AMERICAN MOSAIC #812 - Taxes

By Nancy Steinbach

HOST:

Our VOA listener question this week comes in an e-mail from China.Wang Xu asks what kinds of taxes Americans pay.

The answer is many different kinds. Most Americans pay taxes to the state in which they live. Most states also collect sales tax. That is the tax paid when goods are bought in stores.

Cities and counties usually collect tax on property that citizens own.The federal government taxes any property or money left when someone dies.And it taxes earnings on the sale of some investments, such as a house.

Americans pay a federal social security tax that is used to pay retired workers. Americans also must pay federal income tax on the money they earn. They must prepare an income tax report and pay this tax by April fifteenth. The tax report goes to the Internal Revenue Service, also known as the I-R-S.

Most Americans who earned money last year are expected to pay the I-R-S part of what they earned. Only those who earned very little are not required to make such a payment.

Most American workers already have paid all or most of their federal taxes. This is because part of the tax is given to the I-R-S each time a worker gets paid. If more money is withheld than a person owes, the government gives it back.

The federal income tax rate is not the same for everyone. People who earn a lot of money pay taxes at a higher rate than those who earn little.But even people who earn the same amount of money do not always pay the same tax. This is because of the many different tax laws Congress has written.

Congress uses these laws for social and economic purposes. For example, people who borrow money to buy a house often pay less tax than people who rent a home. Homeowners subtract the interest on the loan from their taxable income. People also can reduce their taxable income by subtracting the value of gifts to organizations that help the needy.

President Bush is trying to get Congress to change some tax laws.He wants to reduce the amount of income tax Americans pay each year.He also wants to end the tax on money or property left when a person dies.Many Americans agree with him. They say their taxes are too high.Others say the government should pay down the national debt instead.Experts say Congress probably will approve a new tax law. But Congress may not give the President all the changes he wants.