Asked by Natalie Kyrie on Mar 10, 2024
Verified
In 2016,the Social Security (FICA) tax was levied only on incomes up to $118,500.Which statement about this tax is CORRECT?
A) A worker with an annual income of $50,000 and one with an annual income of $100,000 paid the same dollar amount of FICA tax.
B) A worker with an annual income of $200,000 and one with an annual income of $118,500 paid the same dollar amount of FICA tax.
C) The top 20% of income earners earned over 50% of total U.S.incomes in 2001,and they paid approximately 60% of the total FICA taxes collected that year.
D) The percentage of income paid in FICA taxes was the same for a worker with an annual income of $50,000 and a worker with an annual income of $100,000.
Social Security (FICA) Tax
A mandatory payroll tax funded by both employers and employees to finance Social Security benefits.
Annual Income
The total amount of money earned by an individual or entity within a year from all sources, including wages, salaries, bonuses, and investments.
- Understand the impact of sales, income, and payroll taxes on different income groups.
- Analyze the consequences of taxation on consumer choices and how income is dispersed.
Verified Answer
IJ
India JohnsonMar 10, 2024
Final Answer :
B
Explanation :
The Social Security (FICA) tax is levied only on incomes up to a certain cap, which was $118,500 in 2016. This means that both a worker earning $118,500 and one earning $200,000 would pay FICA taxes on the same amount of income ($118,500), resulting in the same dollar amount of FICA tax paid by both.
Learning Objectives
- Understand the impact of sales, income, and payroll taxes on different income groups.
- Analyze the consequences of taxation on consumer choices and how income is dispersed.