The Basics of Taxes
What are taxes?
Taxes are the sum of money determined by a _______________________to support the government
as well as specific facilities or services.
A taxpayer is a person who pays a tax to ________________________________________.
How do you benefit from the taxes you pay?
A community is a group of people with common ______________and __________for the common
good.
 Communities may include:
_________________________
_________________________
_________________________
_________________________
 Benefits of being part of a community:
Roads, public schools, __________________, police and fire departments,
______________for national security, recreation (parks, trails)
How do taxpayers pay taxes?
Income tax is paid on earned and unearned income.
 Earned income- money earned from working for pay.
o _________________and ________________earned from employment
 Unearned income-income received from sources other than employment
o ________________earned from saving account
Federal Income Tax
A tax on earned and unearned income. The _________________the income the more tax is paid.
 Who pays? The majority of people living in the US.
 Help fund? Operations of the ___________________ __________________ programs such as
education, defense of the nation and disaster relief.
State Income Tax
A tax on earned and unearned income. The __________________the income the more tax is paid.
 Who pays? People living in a state with a state income tax- not all states have a state income
tax
Payroll Tax
A tax on earned income that supports the Social Security and Medicare programs (also known as
____________); a set ___________of income

Helps fund? The Social Security and Medicare programs
o Social Security- provides income for ______________________, people with profound
disability, children who have lost a _________________, people with children who
have experienced the death of a spouse.
o Medicare- helps pay for health care for ________________citizens.
Property Tax
A tax on property such as _______________, _______________________, (including homes) and
________________________ ____________________.
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Determined by: a percentage of property ___________________the amount paid varies
depending on where you live
Who Pays? Property owners. The fee to license a car is a property tax
Helps fund? __________________, expenses of the state and local government
Sales Tax
A tax on purchased goods and services. A ________________________is added to the price of an
item.
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Who pays? Anyone who purchases an item in a state which charges a sales tax.
Helps fund? Expenses of state and local governments.
Excise Tax
Taxes collected from the seller or retailer and often remain ___________in the price of a product or
service.
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Examples: ______________, hotel rooms, airline tickets, cigarettes and alcohol
Who pays? Anyone who purchases certain items that are charged an excise tax. Excise taxes
vary by location.
Helps fund? Expenses of state and local governments
How are taxes determined?
Taxes are determined by public _______________________.