Final answer:
The miscellaneous tax in question is related to the Federal Unemployment Tax Act (FUTA), a payroll tax that is 6% on the first $7,000 an employee earns. Self-employed individuals or independent contractors must pay the full payroll taxes for both employee and employer sides. The social security tax is regressive because it applies only up to an income ceiling.
Step-by-step explanation:
The miscellaneous tax mentioned in the question refers to the Federal Unemployment Tax Act (FUTA), which is a payroll tax that employers must pay. FUTA is 6% on the first $7,000 an employee earns in a year. However, employers can receive a credit of up to 5.4% if they pay state unemployment taxes, known as State Unemployment Tax Act (SUTA).
In the context of self-employed individuals or independent contractors, such as those in the gig economy, they might have to pay both the employer and employee portions of payroll taxes, typically at a total rate of 15.3% (12.4% for Social Security up to a certain income limit and 2.9% for Medicare). This contrasts with those employed by others, where the payroll taxes for Social Security (6.2% up to an income ceiling) and Medicare (1.45%) are shared by the employer and the employee.
The social security tax is considered to be a regressive tax since it caps at an income level ($113,000 mentioned in the question, though this threshold is subject to annual adjustments), meaning higher-income earners pay a smaller percentage of their total income in social security taxes than lower-income earners.