Hard To Beleive

For the Year of 1950:

Maximum Earnings Taxed = $3,000

S.S. tax rate = 1%

Max. Tax Paid = $30 per employee

Plus Employer’s Share = $30 per employee

Total Tax Paid = $60 per employee

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Yes, this can be hard to believe, so let us do a little figuring. Nothing fancy, just a little common sense figuring. First, you all do understand that the social security tax, or FICA tax, or OASDI tax as it is currently known, is a payroll tax that you pay as a percentage of your gross wages. Your employer must match the same amount to the system that you pay. If you are self-employed, you pay twice as much as a person employed by a business or individual. Self-employed individuals do get a little break on their income taxes which lowers their net cost of their contribution. Oh, OASDI stands for Old Age, Survivors, and Disability Insurance.

Back in 1950 and earlier, only the first $3,000 of gross income earned was taxed, known as the maximum earnings taxed. The social security tax rate back then was 1%. So the maximum tax any employee paid for that year was $30.00. Of course the employer contributed $30.00 as well for a total of $60.00 credited to your account. Also note, that this 1% tax covered only retirement benefits. There were no disability benefits or a medicare program at this time.