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Author: Rayvt Big gold star, 5000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76112  
Subject: Re: Roth taxable now??? Date: 8/6/1998 12:12 AM
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<<You think full taxing of SS is coming....despite the fact that the SS payroll "contributition" (FICA) is
after tax. IOW, it will be taxed *twice*, once going in and once coming out.(Rayvt)

I suspect it will come, its just a matter of time. But it's not exactly clear to me that were being taxed at all going in.

As Pixy points out half the contributions come from me so I'm being taxed on only half going in. the other half comes from the employer, who DEDUCTS his contribution as a business expense. Different tax rates to be sure, but it looks like a wash. So the IRS does not get all that much benefit from the tax implications. The net result is that the employee gives the taxes to the employer. Not all that bad considering he's paying 50% of the freight.

So maybe it fare that it all be taxed on the way out.

Any taker?

Joe Varga >>

Sorry, wrong. (But it's a common error--and one which the politicians aren't too eager to educate people on, as it works in their favor.)

The worker pays the entire SS tax. The "worker's half" in cash, and the "employer's half" in the form of forgone wages. It works the same way for "free employer-paid" health care, BTW. This is widely known by economists, and has been well-researched and studied.

Actually, I could make the argument that the worker pays NONE of the SS tax. After all, you don't write a check and sent it to the IRS, do you? No, you don't. The _employer_ writes the check to the IRS, for the entire 12.4%. Therefore the employer pays the full tax. QED

Regards,
Ray
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