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Taxes are what you pay that goes to the government to pay programs such as public schools.
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What Are Taxes?

Taxes are mandatory contributions levied on individuals or corporations by a government entity-whether local, regional, or national. Tax revenues finance government activities, including public works and services such as roads and schools, or programs such as Social Security and Medicare.

In economics, taxes fall on whoever pays the burden of the tax, whether this is the entity being taxed, such as a business, or the end consumers of the business's goods. From an accounting perspective, there are various taxes to consider, including payroll taxes, federal and state income taxes, and sales taxes.

Understanding Taxes

To help fund public works and services-and to build and maintain the infrastructure used in a country-a government usually taxes its individual and corporate residents. The tax collected is used for the betterment of the economy and all who are living in it.

In the United States and many other countries in the world, income taxes are applied to some form of money received by a taxpayer. The money could be income earned from salary, capital gains from investment appreciation, dividends or interest received as additional income, payments made for goods and services, and so on.

Tax revenues are used for public services and the operation of the government, as well as for Social Security and Medicare. As the large baby boomer generation has aged, Social Security and Medicare have claimed increasingly high proportions of the total federal expenditure of tax revenue. Throughout U.S. history, tax policy has been a consistent source of political debate.

A tax requires a percentage of the taxpayer's earnings or money to be taken and remitted to the government. Payment of taxes at rates levied by the government is compulsory, and tax evasion-the deliberate failure to pay one's full tax liabilities-is punishable by law. (On the other hand, tax avoidance -actions taken to lessen your tax liability and maximize after-tax income-is perfectly legal.)

Most governments use an agency or department to collect taxes. In the United States, this function is performed federally by the Internal Revenue Service (IRS).

Types of Taxes

There are several very common types of taxes:

Income tax-A percentage of generated income that is relinquished to the state or federal government

Payroll tax-A percentage withheld from an employee's pay by an employer, who pays it to the government on the employee's behalf to fund Medicare and Social Security programs

Corporate tax-A percentage of corporate profits taken as tax by the government to fund federal programs

Sales tax-Taxes levied on certain goods and services; varies by jurisdiction

Property tax-Based on the value of land and property assets

Tariff-Taxes on imported goods; imposed with the aim of strengthening domestic businesses

Estate tax-Rate applied to the fair market value (FMV) of property in a person's estate at the time of death; the total estate must exceed thresholds set by state and federal governments

Tax systems vary widely among nations, and it is important for individuals and corporations to carefully study a new locale's tax laws before earning income or doing business there.

Below, we will take a look at various tax situations in the United States. Generally speaking, the federal government levies income, corporate, and payroll taxes; the state levies income and sales taxes; and municipalities or other local governments mainly levy property taxes.

Like many nations, the United States has a progressive income tax system, through which a higher percentage of tax revenues are collected from high-income individuals or corporations than from low-income individual earners. Taxes are applied through marginal tax rates.

A variety of factors affect the marginal tax rate that a taxpayer will pay, including their filing status- married filing jointly, married filing separately, single, or head of household. Which status a person files can make a significant difference in how much they are taxed. The source of a taxpayer's income also makes a difference in taxation. It's important to learn the terminology of the different income types that may affect how income is taxed.

Capital gains taxes are of particular relevance for investors. Levied and enforced at the federal level, these are taxes on the profit generated when you sell an asset that's increased in value.

The rate of taxation on the profit depends on the length of time for which the asset was held. Short-term capital gains (on assets sold one year or less after they were acquired) are taxed at the owner's ordinary income tax rate, whereas long-term gains on assets held for more than a year are taxed at a lower capital gains rate-based on the rationale that lower taxes will encourage high levels of capital investment. Tax records should be maintained to substantiate the length of ownership when both the assets were sold and the tax return was filed.

Payroll Taxes

Payroll taxes are withheld from an employee's paycheck by an employer, who remits the amount to the federal government to fund Medicare and Social Security programs. In 2023, employees will pay 1.45% into Medicare on all wages and 6.2% into Social Security on the first $160,200 earned, up from $147,000 in 2022.

Payroll taxes have both an employee portion and an employer portion. The employer remits both the employee portion, described above, and a duplicate amount for the employer portion. The employer rates are the same 6.2% for Social Security up to the wage base limit, and 1.45% for Medicare on all wages. Therefore, the total remitted is 15.3% (6.2% employee Social Security + 6.2% employer Social Security + 1.45% employee Medicare + 1.45% employer Medicare).

