Final answer:
The incorrect statement about Social Security and Medicare taxes is that they are progressive (c). Actually, Social Security tax is proportional up to its wage cap and then becomes regressive, while Medicare tax is proportional without an income cap, applying a flat rate to all wages earned.
Step-by-step explanation:
The statement that is INCORRECT regarding Social Security and Medicare taxes is: Social Security and Medicare taxes are progressive. In fact, Social Security tax is imposed at a rate of 12.4% up to a certain wage limit (which was $137,700 in 2020), making it proportional up to that limit and regressive above it because higher income earners pay a smaller share of their income in tax once they surpass the wage limit. Medicare tax, fixed at 2.9%, is proportional as it applies a flat percentage of all wages earned with no upper ceiling. Therefore, Social Security and Medicare taxes are not progressive, where tax rates increase as income increases.
Additionally, it's worth noting that the statement regarding the tax deductibility for high-income individuals is also incorrect. Social Security and Medicare taxes are not deductible for high-income individuals. These payroll taxes are imposed on earned income regardless of the individual's tax bracket and are not influenced by the taxpayer's ability to claim deductions on their federal income tax filing.