Chapter 11, Problem 5DQ

To determine

Concept Introduction:

A payroll tax can be defined as a tax collected by the authorities from the employer and the employee during the period of employment

The tax that is levied on both on both the employer and the employee is social security tax. A social security tax can be defined as the tax collected fromboth the employer and the employee and are used to fund the Social Security program.

To determine:

The combined amount (in percent) of the employee and employer Social Security tax rate (assume wages do not exceed $ 118,500 per year).