Responsibilities of All u.S. Residents

Every individual, no matter how important or wealthy, must obey the laws. Of course, not all laws are perfect. Some are unwise, others are too harsh, many are foolish. But they cannot, for any of these reasons, be ignored. Anyone living in the U.S. who disap­proves of a particular law has the right to try to persuade the government to get it changed through peaceful means.

The least popular laws are probably those requiring payment of taxes. For most people, the largest of these is the federal income tax. Since 1913, the U.S. government has been collecting income taxes. As the cost of running the government has increased, so have tax rates. When the federal income tax law was first enacted, people had to pay 1% on annual incomes of less than $20,000. Income of more than $500,000 was taxed at 7%. Today's income tax rates are between 15% and 39.6%. Currently, income taxes provide more than half the money collected by the federal government each year. In 1998, the federal government received about $960 billion in income taxes. These taxes are neces­sary to support a federal budget that, in 1998, was about $1.67 trillion. The money is used for many things. In addition to the cost of operating the government itself, there are expenses for defense, education, foreign aid, research, aid to the poor, and count­less other services provided by governmental agencies.

Income tax is paid by nearly everyone who earns money in the United States - citizens, resident aliens, and visitors. Federal income tax rates are graduated, which means that people with larger incomes are taxed at a higher rate than those earning less. In addition, deductions and exemptions reduce the amount of income that is taxed. An unmarried person earning $25,000 a year pays about 11% of that in taxes, while someone earning $75,000 pays about 21 %. (A married couple earning that amount would pay only 16%.)

Employers are required to withhold a percentage of their employees' salaries and pay it to the government to be applied toward the employees' taxes. Self-employed people and those earning a substantial amount in addition to their salaries must make quar­terly payments toward their annual taxes. By April 15, each person whose income in the previous year exceeded a certain minimum must file a tax return-a statement, on forms supplied by the government, listing income, expenses, number of dependents, and other information. After making calculations on the return, taxpayers can determine how much they owe. Those who have paid more than their share get a refund. Those who have paid less must pay the balance. Every year around April 15, millions of Amer­icans complain, "Uncle Sam is taking all my money." Uncle Sam (the thin, bearded gen­tleman whose clothes resemble the American flag) is a symbol of the U.S. government. Uncle Sam knows a lot about each taxpayer and penalizes those who file false returns. Still, the income tax law could not be enforced without the honesty and cooperation of most taxpayers.

In addition to federal income tax, employers also withhold Social Security and Medicare taxes and state income taxes. Most states and many cities also collect income taxes. Besides income taxes, many other taxes are collected by federal, state, and local governments. The most common are those imposed on property and purchases. The owner of a car, for example, pays several taxes: a sales tax when buying the car, an an­nual vehicle registration tax, and a personal property tax. If the person who owns a car dies, the heirs may have to pay an inheritance tax on the car's value. Funds from these taxes are used to provide services and facilities such as courts, schools, roads, and parks.

Despite complaints about high taxes, Americans know that the taxes they pay make possible the valuable services they receive. Also, when all American taxes are added to­gether, they total less than 32% of the nation's gross domestic product. This is one of the lowest percentages of all industrial nations.

Check your comprehension.

What are four different taxes that most U.S. residents pay?