Unless you don't believe that wages are set by the market, the employer's portion definitely comes from your paycheck. If you dropped the social security tax on

Unless you don't believe that wages are set by the market, the employer's portion definitely comes from your paycheck. If you dropped the social security tax on the employer side, wages would rise (the employer doesn't care whether the money goes to the government or the employee). It's effectively an income tax. The accounting is slightly different, but that's just the name we give it. You can see another example of this in that the self-employed pay the full tax - in the limit of one person, the lack of a distinction becomes obvious. http://www.ssa.gov/OACT/ProgData/taxRates.html http://www.ssa.gov/OACT/ProgData/taxRates.html