Why Payroll Taxes Are the Most Regressive Tax You Pay

Payroll taxes fund Social Security and Medicare, but they hit low-income workers harder than high earners because of the wage base cap. In this episode of The Tax Policy Podcast, Lucas and Luna break down how the 12.4 percent Social Security tax applies only up to $176,100 in 2026, meaning someone earning $60,000 pays the same effective rate as a CEO making $10 million above the cap. They explore the history of the cap, why Congress last raised it significantly in 1983, and how the resulting regressivity shapes household budgets. They also discuss proposals to lift the cap or apply the tax above $400,000, and what those changes would mean for the program's long-term solvency. If you've ever wondered why your FICA tax seems unfair, this episode explains the mechanics—and the politics—behind the most overlooked tax in America. #PayrollTax #FICA #SocialSecurity #Medicare #RegressiveTax #WageBaseCap #TaxPolicy #Economics #TaxReform #PayrollTaxCap #SocialSecurityTax #EffectiveTaxRate #IncomeInequality #FiscalPolicy #PayrollTaxReform #FexingoBusiness #BusinessPodcast #TaxPolicyPodcast Keep every episode free: buymeacoffee.com/fexingo