Taxes
Why do we pay taxes?
The government provides public goods and services for the community as a whole. To pay its bills, the government needs revenue, or a source of income. The money that the federal government uses to pay its bills comes mostly from taxes. Taxes shift resources from private individuals and businesses to the government.
Use this resource to explore lessons related to why we pay taxes.
There are 3 basic types of taxes a US citizen will pay
You will pay taxes on what you earn, taxes on what you buy, and taxes on what you own.
Use this resource to explore the three basic types of taxes.
Payroll Taxes: What is FICA?
FICA, or the Federal Insurance Contributions Act, consists of two payroll taxes that are paid for by employees and employers. Social Security makes up 6.2% and Medicare makes up 1.45% of the contributions per pay period.
We pay both Income Tax (Federal, State and Local) and Payroll taxes each pay period.
Click here for to see the difference between income tax and payroll taxes.