Social Security taxes are levied on earnings up to a maximum level set each year. In 2004, this maximum — or what is referred to as the taxable earnings base — is $87,900. There is no similar base for the Medicare Hospital Insurance (HI) portion of the tax; all earnings are taxable for HI purposes. Elimination of the HI base was proposed by President Clinton and enacted in 1993, effectively beginning in 1994. Recently others have proposed that the base for Social Security be raised or eliminated as well. They complain that taxing earnings only up to a certain level …
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Description
Social Security taxes are levied on earnings up to a maximum level set each year. In 2004, this maximum — or what is referred to as the taxable earnings base — is $87,900. There is no similar base for the Medicare Hospital Insurance (HI) portion of the tax; all earnings are taxable for HI purposes. Elimination of the HI base was proposed by President Clinton and enacted in 1993, effectively beginning in 1994. Recently others have proposed that the base for Social Security be raised or eliminated as well. They complain that taxing earnings only up to a certain level creates a regressive tax. They point out that 94% of all workers whose earnings fall below this level have a greater proportion of earnings taxed than the 6% whose earnings exceed it.
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Congressional Research Service Reports
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Haltzel, Laura.Social Security: Raising or Eliminating the Taxable Earnings Base,
report,
January 20, 2004;
Washington D.C..
(https://digital.library.unt.edu/ark:/67531/metacrs7727/:
accessed June 3, 2024),
University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu;
crediting UNT Libraries Government Documents Department.