In 2013, the Social Security Administration announced that the Social Security Maximum Taxable Earnings would be capped at $113,700. That means that earnings and wages above that amount would not be taxed. Social Security is an example of a tax.

Regressive tax

Explanation:

Social Security tax is the tax that is not exempted from employers and employees and which the funds are used to finance the Social Security program.

The Social Security tax finances the retirement, disability, and other benefits that eligible Americans receive under the Old-Age, Survivors, and Disability Insurance (OASDI) Program - the legal name of Social Security in the United States of America.

It is a Regressive tax in the sense that it takes a larger percentage of income from low-income earners than from their high-income counterparts, thereby further widening the already wide social divide between the rich and the poor.

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