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Exploring why we pay taxes and how the government uses that money to provide public services.
Have you ever wondered why a 1.07 at the register, or why the government takes a 'cut' of your paycheck before you even see it?
To understand how society functions, we must first identify the three main ways the government collects money. First is Income Tax, which is a percentage of the money you earn from a job. Second is Sales Tax, a fee added to the price of goods and services you buy. Finally, there is Property Tax, which is based on the value of real estate (like a house or land) that a person owns. These taxes are collected at different levels—federal, state, and local—to ensure that the government has the resources needed to operate. Think of taxes as a 'membership fee' for living in a community that provides shared benefits.
Quick Check
If you work a summer job and see a deduction on your paycheck, which of the three main taxes are you likely paying?
Answer
Income Tax
Why do we pay these fees? The answer lies in Public Goods. These are services provided by the government that are non-excludable (you can't easily stop people from using them) and non-rivalrous (one person using it doesn't stop another). Examples include infrastructure like roads and bridges, public safety like police and fire departments, and education through public schools. Without tax revenue, it would be nearly impossible for private individuals to build an entire highway system or fund a neighborhood park. By pooling our resources through taxes, we can afford large-scale projects that benefit everyone in the community.
Quick Check
True or False: A public park is considered a 'public good' because it is funded by tax revenue for everyone to use.
Answer
True
You want to buy a game for 5\%5\% = 0.0560 \times 0.05 = 3.0060.00 + 3.00 = 63.0063.00**
A laptop costs 20\%8\%500 \times 0.80 = 400400 \times 0.08 = 32400 + 32 = 432432.00**
Which type of tax is specifically based on the value of a home or land?
If an item costs 8\%$, what is the total cost?
Public goods, like national defense, are usually provided by private companies without any government tax funding.
Review Tomorrow
In 24 hours, try to recall the three main types of taxes and one specific public good each one might help fund.
Practice Activity
Next time you go to a store, look at your receipt. Identify the 'Subtotal' and the 'Tax' amount, then try to calculate the tax percentage yourself using: .