Why do we pay 10% of our paycheck to the government for taxes, and why/under what circumstances do we get it back in tax returns, or have to pay more in tax returns?
In: Economics
I am guessing you referring to the federal income tax, as that os rated between 10%-35% (or is it now 37%), and not the payroll tax which is an additional 7.65% on your first 120ishk something (I forget the number but I think that is close).
Taxes go to provide many of the things the federal government provides you, or provides others which allow them to more easily provide you things. For example, while some of your money is spent on roads in area’s you will never drive, it allows workers, trucks, and other supplies to use them which can make a difference in you getting that thing-a-gig from Amazon.
There are also indirect benefits which they provide such as law enforcement who combat the cartel constantly, which if you want to see what happens if they lose look at Mexico (sorry but yeah you are losing/lost that fight). You have the military who helps to stop groups like the Taliban (they probably wouldn’t want to try and rule the US, just using them as an example) who keep foreign groups at bay. Then you have internal terrorist groups who help stop extremist groups from ruling the country (would you really want the KKK or CHAZ/CHOP to become the new norm? look at some parts of Africa for how it would turn out).
Finally you have direct benefits that help you, maybe you get the EIC (Earned Income Tax Credit), or schools which provide reduced and free lunches (via federal tax money, a few exceptions exist in terms of where they get their funding), Medicare, Medicaid, Social security (retirement and don’t forget disability). They make your milk cheaper, and they pay farmers for growing vegetables which creates a artificial surplus allowing them to be cheaper. Even during COVID that tax money went to developing the vaccine, and supplying it.
That is of course just highlighting the upsides of it, there are negatives too keep in mind which I think you can figure out.
To your second part, if you pay too much or too little you then owe them or they owe you the money. When you fill in your tax form that is when the calculation is ran and the amount owed is determined. Your taxes throughout the year are simply prepayments on it, because I doubt you would want to fill in a tax form every month, so it is estimated and then once a year we do the calculation to determine how close we are.
Latest Answers