Asked by Vanessa Grossman on Jun 30, 2024
Verified
The federal payroll (Social Security) tax
A) increases the progressivity of the federal tax system.
B) offsets some of the progressivity of the federal tax system.
C) offsets some of the regressivity of the federal tax system.
D) decreases the proportionality of the federal tax system.
Progressivity
A characteristic of a tax system in which the tax rate increases as the taxable amount increases, placing a larger burden on high-income earners.
Federal Payroll Tax
Taxes imposed by the federal government on the wages of employees, which fund social security and Medicare programs.
- Comprehend the impact of payroll taxes on both employees and employers, and the general progressiveness of the taxation system.
Verified Answer
ZK
Zybrea KnightJul 05, 2024
Final Answer :
B
Explanation :
The federal payroll tax for Social Security is considered regressive because it applies only up to a certain income level, meaning higher-income earners effectively pay a smaller percentage of their income compared to lower-income earners. This characteristic offsets some of the progressivity of the overall federal tax system, where higher earners are supposed to pay a higher percentage of their income in taxes.
Learning Objectives
- Comprehend the impact of payroll taxes on both employees and employers, and the general progressiveness of the taxation system.