Trevor earned $106,800 in 2010; therefore, he paid 6.2 percent of his income in Social Security taxes or $6,675. Meanwhile, Cody earned $213,600 and also paid 6.2 percent on his first $106,800, and then nothing on the rest, also coming to $6,675. Therefore, Social Security taxes are called _________.

Question

Quizplus · Accepted Answer

Social Security taxes are regressive because they are a flat percentage of income up to a certain limit, which means that those with lower incomes pay a higher percentage of their income than those with higher incomes. This is because once a person's income exceeds the limit, they no longer have to pay Social Security taxes on any additional income.

Trevor Earned $106,800 in 2010; Therefore, He Paid 6