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FAQ

Once you hit the Social Security wage limit in 2022 (132,900) do you get the additional 6.2% untaxed that would normally go towards Social Security?
IIRC, you will get to keep the 6.2% of FICA taxes above the SS wage limit, but the employer portion must continue to be paid. Also, I believe that the portion of FICA that goes towards Medicare must continue to be withheld to a much higher limit.
How much more would healthy people have to pay, if universal healthcare were implemented in the US?
It depends how much money they make, not how healthy they are.Universal health care contributions (in all countries I am aware of) are determined by income not risk factors. Age, number of dependents and pre-existing health conditions do not change the contribution level.In some countries, the contribution is an itemized deduction from the payroll. In some countries it is funded by income taxes. Most important, it is obligatory that all contribute.In Germany, public insurance costs 14.6% of salary or pension. 7.3% is deducted from pay, 7.3% is paid by the employer (or insurer for retired seniors).Yearly income above EUR 54,000 ($61K) is exempt. So the maximum individual payment is capped at roughly EUR 362/month ($410/mo.).For a married couple, where both work, both pay as above. Non-working spouses count as dependents.Those receiving public assistance or unemployed are covered or subsidized by various funding sources.High-earners (above EUR 57,000/year income) can choose private insurance. This significantly lowers contributions for healthy, young singles, but is expensive for families or seniors. This is because each dependent is covered separately and premiums increase with age and risk factors. (You may note that this sounds like the US system • it is with the exception that overall health costs are lower due to more transparent pricing and cost control).Once you leave the public health insurance, it ranges from very difficult to impossible to return. This prevents people benefiting from low payments when they are young and switching only when their risks and payouts increase.In France, insurance is provided by non-profit organisations. Public insurance (5.25% of your salary and other income) is deducted from pay checks. There is no limit, so a € 25 million salary will pay over a million per year. Pensions are levied at 3.95%.The insured self-pays most medical fees (standard visits and services). A portion is reimbursed by insurance. Typically around 75 to 80%, but 100% for serious and expensive health issues like cancer.The patient is liable for the balance, but this is usually recovered if the patient pays a regular premium to a voluntary supplementary health insurance scheme (more than 99% of the population as every worker is entitled, per law, to access to a company subsidized plan). Most of them are managed by non-for-profit groups. Over 95% of the population has supplemental insurance.Those on public assistance and unemployed are covered or subsidized from various funding sources.In the end, nearly everybody needs to pay a lot for healthcare at one point in their lives. Universal health care balances out this cost over a lifetime for the entire society. It is entirely true that the strong (young, healthy, wealthy)) support the weak (old, sick and poor).Some call this insurance. Others call it socialism. I call it humane.
Why does America spend so much on healthcare, yet it's still not universal? Couldn't they cut a few billion from the military?
