Asked by Amelia Bishop on May 19, 2024
Verified
Which statement is true?
A) A person earning $100,000 pays $10,000 in payroll tax.
B) Most taxpayers pay more in payroll tax than in personal income tax.
C) The Medicare tax rate is 6.2%.
D) There is no such thing as a regressive tax.
Payroll Tax
Taxes imposed on employers or employees, usually calculated as a percentage of the salaries that employers pay their staff.
Personal Income Tax
A levy imposed by governments on the income of individuals, where the tax rates typically vary based on income levels.
Medicare Tax
A tax that funds Medicare, a U.S. government health insurance program for individuals aged 65 and over or with certain disabilities.
- Understand the role and mechanisms of Social Security and payroll taxes.
- Recognize the impact of taxes on different income groups.
Verified Answer
KM
Kudzie MagadaMay 23, 2024
Final Answer :
B
Explanation :
Most taxpayers, especially those in lower and middle-income brackets, tend to pay more in payroll taxes (which fund Social Security and Medicare) than in personal income taxes. This is because payroll taxes are levied at a flat rate on wages up to a certain cap, while income taxes are progressive, meaning the rate increases as income rises.
Learning Objectives
- Understand the role and mechanisms of Social Security and payroll taxes.
- Recognize the impact of taxes on different income groups.