Say a family has $60,000 in wage income. Of that, $3,720 is deducted from its paychecks for Social Security taxes, and an additional $870 is taken out for the Medicare tax. That's $4,590 that the family never sees. Nevertheless that money is taxed as personal income, as if the family received it. What it amounts to is a tax upon a tax.
And that's only the beginning. Some 10 million Americans are triple taxed, and that group's ranks swell by 1 million a year. When retirees begin to collect Social Security benefits, the income tax is again imposed on up to 85% of their benefits for those whose overall income exceeds a fixed level. For a husband and wife, it's $32,000 a year. For a single person, it's $25,000.
Because these base amounts do not rise with inflation, the number of retirees subject to the triple tax will grow each year. As a result, the tax will eventually hit many who can ill afford to pay it. And this is happening at a time when an increasing number of Americans are forced to work past their planned retirement age because of depleted pensions and retirement accounts. For 2000, 7.7 million individuals and families with incomes below $75,000 were taxed on their Social Security checks.
Be that as it may, the President's plan focuses on stockholders rather than workers. With certain exceptions, citizens would no longer pay tax on corporate dividends. The President's rationale: corporations already pay an income tax on their