graded project .

Lesson_8/Section_1/reading_assignment_core_1.html

BUS330 Risk Management Graded Project

Your project must be submitted in an Excel spreadsheet. Your project will be individually graded by your instructor and therefore will take up to a few weeks to grade. Be sure that each of your files contains the following information:

• Your name
• Your student ID number
• The exam number
• Your email address

To submit your graded project, follow these steps:

• Click the link on the next page to open the Project Upload page.
• Follow the instructions provided to upload your assignment.

Be sure to keep a backup copy of any files you submit to the school!

Background

Social Security solvency has been a topic of significant debate in recent years. As the population ages, life expectancy increases, and fewer workers fund the PAYGO system, this topic is likely to remain important until it’s solved. This project is designed to increase your understanding of how Social Security taxes are imposed and show you how to research Social Security insurance and retirement benefits.

Take a moment to review the tables below. These are the wage bases to which the OASDI component of Social Security applies. For the 2009 calendar and tax year, this is 6.2% of $106,500 (7.65% up to this wage base ceiling for both OASDI and Medicare).

Social Security Wage Base through the Years
Tax Year Wage Base	Tax Year Wage Base	Tax Year Wage Base	Tax Year Wage Base
1937–5	$3,000	1977	$16,500	1988	$45,000	1999	$72,600
1951–54	$3,600	1978	$17,700	1989	$48,000	2000	$76,200
1955–58	$4,200	1979	$22,900	1990	$51,300	2001	$80,400
1959–65	$4,800	1980	$25,900	1991	$53,400	2002	$84,900
1966–67	$6,600	1981	$29,700	1992	$55,500	2003	$87,000
1968–71	$7,800	1982	$32,400	1993	$57,600	2004	$87,900
1972	$9,000	1983	$35,700	1994	$60,600	2005	$90,000
1973	$10,800	1984	$37,800	1995	$61,200	2006	$94,200
1974	$13,200	1985	$39,600	1996	$62,700	2007	$97,500
1975	$14,100	1986	$42,000	1997	$65,400	2008	$102,000
1976	$15,300	1987	$43,800	1998	$68,400	2009	$106,500

 

Social Security Taxes
Tax Year(s)                SECA         FICA	Tax Year(s)            SECA            FICA
1937–49	1.00%	NA	1971–72	5.20%	7.50%
1950	1.50%	NA	1973	5.85%	8.00%
1951–53	1.50%	2.25%	1974–77	5.85%	7.90%
1954–56	2.00%	3.00%	1978	6.05%	8.10%
1957–58	2.25%	3.38%	1979‐80	6.13%	8.10%
1959	2.50%	3.75%	1981	6.65%	9.30%
1960–61	3.00%	4.50%	1982–83	6.70%	9.35%
1962	3.13%	4.70%	1984	6.70%	11.30%
1963–65	3.63%	5.40%	1985	7.05%	11.80%
1966	4.20%	6.15%	1986–87	7.15%	12.30%
1967–68	4.40%	6.40%	1988–89	7.51%	13.02%
1969–70	4.80%	6.90%	1990–	7.65%	15.30%
FICA Tax (1937– ), SECA Tax (1951– ), SECA tax subsidy phase-out completed & SECA taxes adjusted & partially deductible (1990– )

Remember, the 7.65% for 1990 represents the 6.2 percent OASDI plus the 1.45 percent Medicare tax.

Procedure

Follow these steps to complete your project.

Step 1

Combine the wage base and FICA tax rates applied to these wage bases into a single Excel file. In the process, compute the maximum employee and employer contribution to Social Security, based only on the maximum wage base. Here’s an example of a portion of the table:

Tax Year	Wage Base	Percent FICA	Maximum
1937	$3,000	1.00%	$30.00
1938	$3,000	1.00%	$30.00
— —BREAK IN SEQUENCE— —
2008	$102,000	7.65%	$7,803.00
2009	$106,500	7.65%	$8,147.25

Step 2

FICA (Federal Insurance Contributions Act) and SECA (Self- Employment Contributions Act) represent the employer and employee contributions to OASDI and Medicare and contributions for the self-employed or sole proprietor. Notice that a self-employed individual did not have to contribute to Social Security from 1937 through 1950.

