Politics and economics are both involved in the topic of taxes. Political leaders have implemented a variety of tax changes, such as lowering (or raising) tax rates, altering the definition of taxable income, enacting new taxes on particular goods, and so forth, to further their political objectives.
A taxation authority, typically a government, levying or imposing a financial obligation on its inhabitants or residents is known as taxing them. Since ancient times, paying taxes to governments or officials has been a fundamental aspect of civilization.
Specific tax preferences can have an impact on how economic resources are allocated, whereas high marginal tax rates can discourage work, saving, investing, and innovation. Tax cuts, however, can also reduce long-term economic development by raising deficits.
For instance, the highest payroll taxes in the United States are 2.9% for Medicare and 12.4% for Social Security, totaling a 15.3% tax rate. In this instance, the employer pays half of the payroll taxes, or 7.65% of the tax rate.
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