Payroll taxes and income taxes differ, although both are withheld from an employee's paycheck and remitted to the government. Payroll taxes are specifically to fund Social Security and Medicare programs. A self-employed individual must pay the equivalent of both the employee and employer portion of payroll taxes through self-employment taxes, which also fund Social Security and Medicare.

Corporate Taxes

Corporate taxes are paid on a company's taxable income. The steps to calculate a company's taxable income are:

The corporate tax rate in the United States is currently a flat rate of 21%. Before the Tax Cuts and Jobs Act (TCJA) of 2017, the corporate tax rate was 35%.

In August of 2022, the United States Congress passed a new 15% corporate minimum tax into law as part of the Inflation Reduction Act of 2022. This new minimum tax only affects U.S. corporations with three-year average book values of $1 billion or more and foreign corporations with three-year average U.S. income over $100 million.

Sales Taxes

Sales taxes are charged at the point of sale when a customer executes the payment for a good or service. The business collects the sales tax from the customer and remits the funds to the government.

Each state can implement its own sales taxes, meaning they vary depending on location. There's even room for cities and counties to use their own rates, provided that they abide by the taxing rules of their state.

In 2022, the highest average state and local sales tax rate was found in Tennessee, at 9.55%. Five states-Alaska, Delaware, Montana, New Hampshire, and Oregon-did not have a state sales tax, although Alaska did allow municipalities to charge local sales tax.

Property Taxes

A common property tax in the United States is the real estate ad valorem tax. A millage rate is used to calculate real estate taxes; it represents the amount per every $1,000 of a property's assessed value. The property's assessed value is determined by a property assessor appointed by the local government. Reassessments are typically performed every one to five years.

Property tax rates vary considerably by jurisdiction and many states also tax tangible personal property, such as cars and boats.

In FY 2018, the state with the highest property tax collections per capita was New Jersey at $3,378. (The District of Columbia would rank higher if it was counted with the 50 states, at $3,740 per capita.) The lowest state ranking was $598 per capita in Alabama.

A tariff is a tax imposed by one country on the goods and services imported from another country. The purpose is to encourage domestic purchases by increasing the price of goods and services imported from other countries.

There are two main types of tariffs: fixed fee tariffs, which are levied as a fixed cost based on the type of item, and ad valorem tariffs, which are assessed as a percentage of the item's value (like the real estate tax in the previous section).

Tariffs are politically divisive, with debate over whether the policies work as intended.

Estate Taxes

Estate taxes are levied only on estates that exceed the exclusion limit set by law. In 2023, the federal exclusion limit is $12.92 million, up from $12.06 million in 2022. Surviving spouses are exempt from estate taxes.

The estate tax due is the taxable estate minus the exclusion limit. For example, a $14.7 million estate would owe estate taxes on $1.78 million.

The estate tax rate is a progressive marginal rate that increases from 18% to 40%. The maximum estate tax rate of 40% is levied on the portion of an estate that exceeds the exclusion limit by more than $1 million.

States may have lower exclusion limits than the federal government, but no state taxes estates worth less than $1 million. Massachusetts and Oregon have the $1 million exemption limits. State rates are also different from the federal rate. In 2022, the highest state estate tax rate, implemented in Hawaii and Washington, was 20%.

Estate taxes are different from inheritance taxes in that an estate tax is applied before assets are disbursed to any beneficiaries. An inheritance tax is paid by the beneficiary. There is no federal inheritance tax, and, as of 2022, only six states have an inheritance tax: Iowa, Kentucky, Maryland, Nebraska, New Jersey, and Pennsylvania.

Tax Delinquency

Every type of tax has a different due date or reporting requirement. Some are collected immediately at the time of a transaction or leading up to a transaction like sales taxes or tariffs. Others are on a fixed recurring schedule with a due date repeating on a specific date or specific day/month combination (i.e. property taxes being due the first day of April). The due dates for similar types of taxes will vary across governing bodies (i.e. different counties will have different property tax due dates).

Upon failure to remit the appropriate amount of a tax to the taxing authorities, various penalties may be incurred. Regarding the various taxes mentioned above, tax penalties may include:

A penalty assessment resulting in a one-time fee or charge.

An interest assessment resulting in an escalating penalty based on the duration of the delinquency.

A lien placed on underlying assets in the event the delinquent party should be unable to satisfy their debts.

A denial of access or service for transaction-related taxes (i.e. tariffs).

A seizure of company property or placement of a lien on the company property for business-related taxes.

Why Do We Pay Taxes?

