Social Security Rules and Marginal Tax Rates

Download or read book Social Security Rules and Marginal Tax Rates written by Martin S. Feldstein and published by . This book was released on 1992 with total page 76 pages. Available in PDF, EPUB and Kindle. Book excerpt: The social security payroll tax has become the largest tax paid by the majority of American households. Although, the statutory marginal social security tax rate is the same for all those with wage and salary income up to the maximum level, the complex rules linking social security taxes and subsequent benefits imply that the net marginal social security tax on individual earnings varies substantially among individuals. For some taxpayers, the net marginal social security tax is equal to the statutory rate, while for other taxpayers the combined effect of the tax and the resulting benefits implies a very much lower net marginal tax rate or even a negative marginal tax rate when the incremental benefits exceed the additional taxes.