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Originally Posted by samsonh
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Federal Insurance Contributions Act (FICA) tax (/ˈfaɪkə/) is a United States federal payroll (or employment) tax[1] imposed on both employees and employers to fund Social Security and Medicare[2]—federal programs that provide benefits for retirees, disabled people, and children of deceased workers.
The tax also provides funds to the health care system for institutions that provide healthcare for workers that do not have health insurance and cannot afford healthcare treatment. Social Security benefits include old-age, survivors, and disability insurance (OASDI); Medicare provides hospital insurance benefits for the elderly. The amount that one pays in payroll taxes throughout one's working career is associated indirectly with the social security benefits annuity that one receives as a retiree.[3] This has caused some to claim that the payroll tax is not a tax because its collection is tied to a benefit.[4] The United States Supreme Court decided in Flemming v. Nestor (1960) that no one has an accrued property right to benefits from Social Security. The Federal Insurance Contributions Act is currently codified at Title 26, Subtitle C, Chapter 21 of the United States Code.[5]
Does the money go into trust funds or not to fund Medicare and Social Security?
Yep.
You become eligible for Medicare at age 65 and not before or not?
Yep
Are Medicare benefits payed from a trust fund or not?
Yep.
Do you become eligible for Social Security (SS) at age 62 and not before or not?
Yep if not disabled.
Is the amount you are paid in SS benefits based on how much you contribute in FICA over your lifetime and when you start collecting?
Yep.
Are SS benefits payed from the trust fund that your FICA was paid into?
Yep.
Deferred Compensation
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Deferred compensation is an arrangement in which a portion of an employee's income is paid out at a later date after which the income was earned. Examples of deferred compensation include pensions, retirement plans, and employee stock options. The primary benefit of most deferred compensation is the deferral of tax to the date(s) at which the employee receives the income.
So let me get this straight, Medicare and Social Security benefits are paid from trust funds that people make ontributions to via FICA in the course of their lifetimes. SS benefits are based on how much they payed in FICA over the course of their life times. You are claiming that none of this is true?
Tax
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A tax (from the Latin taxo) is a financial charge or other levy imposed upon a taxpayer (an individual or legal entity) by a state or the functional equivalent of a state to fund various public expenditures.[1] A failure to pay, or evasion of or resistance to taxation, is usually punishable by law. Taxes consist of direct or indirect taxes and may be paid in money or as its labour equivalent. Most countries have a tax system in place to pay for public/common/agreed national needs and government functions: some levy a flat percentage rate of taxation on personal annual income, some on a scale based on annual income amounts, and some countries impose almost no taxation at all, or a very low tax rate for a certain area of taxation. Some countries charge a tax both on corporate income and dividends; this is often referred to as double taxation as the individual shareholder(s) receiving this payment from the company will also be levied some tax on that personal income.
Your argument that FICA is equivalent to an income tax is ridiculous. The accounting is actually simple. People pay a portion of their current income in FICA to fund their health benefits and derive income at retirement based on how much was deferred over the course of their lifetimes. Revenue derived from FICA goes to trust funds that are managed. The assets of the trust funds are used to pay benefits based on what was payed via FICA. Please cite the sources that state otherwise. If you doubt any of this just refer to the government websites.
