this post was submitted on 14 Jul 2026
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Work Reform

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[–] wolfpack86@lemmy.world 2 points 1 day ago

As other mentioned its social security and Medicare tax. Social security tax ends after a point and Medicare tax continues (1.45% I think), hence the 2.2% effective tax rate.

What's missing is also the employer taxes, which are mirrored, this the cost of carrying employees in the US is higher than the gross wage... So the effective tax and real wage is all masked. (Eg if my salary is $100,000 I pay like $12k in social taxes and my employer also does the same, meaning the cost to the employer to hire me is $112,000)

All this said, the limit on social security tax is fucking stupid and needs to be abolished.