How is tax money used by the government? Wonder What's Next? Try It Out Are you ready to pay up? Be sure to check out the following activities with a friend or family member: Although you won't have to worry about paying income taxes until you have a job, there is one tax you're probably already familiar with: sales tax.
The next time you head to the store, bring a calculator with you. As you travel the aisles of the store, look at the prices of products. Use the calculator to figure out how much each product would be if you purchased it.
It's important to remember sales tax when you start saving up for an important purchase you want to make. Always remember to calculate how much an item will cost — after tax — so you'll be sure you have enough money when it's time to head to the store! Talk with an adult friend or family member about their views on taxes. Do they think they pay too much in taxes? Why or why not? What kinds of things do they think their tax money should be used for?
Are there things that governments spend money on that they don't think is worth it? Ask for examples, if so. What kinds of avenues exist for objecting to the way your tax money is spent? Ask an adult friend or family member to go with you on a walk or take you for a drive around your hometown. Bring along a piece of paper and a pencil.
As you walk or drive around, look for examples of your tax dollars at work. Do you see roads being repaired? Is there a public library in your town? What about police and firefighters? Try to come up with a list of at least 10 examples of your tax dollars at work. You might be surprised at how far your tax dollars go to provide services shared by everyone in your community!
Did you get it? Test your knowledge. What are you wondering? Wonder Words year federal legislator executive withheld revenue percentage property civic penalty fortunate refund form duty job income expense resource Take the Wonder Word Challenge.
Join the Discussion. JJ Jan 30, Jan 30, How taxation is connected to our economy and Why do we need to pay tax? Jan 15, Great questions for a Wonder Journey--or a read through your textbook! Tony Oct 5, Sans Jan 29, Oct 15, Erika Feb 21, Feb 24, Hi, Erika!
Feb 5, A Nov 6, Nov 8, John Oct 5, This article is kind of misleading, we stay with a question like "why do we have to pay taxes" but that isn't really answered, it does day because it's required by law but what does that mean?
It means the government rulers claim the right to force all tax payers to find the things they prefer for the prices they choose Taxation is theft by definition, more specifically extortion; "tax noun a compulsory contribution to state revenue, levied by the government on workers' income and business profits or added to the cost of some goods, services, and transactions.
Fiona Oct 18, Kj Sep 11, How do you pay taxes, what do u need to do Could u guide me through the process. Sep 17, Alex May 21, May 23, We appreciate you sharing your thoughts with us, Alex! Apr 2, We hope that reading through this Wonder will help answer your question, klk! I would like to say thank you to Chrysler kings financial investment for all the things they have helped me with.
I have a large family, and every time we have had a crisis Chrysler kings Loan finance has helped us out. Jan 5, B Dec 3, Dec 5, Hi, B! April 15 is "tax day" - hope this helps!!
Dear All, " During the middle decades of the fourteenth-century, the average tax-paying peasant would had to pay the equivalent of 32 grams of silver to the royal treasury.
Jun 5, That's some interesting research! Thanks for sharing! Nessy May 31, Jun 2, Wenhua Chen May 21, May 16, No, but we CAN give you a new Wonder every day! May 19, Answer: Steph Curry. Jan 4, Kaitlyn Galaydick Sep 22, I need the author of this article for school!! I need it really quick!!?? Please help?! Sep 23, Nov 14, Peppapig21 Aug 22, Aug 23, Thanks for sharing your thoughts, Peppapig21!
Tyson Aug 22, Some of these projects include:. Without taxes, government contributions to the health sector would be impossible. Taxes go to funding health services such as social healthcare, medical research, social security, etc. Education could be one of the most deserving recipients of tax money.
Governments put a lot of importance in development of human capital and education is central in this development. Money from taxes is channeled to funding, furnishing, and maintaining the public education system. Governance is a crucial component in the smooth running of country affairs.
Poor governance would have far reaching ramifications on the entire country with a heavy toll on its economic growth. Good governance ensures that the money collected is utilized in a manner that benefits citizens of the country.
This money also goes to pay public servants, police officers, members of parliaments, the postal system, and others. The money could be income earned from salary, capital gains from investment appreciation, dividends or interest received as additional income, payment made for goods and services, etc. Tax revenues are used for public services and the operation of the government, as well as for Social Security and Medicare.
As baby boomer populations have aged, Social Security and Medicare have claimed increasingly high proportions of the total federal expenditure of tax revenue. Throughout U. On the other hand, tax avoidance —actions taken to lessen your tax liability and maximize after-tax income—is perfectly legal.
Most governments use an agency or department to collect taxes. There are several very common types of taxes:. Below, we will take a look at various tax situations in the United States. Generally speaking, the federal government levies income, corporate, and payroll taxes; the state levies income and sales taxes; and municipalities or other local governments mainly levy property taxes.
Like many nations, the United States has a progressive income tax system, through which a higher percentage of tax revenues are collected from high-income individuals or corporations than from low-income individual earners. Taxes are applied through marginal tax rates. A variety of factors affect the marginal tax rate that a taxpayer will pay, including their filing status— married filing jointly , married filing separately , single , or head of household.
Which status a person files can make a significant difference in how much they are taxed. Capital gains taxes are of particular relevance for investors. Levied and enforced at the federal level, these are taxes on income from the sale of assets in which the sale price was higher than the purchasing price.
These are taxed at both short- and long-term rates. Tax records should be maintained to substantiate the length of ownership when both the assets were sold and the tax return was filed. In , employees pay 1. Payroll taxes have both an employee portion and an employer portion. The employer remits both the employee portion, described above, and a duplicate amount for the employer portion.
The employer rates are the same 6. Therefore, the total remitted is Payroll taxes are specifically to fund Social Security and Medicare programs. A self-employed individual must pay the equivalent of both the employee and employer portion of payroll taxes through self-employment taxes , which also fund Social Security and Medicare.
Sales taxes are charged at the point of sale , when a customer executes the payment for a good or service. The business collects the sales tax from the customer and remits the funds to the government.
Different jurisdictions charge different sales taxes, which often overlap, as when states, counties, and municipalities each levy their own sales taxes.
As of , the highest average state and local sales tax rate is found in Tennessee, at 9. Alaska does allow municipalities to charge local sales tax. A common property tax in the United States is the real estate ad valorem tax. One of the key issues is corruption. When taking a step back, and looking at why for some countries tax revenue does not increase in the first place, we come across another key issue: tax dodging. During my work at Oxfam, I have come across a perfect example of a country that experiences both issues.
While co-writing the report, I found that Nigeria is struggling with two of the key issues mentioned above: corruption and tax avoidance. Lawmakers make 63 times the GDP per capita [4] Tax incentives are managed in a non-transparent way, and there are multiple cases of companies getting away with not paying taxes. If there is corruption, how will the public ever see healthcare and education improve in quality?
And, why would they pay taxes in the first place if there is no trust in the government? The Netherlands is one of the biggest tax havens and while corruption does not play a major role per se, tax avoidance here is enormous and is in that sense not an exemplary country. How to go about it? Team is battling unceasingly.
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