Know known as the Federal Insurance Premiums Act (FICA)it is a law which was enacted in 1935 and which makes compulsory a pay tax on employee pay. This money is collected to be used to finance the Social Security and Health Insurance programs. From the start, this idea was that workers could contribute a certain amount from each monthly salary throughout their working years to fund these programs. This would benefit them because later in life they would enjoy both financial and health benefits. An excellent idea that has been a constant for all the workers of American since its creation.
In 1954, the Self-Employed Persons Contributions Act (SECA) was created, it forces the self-employed to pay taxes on their net income, which would also help the Social security and health insurance programs. It works like a life agreement type cycle because the taxes people pay under FICA and SECA are helping seniors right now. If you are young and paying at the moment, you are helping an elderly person during their retirement. By the time you reach their age, young workers who pay those taxes at that time will help you through your retirement years.
More details on FICA dues
FICA dues are basically deducted from an employee’s gross salary, the amount depends on what they earn. All employers must match the FICA taxes paid by their employees. Employees are not able to refuse to pay FICA taxes, they are mandatory for every worker. The benefits that paying these FICA taxes bring are still ongoing to this day. It all started in the ‘1930 with funding from Social Security programs that provide benefits to all retirees, children, surviving spouses and citizens with disabilities. The salary base for social security contributions on earnings is set at $160,200 for 2023.