Final answer:
FICA includes taxes to pay for Social Security and Medicare. The Social Security tax funds retirement, disability, and survivor benefits, while the Medicare tax funds the Medicare program.
Step-by-step explanation:
FICA includes taxes to pay for Social Security and Medicare. FICA stands for the Federal Insurance Contributions Act, and it is a federal payroll tax that is withheld from an employee's wages to fund these programs. The FICA tax consists of two parts: Social Security tax and Medicare tax.
The Social Security tax is used to provide retirement, disability, and survivor benefits to eligible individuals and their families. It is a progressive tax, meaning that the tax rate increases as income increases.
The Medicare tax is used to fund the Medicare program, which provides health insurance for people aged 65 and older, as well as certain younger individuals with disabilities. The Medicare tax has a fixed rate and is applied to all wages.
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