How Do Income Taxes Work in the U.S.?

Are U.S. Taxes Low?

Who Needs to Pay Taxes?

What Are Different Types of Taxes?

The Bottom Line

There are many types of taxes that are applied in various ways. Understanding what triggers a tax situation can enable taxpayers to manage their finances to minimize the impact of taxes. Techniques that can help include annual tax-loss harvesting to offset investment gains with investment losses, and estate planning, which works to shelter inherited income for heirs.

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Taxes Definition: Types, Who Pays, and Why

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Taxes are a mandatory contribution levied on corporations or individuals to finance government activities and public services.

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This Website will help you answer the 1st HIT.
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10 Ways Clean Water can Change the World

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An informative infographic detailing the many ways access to clean water can change our world.

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This Website will help you with the words "Democratic Principles".

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The Website will help you about the main question also part of included in Hit #2.

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As we celebrate once again the anniversary of our nation's Declaration of Independence, we can rightfully take pride in its recognition that all men are "endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." These words remind those in government, not just in this country but in all nations, of the limits of their power, a moral boundary that must never be violated if the government is to retain its legitimacy.

Yet it is crucial for us to revisit this patrimony. I have no doubt most Americans can recite these words from memory; but I have great doubts that Americans interpret them in the same way. This is why these words should not merely be a text displayed in the museum of national memory. Rather, they need to be the principles that illuminate public debate and guide public reason. John Courtney Murray, SJ, reflected on the American political tradition in his book We Hold These Truths. He begins his analysis by reminding the reader that civilization is formed by men who create a community through deliberation. Thus, at the heart of every civilization, there must be an ongoing argument concerning the values that hold the people together. This argument must be made continually, for the people must be convinced that these values are true, and that there is in fact agreement about their meaning. Murray recognizes that without this argument, society would lack a stable foundation: "In the public argument there must consequently be a continued recurrence to first principles. Otherwise the consensus may come to seem simply a projection of ephemeral experience, a passing shadow on the vanishing backdrop of some given historical scene, without the permanence proper to truths that are 'held.'"

It has become a cliché that America is a divided country. It is clear there is little agreement about the meaning of even these most basic principles. The right to life is questioned, especially for those at the beginning of life and those near its end; the idea of liberty has come to be understood as a libertine autonomy which pursues unfettered individual expression as the sole goal of life; and the pursuit of happiness is no longer seen to be the common good pursued by men together, but is now taken to license radical anti-social individualism. Each of these trends erode society, for if we lack agreement on these basic principles, we cannot hope to attain agreement on more controversial issues. If America is to survive as a civilization, we need to engage the public argument in order to rediscover the real meaning of these rights; we must agree on them as the common principles that constitute our moral union as a nation.

Our Rights Grounded in Human Nature
I would suggest that the founding principles of "Life, Liberty, and the pursuit of Happiness" can only be properly understood from the perspective of natural law. The natural law insists that rights are grounded in the reality of human nature. Human nature is a universal and unchanging reality which remains the same all over the world and throughout history. It is therefore an objective referent that can be discovered by reason anytime and anywhere. Only if we define rights as they are understood by the natural law can we be confident that there is reasoned agreement between citizens. Furthermore, we can also know that we are in agreement with the Founders who wrote the Declaration as well as all those generations who will inherit this nation from us. Thus, only through a natural law argument can an objective notion of rights be delineated. One may object that the founders were not directly influenced by St. Thomas and the Catholic natural law tradition; nevertheless, it is clear that the natural law permeated their thinking indirectly through the shared Christian culture and the heritage of British common law.

If it is true that we are a divided nation, I would suggest that the ultimate source of our divisions today lies in our radically divergent understanding of rights. In recent decades, the concept of a "right" has been separated from its objective grounding in human nature, and so it has become a purely theoretical reality which is infinitely malleable. Traditionally, the idea of right ( ius) implied an objectively correct state of affairs wherein a human being behaves and is treated in a manner befitting that human nature. In contrast to this, modern philosophy has abolished the idea of a universal human nature. Thus, rights can no longer be defined according to these objective moral relations. In place of this objective foundation, rights now arise from mere subjective preferences which are to be protected from any interference by others. The sanctity of individual preference soon balloons to include the idea of entitlements, preferences that should be supplied for by others. A brief consideration of the public debates will amply demonstrate how there is no limit to what some will now claim in the name of rights: homosexual "marriage," euthanasia, free health care, and even a universal minimum income. Thus, without human nature as an objective reference to determine what constitutes a right, the idea becomes an empty variable upon which individuals project the most arbitrary of preferences.

