I’ve been receiving a steady paycheck for about a month now. Every week, my earnings are directly deposited into my checking account. But I’ve noticed that someone (or something) is stealing a bunch of my cash before it gets deposited.
The nerve!
As you can see in the scan below, FICA is taking a decent amount of money from me every single week.
I’ve blurred my city to keep the Internet predators away…
I’m not a fan of people taking my money, so I started an investigation. Thanks to the Internets, more specifically – Wikipedia, I discovered that FICA is actually an alias of Uncle Sam – A.K.A the Federal Government.
It turns out that FICA stands for Federal Insurance Contribution Act. This act allows for a tax to be levied in order to pay for Social Security and Medicare. Some people argue that it’s not really a tax because you get your contributions back when you start collecting benefits. Whether or not you agree with this assessment is another topic completely…
Here are some quick facts and figures related to Social Security, Medicare, and FICA:
- Accounts for 37% of government spending
- Estimated to keep 40% of Americans over the age of 65 out of poverty
- FICA is calculated as 6.2% of your earnings, up to $106,800. This means that anything you earn over that ceiling is not subject to FICA
My Thoughts:
1. While 37% is a large chunk, I think it’s appropriate to spend a lot of money to keep the elderly from being stuck on the street and without medical care. Honestly, I think the priorities for government spending should be (in no specific order), health care, education, defense, and awesome stuff. Awesome stuff includes NASA, high way system, high speed Internet, etc. I do think we spend a tad too much on defense though. Just a thought….
2. I can’t believe that so many people are completely dependent on Social Security. I mean, I’ve always viewed SS as simply being one part of a retirement plan. Really, I think of it as a bonus because I have a strong feeling that the whole FICA, SS, and Medicare mess will go through a huge overhaul in the coming decades. Personal responsibility plays a hand in this too. Everyone should be saving something in a retirement account.
3. Just thinking out loud here, but would raising (or gasp, eliminating!) this cap help solve the budget crisis? I honestly don’t know and I’m not an economist so I can’t say with any certainty, but maybe we should look at the possibility. Perhaps eliminating it would allow for a true national health care system where everyone was covered? I know, I know – the horror. What would it be like to not have to worry about health insurance companies denying claims or being able to quit your job and start a business without the lack of health insurance benefits holding you back?
How do you feel about FICA? Friend, Acquaintance, or Foe?
{ 1 comment… read it below or add one }
No, FICA is not my friend. I know that SS will not be around when I am ready to retire. I pay 6, yes 6 taxes on my paycheck. Federal, Social Security, Medicare, State, City, and social security disability. The federal tax is enough. Just give me back the social security and we can call it even.