To fund mandatory spending for Medicare and Social Security, what type of tax is withheld from payroll?
Now is the time to find out what taxes are withheld
From payrolls to fund mandatory government spending
Known as the Federal Insurance Contributions Act (FICA),
it was enacted in 1935 and mandates a payroll tax on employees' paychecks.
A portion of this money is collected for funding Social Security
and Medicare. From the beginning, the idea was that Working
People would contribute a certain amount from their paychecks
throughout their working years to fund these programs.
As a result, they would be able to enjoy both financial and
health benefits later in life. In American history,
it has always been a great idea that has served all workers well.
Self-Employment Contributions Act (SECA), passed in 1954,
Requires the self-employed to pay taxes from their net earnings to benefit
Social Security and Medicare. In this case,
the taxes people pay under FICA and SECA are
Helping senior citizens right now.
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