How the Payroll Tax Funds Social Security and Medicare

In this episode, Lucas and Luna break down the payroll tax system that funds Social Security and Medicare—how it works, who pays, and why it creates a different set of incentives than income tax. They walk through the 2026 wage base cap of $176,100, the flat 12.4% Social Security rate split between employee and employer, and the uncapped 2.9% Medicare tax. Lucas explains why Warren Buffett famously pays a lower effective payroll tax rate than his secretary, and they discuss how self-employed workers face the full 15.3% bite. Luna raises the question of solvency: with trust funds projected to run dry by 2035, is the payroll tax model sustainable? The episode closes with a look at proposals to expand the base or lift the cap, and a listener-supported pitch to keep the ad-free conversation going. #PayrollTax #SocialSecurity #Medicare #FICA #WageBaseCap #SelfEmploymentTax #TrustFundSolvency #TaxPolicy #Economics #FiscalPolicy #WarrenBuffett #EffectiveTaxRate #RegressiveTax #PayrollTaxCap #GenerationalAccounting #FexingoBusiness #BusinessPodcast #TaxPodcast Keep every episode free: buymeacoffee.com/fexingo