 16 th Amendment: Was ratified in Before this amendment the federal government could not levy income tax.  Payroll Deduction: A system requiring employers to take income taxes from a paycheck and send it directly to the government (IRS).  This is how most income taxes are paid throughout the year  Tax returns are filed yearly, as a summary of taxes to see if you owe the government money or if they owe you.

 A Progressive Income Tax: Our income taxes are progressive, meaning as one makes more money, they pay a higher percentage of income taxes.  Indexing: An upward revision of tax brackets to allow employees to receive raises to match inflation without being put in a higher tax bracket

 FICA: Federal Insurance Contributions  Goes to pay for retirement benefits/benefits for the elderly  Also deducted from your paycheck  Payroll Taxes  Social Security Taxes: This is a capped income, meaning the percentage paid stops going up after a certain point. Covers benefits such as retirement (pension)  Medicare: Federal medical insurance for the elderly Meant to cover the major share of eligible persons’ medical bills. Not capped, meaning the amount taxes continues to rise as a person’s income rises

 Corporations must pay income taxes as well  Corporations are their own legal entity (they are and have always been legally considered to be people), they are responsible for their own profits, loses, and taxes.

 Excise Tax: Federal sales tax levied on the manufacture and sale of many items (gas, tires, phone services, tobacco, etc.)  Estate and Gift Taxes: Taxes levied on the transfer of property when one dies, ranging from 18-50%.  Custom Duties: A charge on goods brought in from other countries.  Miscellaneous Fees: User fees such as fees paid to visit a national park.

 Intergovernmental Revenues: Funds that are collected by one level of government (national), and distributed to another level (state).  Taxes and Fees: State taxes on things such as income, sales, and other various fees.  Other Revenues: Usually interest on surplus funds.  The Choice of Tax: Optional means of income such as the lottery.

 Intergovernmental Revenues: Revenues collected by federal and state governments can also be passed to local governments.  Property Taxes: Yearly taxes assessed on your property (land) based upon the value of your property.  Other Sources: Revenue from sources such as public utilities, state-owned liquor stores, and local sales tax.