Video Transcript: What are Taxes?

Hello, welcome. We're going to discuss taxes. What are taxes? Taxes are a sum demanded by government to support the government itself as well as specific  facilities or services. So without taxes, our governments can't operate, right?  They can't provide services to our communities on a federal, state and local  level. They're paid by taxpayers, a person who pays a tax to national, state,  county or municipal, which is a city or a town government. So the community is  a group of people with a common interest and concern for the common good.  You can look in the United States, where we are broken down by states and  counties and cities, and all of them impose taxes. Right? The United States,  federal government, they impose taxes. Your state imposes taxes, your county  and your local municipality may also charge taxes like land taxes. What are the  benefits of being a part of these communities? Right? We give roads, public  schools, libraries, police departments, fire departments, right? They take care of  our recreation and parks, military for national security. So we benefit by paying  taxes. Are you better being in a community than by yourself. As a community  member, you receive many benefits that you may not be able to receive as an  individual, because collectively, taxes are taken so the sum of those taxes are  greater, so they can provide more services for the common good of the people.  Taxes are a way members of a community provide for one another. Again, we all share in these costs. We are all divvied into the same pot, and then some of us  may pay more in taxes than others, but they are all going to be distributed for  the common good and welfare of the people. How do you benefit from taxes?  Make a list of things you use or benefit from that were funded at least in part by  taxes. Think about it. What do you use or what do you consume that was funded by the government through taxes? How do these items contribute to your well  being? How do they help you? What would you do if you didn't have these  items, how would you go about maintaining the roads or things like that, right?  So let's make sure that we know the benefits of taxes. How do taxpayers pay  taxes? Through income tax, payroll tax, property tax, sales tax, excise tax, all of  us pay these types of taxes, right? So we're going to continue to pay taxes, I'm  pretty sure, components of income tax. So typically the federal income tax, and  depending on where you live, what state, you may or may not, pay an income  tax for your state. So But typically, federal and state income taxes are the major  components of how prepaid taxes in the United States, the Federal income tax  is determined by how much you've earned and unearned income. Higher  income equals more tax paid. Who is it paid by majority of people living in the  United States pay taxes helps fund operations of the federal government,  government programs such as education, defense of the nation and disaster  relief. So the state income tax is earned and unearned income. Higher income  equals more tax paid, just like the federal those living in states with a state  income will pay those taxes. Not all states have a state income tax. Again, it  helps fund state highways and the operations of the government. So just those 

fundamental services that the government provides is funded by our tax dollars.  So the payroll tax is a percentage of income that is deducted out of your  paycheck. If you're self employed, you may have to you'll file a 1099, and you'll  pay your taxes in a lump sum at the end of the year, individuals who earn  income from working for pay, right? So that's how people pay taxes through  payroll and employers deduct that out. It helps fund social security program and  Medicare. So we'll talk more about Social Security and Medicare. What is Social Security income for retirees, people with profound disabilities, children who have lost a parent, a person with children who has experienced a death of a spouse.  So we trying to secure our society through a basket of. The cash has been  taking in through taxes and dispersing it to people who really, really need it,  6.2% of earned income was charged for Social Security decreased to 4.2% for  2011 2012 which it remains, up to an annual maximum of 4.2% what is  Medicare? Purpose of Medicare is it helps to pay for the health care costs of  senior citizens. So we want to make sure that they're taken care of, and, you  know, and making sure that their health care is provided for because as we age, we may have more health issues, and we want to make sure that these people  payed the way for us. Let's take care of them, 1.45% is what is paid out on  Medicare taxes for each of us. Employers also pay Social Security and  Medicare match their employer tax contributions, so your employers are also  matching, which adds to the pot of taxes to help redistribute those funds to  ensure our social welfare is provided for