Does that seem a little high? If you check your paycheck, the amount of money that is actually deducted from your paycheck for Social Security and Medicare is only 7.65%. Employers, however, pay an equal amount of taxes on your behalf (i.e., an additional 7.65%). Previous studies have indicated that all taxes employers pay on employees behalf is funded through lower employee earnings. In other words, if the employer didn’t have to pay these taxes, your salary would be 7.65% higher. Ouch!
Here is the breakdown of what where your payroll tax deductions are going.
Notes that OASDI (Old Age Survivors and Disability Insurance) is Social Security and HI (Hospital Insurance) covers only for Medicare beneficiaries’ Part A (i.e., hospital) medical costs.