Answer
Taxes implemented by the government for the development of the social security and Medicare benefits, on both employees and employers are known as Federal Insurance Contributions Act (FICA) tax.
Work Step by Step
Federal Insurance Contributions Act (FICA) tax is implemented by the US government for employees and employers for the benefit of the social security and Medicare. It provides benefits to disabled, retirees and children of deceased workers.Old age, disability insurance,and survivors come under social security. Hospital benefits for elder people, mostly age of 65 and older comes under Medicare benefits.
Computation of FICA taxes can be shown as:
\[\text{FICA}\,\text{tax}=\text{Tax}\,\text{rate}\times \text{Income}\]