Against this modern notion of rights, let us consider what the natural law tradition says. In his seminal study The State in Catholic Thought, Heinrich Rommen defines a right as "that conformity to human social nature of social acts and relations between persons and between persons and things." It is human nature itself, and in particular his social nature which implies necessary relations with other men, which determines what sorts of acts and relations are correct. Because they are grounded in human nature, these rights are not given by the state, much less dreamt up according to individual preference. Rather, they reflect what is necessary if a man is to realize everything of which human nature is capable, that is, to attain a correct relation with human nature itself. It is here in particular that I think some basic concepts from St. Thomas Aquinas can help to elucidate the meaning of "Life, Liberty, and the pursuit of Happiness" as they relate to the reality of human nature.

Thomistic Explanation of the Declaration
A fundamental doctrine of Thomas's account of the natural world is that there is an essential relation between what something is and what that thing does. If we see a tree with apples, we know it must be an apple tree since no other tree is capable of growing apples. In the same way, I would plant an apple tree in the hope to harvest apples, knowing that the nature of the tree is oriented to the act of growing apples. Thomas refers to this as a relation between "first act" and "second act," with each "act" being a mode of reality. What something really or actually is (first act) determines what something really or actually does (second act). So, for example, he says, "There are two kinds of perfection, first and second. First perfection is the form of each thing, and that by which it has its act of existing.... Second perfection is operation, which is the end of a thing or the means by which a thing reaches its end." Notice that there is an important difference between these two kinds of reality. What a thing is, its first act, remains constant and unchanging as long as the thing continues to exist. But what a thing does is constantly changing: in a few minutes I might be sitting, walking, thinking, and sleeping. Moreover, what a thing "does" also includes attaining properties, like weight, complexion, and location, which are also changing. Thus, all natural beings are in a constant state of development and change with respect to their properties, but the thing itself remains stable as the underlying cause of these changing properties.

But this fact of changing properties also reveals another important truth. The changes that occur are not normally capricious, but manifest a systematic order: all the activities and properties are directed to one activity that is the ultimate goal for which nature exists. For example, all the changes an apple tree goes through, from germination to growing flowers, are ordered to the growing of fruit. In fact Thomas says that God creates natures for the sake of the activity, for that activity is essential for the perfection of the universe as a dynamic whole. Thus, he says, "Indeed, all things created would seem, in a way, to be purposeless, if they lacked an operation proper to them; since the purpose of everything is its operation. For the less perfect is always for the sake of the more perfect: ...so the form which is the first act, is for the sake of its operation, which is the second act; and thus operation is the end of the creature."

And what is the activity to which human nature is directed? It is happiness. But happiness is the goal of human nature, common to all people, and so is an objective truth. Happiness most emphatically is not something that each person is free to define for himself. Just as an apple tree finds its perfection in growing apples, happiness as the perfection of human nature must be defined in terms of the distinctive powers that set humans apart from other natures: reason and free will. Accordingly, happiness is the activity of growing in wisdom and love, an activity that can only find completion in the Beatific Vision in which we know the Truth itself and love God who is goodness itself. Nevertheless, in this world man is called on to attain a limited happiness; and this fact is the source of human rights. Rights are derived from whatever is necessary for man to attain happiness in terms of wisdom and love.

Correctly Understanding Life, Liberty and the Pursuit of Happiness
Let us apply this back to the Declaration. The natural law can reveal a very specific meaning to our right to life and the pursuit of happiness. Aristotle argues that life is the being of living things; that is, the very existence of animate beings is tied up with life. The powers of life, which in man includes the powers of reason and will, are caused by the presence of a soul, which is, as Aristotle says, the form of the body. So we can see that the right to life relates to our first act as an individual entity, for as long as we exist as a living human being, we have the ability to grow in wisdom and love. Therefore, from the moment of conception to natural death, as long as a soul is present, a human being has a right to exist.

