The letter “What’s ‘fair share’ when it comes to taxes?” (Jan. 24, TribLIVE) repeated the tired old saw that “Roughly 50% of wage earners pay no federal income tax at all.” This is simply not true.
6.2% of each employee’s wages is deducted as a dedicated tax, matched by an equal amount by the employer. Self-employed individuals must pay the entire 12.4% tax themselves. In addition, each employee must pay a Medicare tax of 1.45%, also matched by the employer, for a total of 2.9%. Self-employed people pay the full 2.9%. Taxable earnings are capped at $147,000.
Realize that a $15-per-hour self-employed worker earning $31,200 annually would pay 15.3% of her earnings ($4,773.60) in those federal taxes. If a self-employed person earned the maximum taxable amount of $147,000 they would pay $22,491.
No surprise! Very high earners get a break. Those earning over $147,000 pay no more than $22,491 in tax, even if their income soars into the millions. One earning $1 million pays the same Social Security and Medicare tax as one earning $147,000. These are the flat taxes that various wealthy people have promoted, except that they are exempted for incomes over $147,000.
Charles Henry
Greensburg