Types of Taxes in the United States

Summary

This video script explores various types of taxes in the United States, starting with income tax, which is the government's primary revenue source. It covers taxes such as property, sales, estate, and gift taxes, alongside social security and Medicare taxes. The script also delves into tariffs on imported goods and alternative revenue streams for the government, like land leasing and fines. Additionally, the video highlights how tax revenue is used, including government expenditures on goods, services, and transfer payments like welfare and Social Security, ultimately illustrating the government's tax structure and spending priorities.

Takeaways

• 😀 Income tax is a tax on the income earned by individuals and businesses, with personal income tax often withheld directly from paychecks.
• 😀 The 16th Amendment, passed in 1913, gave the federal government the power to levy income tax.
• 😀 Corporate income tax is based on a business's annual profits, while both personal and corporate income taxes are progressive.
• 😀 Property tax is paid on property, including real estate, and is the primary source of revenue for local governments.
• 😀 Sales tax is a tax on products purchased, including both general sales tax and excise taxes on specific items like gasoline, cigarettes, and alcohol.
• 😀 Estate tax is a tax on property or money left behind after someone's death, applicable if the estate exceeds $5.49 million.
• 😀 The gift tax is levied on gifts worth more than $14,000 per year.
• 😀 Social Security tax, which funds income for the elderly and disabled, is 15.3% and is paid by both employees and employers.
• 😀 Medicare tax, used to fund health insurance for the elderly and disabled, is also deducted from paychecks.
• 😀 Tariffs are taxes on imported goods, used to encourage the purchase of American-made products.

Q & A

What is income tax, and how is it collected?

Income tax is a tax on the income earned by individuals or businesses. It is usually collected through withholding, where a portion of the individual's earnings is automatically deducted from their paycheck by employers and sent to the government.

What is the significance of the Sixteenth Amendment in relation to income tax?

The Sixteenth Amendment, passed in 1913, granted the federal government the power to levy an income tax, allowing them to collect taxes based on the income individuals and businesses earn.

How does withholding help in the collection of income taxes?

Withholding helps by automatically deducting the income tax from an individual's paycheck. This makes it easier for individuals to pay taxes and for the government to collect them throughout the year, reducing the burden during tax filing.

What is corporate income tax, and how is it different from personal income tax?

Corporate income tax is a tax on the annual profits of businesses. Unlike personal income tax, which is based on individual earnings, corporate income tax is assessed on the profit a business generates.

What is the purpose of property tax, and how is it determined?

Property tax is a tax levied on the value of property, such as real estate. It is determined by an assessor who evaluates factors like the size, location, and condition of the property, then applies a percentage of the property’s value as tax.

What is the difference between general sales tax and excise tax?

General sales tax applies to most goods purchased, while excise taxes are applied to specific items like gasoline, cigarettes, and alcohol. Excise taxes are often referred to as 'sin taxes' due to the nature of the items they are applied to.

What is an estate tax, and when is it levied?

An estate tax is a tax on the property or money left behind when a person dies. It is levied when the value of the deceased person's estate exceeds $5.49 million, at which point the federal government may take a portion of it.

What is the gift tax, and what are the current limits for gifting?

The gift tax is a tax on gifts given that exceed a certain value. Currently, if a person gives a gift worth more than $14,000 per year to an individual, they are required to pay the federal government a percentage of the gift’s value.

What are Social Security and Medicare taxes, and how are they paid?

Social Security and Medicare taxes are deductions taken from employees' paychecks to fund benefits for the elderly, disabled, and other eligible individuals. These taxes are each a percentage of earnings, with both employees and employers contributing.

What is a tariff, and why does the U.S. government impose them?

A tariff is a tax on imported goods. The U.S. government imposes tariffs to encourage the purchase of domestically produced goods by making imported goods more expensive.