Before the 1980s, self-employed taxpayers’ contributions to Social Security were less than the employee’s and employer’s contributions combined. However, one of the solutions to the Social Security shortfall at that time was to phase in a catch-up provision, where, starting in 1990, the employer (7.65%), the employee (7.65%), and the self-employed (15.3%) make equivalent contributions. Effectively, the self-employed taxpayer makes both employer and employee contributions.

In the Excel file you completed in Step 1, add columns for the SECA tax rates applied to these wage bases. In the process, compute the maximum self-employed taxpayer’s contribution to Social Security, based only on the maximum wage base. Also add a column for both employer and employee FICA components so that you can compare the combined employer and employee contributions to FICA to the SECA contributions. Here’s an example of a portion of the table:

Tax Year	Wage Base	FICA Percent	Maximum FICE	2 Times Maximum FICE	SECA Percent	Maximum SECA
1937	$3,000	1.00%	$30.00	$60.00	0.00%	$ —
1938	$3,000	1.00%	$30.00	$60.00	0.00%	$ —
1939	$3,000	1.00%	$30.00	$60.00	0.00%	$ —
— — — — —BREAK IN SEQUENCE— — — — —
1989	$48,000	7.51%	$3,604.80	$7,209.60	13.02%	$ 6,249.60
1990	$51,300	7.65%	$3,924.45	$7,848.90	15.30%	$ 7,848.90
— — — — —BREAK IN SEQUENCE— — — — —
2008	$102,000	7.65%	$7,803.00	$15,606.00	15.30%	$15,606.00
2009	$106,500	7.65%	$8,147.25	$16,294.50	15.30%	$16,294.50

Notice that the employee and employer contributions to FICA became equivalent to the self-employed taxpayer’s contribution to SECA in 1990.

Step 3

Prepare a simple Excel graphic to illustrate the employee’s and the employer’s combined dollar contributions to FICA compared to those for the self-employed taxpayer to SECA from 1937 through 2009.

Step 4

Under current law, a taxpayer with a salary of $110,000 for 2009 would pay only 7.65% on the first $106,500. The same would be said for the employer. However, also under current law, any amount in excess of the $106,500 wage base and earned income amount for 2009 would be subject to the 1.45% Medicare contribution by both employer and employee, for a total of 2.9%.

In addition to the $16,294.50 from the above table, separately compute the amounts that the employee and employer would have to pay for Medicare, assuming a salary level of $110,000 for the 2009 calendar and tax year. Show your calculations.

Grading Rubric

Your project will be graded using the following rubric:

