I totally agree with you fleg. The OTHER thing that always po'd me was the earnings cap on FICA contributions. For 2010 the cap is $106,800. The FICA rate is 6.2% and the Medicare rate is 1.45% for a total of 7.65%. The following is taken from a blog by Floyd Johnson way back in Nov 2005. I adjusted the numbers to reflect the current FICA % rates and caps.===============================================================================================What is FICA? In 2010, a 6.2% Social Security tax was imposed on the first $106,800 of everyone's earnings up to a maximum tax deduction of $6622.Translated into net dollars, that means: * If you are a computer programmer earning $106,800 a year, you pay the maximum deduction of $6622 in social security taxes. Obviously this translates to 6.2% of the computer programmer's total income. * But if you are Bill Gates or Warren Buffet and earn $10,000,000 a year, you also pay only the maximum deduction of $6622 in Social Security taxes. In these two cases, Gates and Buffet pay only 0.0062% (that's 6/1000ths of a percentage point) of their total annual income of $10,000,000 in Social Security taxes. If they were required to pay 6.2% of their total income, Gates and Buffet would make annual contributions to Social Security of $620,000 not the $6622 that they currently only pay.First disparity. The current social security tax table causes the computer programmer to pay a much higher percentage of his actual annual income in Social Security tax than Gates or Buffet do - 6.2% of his total annual income verses 0.006% of their total annual income. Viewed just in terms of those percentages, the computer programmer pays 103 times more than Bill Gates or Warren Buffet do. (Ultimately, the computer programmer, Bill Gates and Warren Buffet will all be entitled to a similar - if not identical - Social Security benefit at age 65 (or whatever the current " normal " retirement age is ... depending on their date of birth.)Second disparity. Bill Gates and Warren Buffet will be entitled to receive Social Security benefits at retirement that they clearly do not need. Bill Gates and Warren Buffet do not need a `security net' to protect them from living in poverty. Low or no income retirees and their families clearly do!As I previously stated .... this is from a blog dated November, 2005 and this inequity in the SS System remains the same today.To top it off ... the retired guy who is trying to maintain a halfway decent lifestyle by working is penalized for any earnings above $14,160 !!!Thank you my fellow Fools for letting me rant.Rich (in name only)
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