Payroll taxes are taxes that are withheld from an employee's paycheck by their employer and are used to fund mandatory spending programs such as Social Security and Medicare. They are not based solely on income and are not limited to a certain income level. Additionally, even self-employed individuals are typically responsible for paying payroll taxes on their own earnings.

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Payroll Taxes

Question 49

Multiple Choice

Payroll taxes

A) are not paid by individuals who are self-employed.
B) generate revenues earmarked for mandatory spending purposes.
C) generate revenues earmarked for discretionary spending purposes.
D) are based solely on income.
E) are not paid by people making over $110,100.

Correct Answer: