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One of the first lessons you learn about money as a kid is that the price on the tag may not be the same as the price on the receipt. Why? Taxes.
Taxes have a much bigger impact on our lives beyond just paying a little more for the things we buy.
And the better you understand them, the better equipped you are to make decisions about them.
All taxes can be divided into three basic types: taxes on what you buy, taxes on what you earn, and taxes on what you own.
Every dollar you pay in taxes starts as a dollar earned as income. The main difference is the point of collection.
Sales taxes are paid by the consumer when buying most goods and services.
These taxes provide state and local revenue, funding services like education, transportation, and health care.
The Individual Income Tax is a tax paid on many sources of income you might earn, like the taxes taken directly from your paycheck.
Income taxes are major sources of revenue for the federal government and many state governments.
The third type of taxes are taxes on what you own—like homes, land, or vehicles—known as property taxes.
Property taxes generate revenue at a local level. They provide funding for everything from parks, to public safety services, to additional funding for schools.
Every dollar you pay in taxes affects how much of your income you get to keep, save, and spend.
So, understanding each tax type can help you make better decisions about everything from which job to take, to where to live, to how you vote.
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TaxEDU was made possible thanks to the generous support of the Stiles-Nicholson Foundation.