Income tax is on my salary, not my salary less payroll taxes. Why should I pay income tax on my salary, payroll tax to cover the SS benefit and then income tax on the SS benefit? How is the SS benefit “income” to be taxed in the first place?
That was Reagan’s bright idea.
Joe Biden.
Wrote the bill that started taxing 50% of SS benefits.
Joe Biden.
Cast the deciding vote to raise the taxable portion to 85%.
The way SS works is that your employer pays half of the SS contribution. So what you see deducted on your pay stub for SS, the employer not only withheld that amount from you, but contributed an equal amount to dutifully send in as part of payroll taxes.
The employer deducts payroll taxes from the business gross income so that matching amount is not taxed. The tax on that is effectively deferred until you “withdraw” it.
Some relief occurs in that there is an income threshold before you actually do begin to get taxed on that 50%.
That’s how SS was set up from the get go. The only recent stuff is in regards to where that income threshold is, how much of it is taxed, and at what rate.
Independent contractors were exempt from paying payroll taxes initially. That’s the bit that Reagan and Tip O’Neill changed.