Social Security Rules and Marginal Tax Rates
AbstractThe social security payroll tax has become the largest tax paid by the majority of American households. Although, the statutory marginal social security tax rate is the same for all those with wage and salary income up to the maximum level, the complex rules linking social security taxes and subsequent benefits imply that the net marginal social security tax on individual earnings varies substantially among individuals. For some taxpayers, the net marginal social security tax is equal to the statutory rate, while for other taxpayers the combined effect of the tax and the resulting benefits implies a very much lower net marginal tax rate or even a negative marginal tax rate when the incremental benefits exceed the additional taxes.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3962.
Date of creation: Aug 1992
Date of revision:
Publication status: published as National Tax Journal, Vol. 45, No. 1, pp. 1-22, (March 1992).
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