Recent policy discussions have raised the possibility of payroll tax cuts or income tax credits based on payroll tax payments. In 2003, workers and employers each owe 6.2 percent Social Security tax on the first $87,000 of a worker's earnings, and a 1.45 percent Medicare tax on all wages. Although the statutory obligation to pay payroll taxes is split between the worker and the employer, most economists believe that workers bear most or all of the economic burden. About 74 percent of filers owe more payroll taxes (including the employer portion) than individual income taxes, including 85 percent of those with income below $40,000.
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