The short answer is no.We can't simply cut military spending to fund a universal healthcare plan.Here's why:To begin, I'll lay out some of the numbers and then we'll talk about it. This may be pretty long.Firstly, the Congressional Budget Office (CBO) projects that the US Government (USG) will spend $15.055 Trillion on major healthcare programs over the next decade (from 2018-2027) after accounting for offsetting receipts.[1] Keep this number in mind as we go on and understand that this is simply for the programs we already have (Medicare, Medicaid, ACA, CHIP).For the purpose of this analysis, I'll be talking about Senator Sanders' Medicare for All (M4A) plan because it is the only real proposal that has been analyzed to date. According to the most recent analysis by the Mercatus Center at George Mason University, the cost of his plan for the USG would come in at an estimated $27.7 Trillion from 2019-2022 (and $32.6T from its actual possible implementation period from 2022-2031).[2]That is an increase in cost of $12.6T. It is very important to note here that the author of that analysis based his numbers off of the assumptions made by Senator Sanders. That is to say, Sanders assumes certain savings (lower drug pricing, lower reimbursement rate for healthcare professionals, etc.) that may not reach the levels he expects—which were in the neighborhood of a 40% reduction—but Mr. Blahous takes all of those assumptions at face value and estimates that if Sanders is right it will cost nearly $28T.Surely, the scale of these numbers is already making quite clear that a “few Billion” from our comparatively paltry Defense budget is not going to cut it, but we will go further still.Now that we have laid out the bare cost of the M4A plan, we will talk about how politicians are proposing it be paid for.To fund his many proposals, Senator Sanders proposed sweeping changes to the US tax code. These changes included overhauling the individual tax rates, adding an additional 2.2% income tax specifically for M4A, and levying a 6.2% payroll tax on companies to replace their current healthcare spending. After accounting for the decrease in our economic output that these changes would bring, the Tax Foundation estimated that these changes would net the USG an additional $9.8T from 2016-2025.[3]It is also important to note here, like before, that this is based on the assumption that the moneys currently spent on health benefits by employers will be passed down as wages to workers. I'm not convinced that this would occur (it sounds a whole lot like “trickle-down” economics to me), especially when considering that much of that money will now be paid directly to the USG because of the increased payroll tax.Again too, please keep in mind that this was an analysis of his entire tax plan. Much of this money was intended to pay for M4A as well as his other proposals. However, even if all of this revenue was used to fund solely his M4A plan, we would still find ourselves short by approximately $2.8T over the 10-year period.It is also worth noting that they also predicted that:After accounting for economic effects, taxpayers in all income groups would see their after-tax incomes decrease by at least 12.84 percent. The top 1 percent of taxpayers would see their incomes decrease by 24.88 percent.This, of course, would be a significant added burden to many families beyond the base percentage of the tax increases proposed.So, what we end up with then is a plan that costs $27.7T minus the $15T (much of which is deficit spending currently, I think) we are already obligated to pay for healthcare programs that would be made unnecessary. This leaves us with ~$12.7T left to be funded, with a revenue increase of $9.8T that could all be funneled towards M4A (leaving nothing for other plans). This would leave us $2.9T short for M4A funding.This means we would need an additional $290B per year from the discretionary Defense budget to cover the costs over that 10-year period. This number is an average, and would be slightly smaller at the beginning of the 10-year period and would increase as the years went on as healthcare costs continued to increase. It would steadily increase in perpetuity, which is why the 10-year cost for the M4A plan is some $5T higher over the 10-year period starting in 2022.While this is technically possible, there are a ton of consequences to a 45% decrease in Defense budget. Our 2022 base Defense budget (set by the 2022 National Defense Authorization Act) is $639B with another $69B for overseas contingency operations funding.[4]This, I think, is excessive; however, cutting $290B off of that number would be a disaster. To make a long story very short, when I was in the Army, President Obama was actively cutting the Defense budget leading to a policy known as sequestration.* What this meant for us Joes (in the 82nd ABN anyway) was fewer troops, fewer reenlistment opportunities, inadequate pay raises, non-functioning equipment, and poor training opportunities. These factors combined to create an unmotivated military force with inadequate training and equipment with little opportunity for career progression and success. This would be worsened by a cut of the magnitude necessary to provide the $290B that Sanders' plan requires (assuming every one of his predictions is correct).So, what does all of this mean? Well, it means that Senator Sanders' M4A plan is not feasible as proposed, in my opinion. Funding M4A would require a complete tax overhaul, and this would still not provide enough revenue for the program to be solvent. If we cut our Defense budget in half, from the current number, and by more than half from the Obama-era budget, we might be able to fund it for a short while, but the consequences of that type of funding cut would make it very difficult to predict our nation's financial situation. Doing so would certainly lead to our military forces being inadequately trained and equipped, and I suspect there would be a sharp rise in unemployment as many of our soldiers, sailors, airmen, and marines were forced out for budget reasons without adequate employment opportunities waiting for them in the civilian sectors.In sum, M4A may be a policy that should be seriously considered in the U.S., but it will be much more complicated than simply “cutting military spending” or “taxing the rich” if we intend to implement it.*Carter Moore has clarified this point in the comments for those who want more information about it. In this answer, this point was merely my relaying of my experience in the military during that time. For us, sequestration was shorthand for budget cuts (or simply all things related to the budget). This, it turns out, is not accurate to what actual sequestration was during the Obama years, but the experience I relayed is still accurate as to what it looks like when the approved military budget does not meet the combatant commander's requirements for mission readiness.Originally Answered: Why does America spend so much on healthcare, yet it's still not universal? Couldn't they cut a few billion from the military?Footnotes[1] Budget and Economic Data[2] http://Blahous, Charles. "The Co...[3] Details and Analysis of Senator Bernie Sanders’s Tax Plan | Tax Foundation[4] Congress finalizes $717 billion defense budget authorization months ahead of schedule
Who usually pays less in taxes in 2022. an employee or a sole proprietor with equal incomes?