Criteria	Ratings	Pts
Step 1: Create Excel File with Wage Base and FICA Combine the wage base and FICA tax rates applied to these wage bases into a single Excel file. In the process, compute the maximum employee and employer contributions to Social Security, based only on the maximum wage base.	Excellent	Good	Average	Failing
25 – 22.5 pts	22.5-20 pts	20 – 17.5 pts	17.5 – 0 pts
Created an Excel file that includes all the correct wage base and FICA tax rates and corresponding columns. Columns include 1. Tax Year Wage Base 2. Wage Base 3. Percent FICA 4. Maximum. Correctly computed the maximum employee and employer contributions to Social Security based only on the maximum wage base.	Created an Excel file that includes a few minor errors on the wage base and FICA tax rates and/or columns are missing. Computed the maximum employee and employer contributions to Social Security based only on maximum wage base, but incorrectly computed either the employee or employer contributions.	Created an Excel file that includes numerous wage base and FICA tax rates errors and missing or incorrect columns. Incorrectly computed the maximum employee and employer contributions to Social Security based only on the maximum wage base	Failed to create an Excel file that includes all correct wage base and FICA tax rates or uploaded in the wrong file format with numerous errors of correct wage and tax information. Did not compute or incorrectly computed the maximum employee and employer contributions to Social Security based only on the maximum wage base
Step 2: SECA Tax Rates In the Excel file you completed in Step 1, add columns for the SECA tax rates applied to these wage bases. In the process, compute the maximum self-employed taxpayer’s contribution to Social Security, based only on the maximum wage base. Also add a column for both employer and employee FICA components, so that you can compare the combined employer and employee contributions to FICA to the SECA contributions.	All columns are added for SECA tax rates that apply to wage bases from Step 1. Correctly computed the maximum self-employed taxpayer's contribution to Social Security, based only on the maximum wage base. Added the correct column for employer and employee FICA data. The table includes the following columns: 1. Tax Year 2. Wage Base 3. FICA Percent 4. 2 Time Maximum FICE 5. SECA Percent 6. Maximum SECA with all correct data	All columns are added for SECA tax rates that apply to wage bases from Step 1. Minor errors exist in the computation of the maximum self-employed taxpayer's contribution to Social Security, based only on the maximum wage base. Minor errors exist in the column for employer and employee FICA data. The table includes the following columns: 1. Tax Year 2. Wage Base 3. FICA Percent 4. 2 Time Maximum FICE 5. SECA Percent 6. Maximum SECA with all correct data	Excel table has several missing or incorrect columns and errors exist in the added column for SECA tax rates that apply to wage bases from Step 1. Incorrectly computed the maximum self-employed taxpayer's contribution to Social Security, based only on the maximum wage base. Numerous errors exist in the columns for employer and employee FICA data. The table includes the following: 1. Tax Year 2. Wage Base 3. FICA Percent 4. 2 Time Maximum FICE 5. SECA Percent 6. Maximum SECA with all correct data	No submission or no columns were added with correct SECA tax rates and all or most information from Step 1 is missing. Failed to compute the maximum self-employed taxpayer's contributions. Columns were not added for the employer and employee FICA components.
Step 3: Excel Graphic Prepare a simple Excel graphic to illustrate the combined dollar contributions of employee and employer to FICA compared to those for the self-employed taxpayer to SECA from 1937 through 2009	An Excel graphic that provides comparisons, such as a pie chart or bar chart, is created. Includes all correct dollar contributions of employee and employer to FICA compared to the self-employed taxpayer to SECA from 1937 to 2009. The graphic is properly formatted and labeled.	An Excel graphic that provides comparisons, such as a pie chart or bar chart, is created. Includes minor errors in the dollar contributions of employee and employer to FICA compared to the self-employed taxpayer to SECA from 1937 to 2009. The graphic has minor formatting or labeling errors.	An Excel graphic that doesn’t show comparisons or is hard to read is included. Includes major errors in the dollar contributions of employee and employer to FICA compared to the self-employed taxpayer to SECA from 1937 to 2009. The graphic has several formatting or labeling errors	No Excel graphic that provides comparisons, such as a pie chart or bar chart, is created OR includes major errors OR doesn’t include the data in the dollar contributions of employee and employer to FICA compared to the self-employed taxpayer to SECA from 1937 to 2009. The graphic has major formatting or labeling errors.
Step 4: Compute Medicare Amounts In addition to the $16,294.50 from the above table, separately compute the amounts that the employee and employer would have to pay for Medicare, assuming a salary level of $110,000 for the 2009 calendar and tax year. Show your calculations.	Correctly computed the Medicare amounts for both the employee and employer based on the given figures.	Minor computation errors in the formula led to the Medicare amount to be incorrect for both the employee and employer based on the given figures. The learner still showed work and completed the computation steps in a logical manner.	Several computation errors in the formula led to the Medicare amount to be incorrect for both the employee and employer based on the given figures. Learner still showed work and but missed several steps in the computation formula.	No work was submitted OR major computation errors exist in the formula led to the Medicare amount to be incorrect for both the employee and employer based on the given figures. The learner did not show work and did not provide the steps in the computation formula to evaluate.
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