This page was last updated on October 8, 2013.
Accurate tax figures are important; Harley Baden; Beaver County Times; October 8, 2013.
Below is a detailed critique of the subject letter.
“I would like to respond to the letter from Robin Cox concerning the amount of taxes withheld from our paychecks. He states that Social Security, Medicare and the like are withheld at over 15 percent. After adding state and federal taxes, the rate is over 29 percent. Where does he get his figures? The rate withheld for Social Security is 6.2 percent, for Medicare its 1.45 percent, and for unemployment its 0.7 percent. That adds up to 8.35 percent. When you add the state income tax deduction of 3.07 percent, you are still only at 10.79 percent. That doesn’t include Federal Income Tax, but one is still almost 20 percent lower than the 29 percent figure he quotes. Yes, we do pay a lot of taxes, but please be somewhat accurate when you are quoting easily found figures.”
[RWC] The letter to which Mr. Baden refers is “Medicaid acceptance a pleasant surprise? For whom?” The 250-word limit for letters to the editor makes it difficult to make your point plus include and/or cite all of the supporting info. That’s part of the problem here. My full critique of the editorial (“Medicaid acceptance a pleasant surprise”) my letter responded to contains all the details. Below is the shorthand version.
First, let’s look at the comments regarding Medicare and Social Security taxes. Contrary to folklore, 100% of Medicare and SS taxes comes out of the employee’s pocket. The myth employers pay half (1.45% for Medicare, 6.2% for SS) is simply accounting sleight of hand mandated by law to understate the actual impact on the employee (15.3%). Since the paycheck stub doesn’t show the payroll taxes held back by the employer or the cost of benefits (like healthcare insurance, vacation, etc.), most of us think our benefits are “free” and there really is an employer portion of payroll taxes. Up to the maximum taxable earnings amount (MTEA) for SS (There is no MTEA for Medicare.), the total Medicare and SS tax rate paid by the employee is 15.3%, not 7.65% as stated by Mr. Baden.
Second, the total of 29.3% came from the Tax Foundation (TF), a source routinely cited by the BCT. The TF reported Pennsylvanians worked over three-and-a-half months in 2013 just to pay taxes (local, state, and federal). That’s about 29.3% of a family’s paycheck.
Third, the other 14% (“local, state and other federal taxes”) I noted is simply the difference between the total of 29.3% and the 15.3% for Medicare and SS taxes.
Finally, though the figures differ, a person using the screen name “Deanthedream” commented on the BCT website and said pretty much what Mr. Baden said above. I don’t know if Mr. Baden and “Deanthedream” are one and the same.
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