It depends what you mean by “equal incomes.” Let’s say you mean by that adjusted gross income on their tax returns.The sole prop in addition to income taxes pays self-employment taxes which are their contributions to Social Security and Medicare.So, the answer would be the employee pays fewer taxes, all things being equal as described.But don’t forget to get to the “equal income” the sole prop had a number of non-cash tax deductions such as depreciation and home office that would give the sole prop more after tax income on the same taxable income.
What is the overall tax rate for a non US resident in the state of California if I make $100,000 a year?
I’ll give you an answer, which you can use as a base line.I’m simplifying the heck out of this, assuming you have no deductibles (loans, car registration fees, interest income, stocks, 401(k), IRA, other income) and you are a single with no dependents.Federal taxes 17.66% (hitting the 24% bracket over $82,500) - $15,890 (of $90,000 after $10,000 std deduction) (37% over $500k)The New 2022 Federal Income Tax Brackets & RatesMediCare 1.45% - $1,450 (of $100,000) for over $200,00 it goes up to 2.35%2022 Medicare Tax RateSocial Security 6.2% of - $6,200 (of $100,000) capped at $128,400An Overview of Social Security Taxes: Who Pays What?State taxes 6.41% - $6,107 (of $95,198 after CA deductions) (13.4% over $1M)https://www.ftb.ca.gov/forms/201...CA-SDI 1% - $1,000 (of $100,000) [capped at $118,371https://www.edd.ca.gov/Disabilit...Total taxes $30,464 or 30.46%There are plenty of other taxes that comes sneaking in at different income level (other than the increasing tax rate / marginal tax) : MediCare tax for $200,000+ (0.9% of amount over), Medicate on interest/stocks/bonds etc. an additional 3.8% on this amount (investment income), potential Alternative Minimum Tax (getting rare these days due to deduction limitations).Hope this is somewhat helpful.Contribution to 401k will lower your taxable income with contribution amountYou can deduct interest on primary residence, property tax etc. interest is capped to interest on up to $750,000 of your loan, and property tax is capped to max $10,000 for property tax etc. (itemized). In CA you can also deduct part of the vehicle fee (typically 0.65% of car’s value (this will drop with age).
What is the highest rate of taxation on personal income ever recorded historically and where did this happen?
