Understanding Taxes

1. Purpose:
   • Taxes finance essential public services like education, infrastructure, and national defense.
   • They ensure the welfare of society through community programs and resources.
2. Types:
   • Income Taxes: Based on earnings from salaries, wages, or investments.
   • Payroll Taxes: Fund Social Security and Medicare programs.
   • Property Taxes: Levied on real estate values.
   • Sales Taxes: Applied to goods and services.
   • Excise Taxes: Target specific goods like alcohol, gasoline, or tobacco.
3. Tax Systems:
   • Progressive: Higher earners pay a higher percentage (e.g., U.S. federal income tax).
   • Flat Tax: Uniform tax percentage for all income levels (used in some states).