The Federal minimum wage mandated by law in America is $7.25/hr, which equates to an annual income of $15,080. In most cases, making a wage this low, will not necessitate the payment of either Federal or State income tax, so any of those taxes taken out of your paycheck during the year will in all probability be return to you when you file your annually taxes. However, your net paycheck also has two other taxes that will definitely not be returned to you, which are the Social Security tax and the Medicare tax which are respectively 6.20% and 1.45%. This means that out of your wages of $15,080, a total of $1153.62 will be extracted from your paycheck for Social Security and Medicare taxes that you will not receive back at the end of the year. This money will be taken from your paycheck as your contribution to Social Security and Medicare for your benefit later on in your life at your retirement age.
Most people that make a minimum wage as their salary or low wages in general, need as much of their income presently to be utilized to live now, and the mandated sacrifice of a portion of their wages to be contributed to their well-being in the far distance future doesn't benefit them in the real world, and in real time. Incredibly, both the Social Security tax as well as the Medicare tax are fundamentally flawed in their structure, instead of setting a floor, to which an employee must first make this amount of money before these taxes are taken from their pay, instead there is a ceiling to which, if you are so fortunate as to earn more than $117,000 in 2014, any monies above that amount are not subject to the 6.20% Social Security tax, although they are still subject to the Medicare tax of 1.45% which has no income limit. What this means is that for those that earn more than $117,000, they will not pay any more Social Security tax for the balance of the year, once they exceed that level, whereas those that earn less than $117,000 cannot escape this pernicious and unfair tax.
Upon the passage of the Social Security Act in 1935, President Roosevelt stated that: "… we have tried to frame a law which will give some measure of protection to the average citizen and to his family against the loss of a job and against poverty-ridden old age." Unfortunately, the actual structure of this Act has been inherently unfair from day one, because instead of exempting low-wage earners from this inequitable tax, it has instead protected the highest-wage earners from its full effects. This truly makes a mockery of providing relief for the needy and the most deserving, as the program fundamentally fails to take into account that a person that is unable to take care of themselves in the present day while dealing with the inevitable adversaries and vicissitudes of life, probably won't be in too good of condition, if alive at all, to reap any benefits from his contribution to Social Security or Medicare when he reaches the age to qualify for his "retirement benefits".
The Social Security and Medicare taxes should be amended forthwith, to establish a floor, to which you as an employee are not subject to such taxes, a floor that should be indexed to the Federal Minimum wage, it is the least that we can do for our poorest and least able, who for the most part, aren't looking for handouts, but simply for a true helping hand.