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Comment by newbie12 | Hacker News Reader

Well put, but the top income tax rate in the US is now nearly 40%. Plus there's 12.4% for Social Security (employer+employee but it is economically all your salary) and state income taxes. And if you invest anything after that, there's capital gains and dividend taxes.

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Social Security taxes are only on the poor and middle class. If you make more than $113,700/year you're only out the $14,098.80

Source: http://www.ssa.gov/pubs/EN-05-10003.pdf

SSI is forced retirement savings program. You get out an amount proportional to what you pay in. It makes sense from that perspective to have a cap on the amount of income taxed, because they have cap on the benefits you can receive.

Except that it is a was originally designed as a widows benefit.

It is not about getting what you put in, it is about a safety net for old poor people who have no income, whether or not you agree that we should do that, to me it is clear that is what the goal of SSI clearly is.

I think the parent was referring to effective tax rate. Tax rates are applied in graded steps, so you will only pay 40% on income over a certain amount.

As your total income rises, your effective tax rate converges to the headline marginal rate.

(Granted this is a mathematical problem for millionaires, but still...)

Except that the truly rich tend to get most of their income from capital gains rather than wages and salaries, and there's a much lower rate for capital gains than for earned income. The "Buffet pays a lower tax rate than his secretary" problem.

Quite, though the arrangements vary from place to place.

There's a lot distortion and unseemly outcomes that flow from having misaligned personal, capital gains and corporate tax rates.

Unless you pay the AMT.

Total FICA is 15.3%. And don't forget sales tax (approaching 10% where I live, on purchases made with after-tax income).

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