Why Are Your Payroll Taxes So High?

Video Details

Published on Jul 29, 2017
Did you know the government deducts money out of every paycheck you get? Do you know where that money goes? Watch this short video on payroll taxes to learn more.
Donate today to PragerU: http://l.prageru.com/2eB2p0h

This video is part of a collaborative business and economics project with Job Creators Network. To learn more about JCN, visit https://www.jobcreatorsnetwork.com.

Join PragerU's text list to have these videos, merchandise coupons and breaking announcements sent directly to your phone! https://optin.mobiniti.com/prageru

You can support PragerU by clicking here: https://www.classy.org/checkout/donation?eid=60079. Free videos are great, but to continue producing high-quality content, contributions--even small ones--are a must!

Do you shop on Amazon? Click https://smile.amazon.com and a percentage of every Amazon purchase will be donated to PragerU. Same great products. Same low price. Shopping made meaningful.

VISIT PragerU! http://www.prageru.com

Facebook: https://www.facebook.com/prageru
Twitter: https://twitter.com/prageru
Instagram: https://instagram.com/prageru/

For Students: https://www.prageru.com/student-ambassador-program
For Educators: https://www.prageru.com/educators
Sponsor a Student: https://www.prageru.com/become-pragerforce-sponsor


If you have a job you might be wondering what all those deductions on your paycheck are.

When you’re just starting out in the workforce it’s important to learn the difference between gross pay and net pay. Gross pay is what you earned before deductions, like taxes. Net pay is what’s left in your check after all the deductions are taken out.

So who or what is FICA?

It is the Federal Insurance Contributions Act Tax, which is comprised of Social Security and Medicare taxes. It’s called a payroll tax because it takes money out of employees paychecks every pay cycle. FICA taxes are currently more than 7.5 percent of everyone’s paycheck until you reach a cap.

Employers pay an equal amount of FICA taxes for each employee. And even if you don’t pay any income taxes, you still pay FICA taxes.

Social Security taxes fund retirement benefits for retired workers, as well as benefits for the disabled and their dependents. The funds received for Medicare, on the other hand, are used to provide medical benefits for certain individuals when they reach age 65.

Workers, retired workers, and the spouses of workers and retired workers, are eligible to receive Medicare benefits once they reach retirement age.

So if you’re working, it’s your money that helps pay for those benefits. And it’s a lot of money too. In 2015, federal payroll taxes generated $1.07 trillion in revenue for the government, accounting for about one-third of all federal tax revenues.


Share Video

Player size:
  • 560 x 315
  • 640 x 360
  • 853 x 480
  • 1280 x 720
Link to this video (short):
Link to this video (seo):

Add to

Flag Video

Rate video

Rate video

Up next
Advertisement ↷