In the 1950’s the top US federal marginal individual tax rate was as high as 91%.I don’t know whether that is the highest rate of taxation ever recorded historically, but it’s pretty high.The 91% marginal rate applied to very high incomes. For single taxpayers it applied to that portion of taxable incomes in excess of $200,000. On an inflation adjusted basis, $200,000 dollars in 1955 is the equivalent of about $1,900,000 in 2017.The tax actually paid any individual taxpayer is subject to a lot of variables, however. So, for example, the tax paid by a wage earner making $132,900 or less in 2022 has a surcharge social security tax of 6.2% . In addition there is a medicare tax on all earned income of 1.45% that has no wage limit. These taxes are theoretically different from the income tax, but in fact they are identical except that they are not subject to any deductions.Various special tax provisions have always applied to wealthy taxpayers in the US who are not ordinary wage earners. As a result, many of these people can legally pay a lower total tax than their gross revenue would tend to suggest. In addition, because an income tax does not reach increases in wealth unless those increases are “recognized”, many wealthy people can have significant increase in their wealth on which they do not pay current income tax.Under current US estate tax law, increases in wealth that are not recognized by the time of the owner’s death escape income taxation altogether.For 2022. the marginal tax rate for a single individual will be 24% for people with taxable incomes between $84,200 and $160,725. If we assume that most folks earning wages of 132,900 or less would fall in this taxable income bracket, the highest marginal tax for this group would be 31.65% (24+6.2+1.45).The 1955 federal marginal tax rate for taxable income of between $6,000 and $8,000 was 30%. The Social Security maximum wage base was $4,200 in 1955, so there was no social security tax applicable to this wage bracket. There was no Medicare tax in 1955. The wage bracket for $6,000–8,000 would be the equivalent of about $56,000–74,000 today.US federal income tax was generally somewhat higher for ordinary single individual taxpayers in every tax bracket in 1955 than it is today.
Would you recommend that the social security tax on wages not be stopped at $127,200 and be raised to $1,000,000? Currently anyone that makes over $127,200 only pays social security taxes for $127,200, nothing more.
I’d recommend we scrap all other forms of retirement and turn social security into a true national retirement plan. 401ks have been an abysmal failure. The average citizen lacks the sophistication to manage their own investments. As a result, 90 percent of Americans solely depend on social security for retirement. Many of these folks also end up on Medicaid and other forms of public assistance. Worse many older people never leave the workforce - keeping labor demand low and wages low.If I was declared Tzar Of The US. I’d turn Social Security into a fund for all vacation, sick, family leave, unemployment and retirement. Take all that away from the employer. You’d fund it via a reformed tax code that taxed all economic gains equally and set the standard deduction above the estimated cost of living of the community in which people resided. And I’d get rid of all other taxes state, local, and federal, except tariffs.Wishful thinking but fair, simple, efficient, and transparent. Also no more tax shifting• Further, all retirement and leave are unburdened from the private sector. I have no problems with privitization as a choice as long as they must disclose in large bold letters that they cost more than public options and the decision must be non-reversible and soleley at the discretion of the individual.As for welfare, you get it if you check yourself into drug rehab center. Or with kids, in exchange for sterilation after 2.A good national unemployment program that pays just enough to make your monthly obligations keeps mortgages and debts solvent and motivates the unemployed to re-employ.A good national family leave and sick leave policy allows our children to be raised and keeps the sick from infecting everyone else. Further, the burden is removed from the private sector where job creation could be hampered in marginally profitable businesses.There are tons of opportunities to steam line the government and make the US more efficient and competitive while also reducing our work week and increasing retirement and vacation enjoyment for the masses. The Germans are a model of worker efficiency. If all else fails, just copy them. They get by with 8 weeks of paid vacation, a 35 hour work week, full retirement, and family leave….And they are no Marxist State. But they are more efficient and a more equitable society-to be envied.
What is the current cap on social security taxes?
The maximum amount of wages subject to OASDI tax is $132,900 for 2022. (There is no wage cap for Medicare taxes.)OASDI collects 6.20% of earned income from the employee, so the maximum you could pay is $8,240 per year. (Double that if you are self-employed, since you pay the employer portion as well.) Medicare collects an additional 1.45% (again, double, if you are self-employed).If you are already collecting social security benefits but are less than your full retirement age (which would be 66 in 2019), and are still working, there is an income cap for earned income. Above that cap, some of your benefits are withheld. This withheld money is later returned to you as a higher benefit.If you are collecting Social Security, the MAXIMUM benefit in 2022 is $2,861/month ($34, 332/year) if you met or exceeded the salary cap every year you worked (or at least for 35 years) and took your benefit at exactly your full retirement age. The AVERAGE payment is expected to be $1,461/month ($17,532/year) in 2019.
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