But humans live so that they may attain happiness. Thus, humans have a right to act in that most human way, to grow in wisdom and love. That is, since the goal of human existence lies in the exercise of reason and will, we have a right to be able to develop our intellect by growing in knowledge of truth and to perfect the will's love of the good by delighting in the goodness of creation. It is clear, though, that for man to flourish in this way there needs to be more specific rights enabling the use of reason and will. Since knowledge grows through conversing with others, and love grows through friendship, these other rights focus on the necessary relations man has to others. Unlike so many of our contemporaries, however, who demand rights that reflect our random preferences, we can look to the Decalogue for guidance to know what humans really need. So, for example, there is a right to freedom of religion so we can know that God is in whom our ultimate happiness lies. Also, one needs a stable society in which peace is secured and justice protected, so there are authorities who have the right to be obeyed when deciding for the common good. In addition, a person has a right to a private family life as the first school of virtue, and so the sanctity of marriage must be protected. There are also rights to private property, so that one can attain maturity and independence by exercising stewardship. And if we are to grow in wisdom, there is a right to truthful communication with other people. In this way, as St. John Paul argued in Veritatis Splendor, the Decalogue indicates those rules that must be observed if we are to gain the happiness we all desire.

This leaves the Declaration's right to Liberty. Again, Thomas's philosophy can shed great light. In Thomas's philosophy, "act" is always correlated with "potency." While act is what something really is, potency indicates the ability to be other or change. The reason why our actions and properties are changing is that the nature has the potency to do something else: I am sitting, but can stand; I am heavy, but can lose weight; I am pale, but can tan. So, even though natures exist for the sake of their activity, it is also obvious that not all natures actually reach that activity: not all apple trees bear fruit, and not all humans grow in wisdom and love. However, each entity certainly has the power or inclination to attain its end. This is the potency inherent in any human being, whether or not he ever gets to happiness.

As mentioned earlier, the peculiar power by which a human being attains his end is through proper use of his reason and free will; it is through this potential that we achieve happiness. But reason and will are the source of human freedom, because we can know reality objectively and judge what ought to be done. So, while animals act on instinct alone, human beings have to exercise deliberative judgment. This choice is "right" if it conforms to the reality of human nature by maximizing wisdom and love, and wrong inasmuch as it departs from attaining wisdom and love. Liberty, then, is an ordered freedom, an exercise of choice for the sake of an objective notion of happiness. This is in stark contrast to how the right to Liberty has been interpreted in recent decades as an utterly unrestricted power. This is best exemplified in the notorious "mystery clause" from the Supreme Court's 1992 Casey decision: "At the heart of liberty is the right to define one's own concept of existence, of meaning, of the universe, and of the mystery of human life." If this were the liberty defended by the Declaration, we could never have formed a society at all. Correctly interpreted, liberty does not mean we can do anything at all; it means that we can work toward happiness in a multiplicity of ways. Pace Justice Kennedy's remarkable notion of liberty, man is not free to determine the nature of reality, especially the reality of human nature and the happiness that flows from it. Nevertheless, we do have freedom, for God has given different gifts to different people, and each must realize the vocation to which God has called him; our liberty lies in the ability to realize that for which we were created.

Our nation has prospered by protecting the rights to Life, Liberty, and the pursuit of Happiness. However, in recent decades, as we have forgotten both human nature and the God who created it, these principles have been interpreted in fanciful and destructive ways, causing seemingly insuperable divisions in society. If we take up the public argument required of every civilized people, we can restore the true meaning of these rights. To do so, we need only remember the most basic axiom of Thomistic philosophy: action follows from being. By attending to this, we can protect life in its entirety, and define liberty and happiness according to the truth of human nature, thereby securing the common good longed for by those who first founded the United States in the name of universal human rights.
Editor's note: Pictured above is a detail from "Drafting the Declaration of Independence, 1776" painted by Jean Leon Gerome Ferris (1863-1930) for the Library of Congress.

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The Meaning of "Life, Liberty, and the Pursuit of Happiness" - Crisis Magazine

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As we celebrate once again the anniversary of our nation's Declaration of Independence, we can rightfully take pride in its recognition that all men are "endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the pursuit of Happiness." These words remind those in government, not just in this country ...

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This will help you with Hit #3.

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Duties, Responsibilities, and Selection Process

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Here are some recent news about the local, state, and regional leaders.

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[IEDC] State & Regional Leaders Unite to Support Full Funding for Indiana Regional Cities Initiative

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INDIANAPOLIS (March 25, 2015) Community leaders from across Indiana urge state lawmakers to fully fund the Indiana Regional Cities Initiative at $84 million, after funding for the initiative was reduced to just $10 million a year in the state budget proposed last month by the Indiana House of Representatives.

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This website is about our government.

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About Our Government | Congressman Mike Doyle

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Each level of government is divided into three branches: the legislative branch (which makes the laws), the executive branch (which carries out the laws), and the judicial branch (which applies the laws to specific court cases, determines whether someone has broken the law, and evaluates laws to make certain that they are legitimate).