7
QuizMultiple Choice

Fiscal Policy

Question 7 • *FL-2100310-United States History Semester 1

What is a difference between payroll and income taxes?

Answer
A
Payroll taxes are itemized deductions from an individual’s paycheck, while income taxes are based on an individual’s salary.
B
Payroll taxes are taken out of an individual’s salary once a year, while income taxes are paid by workers every time they get paid.
C
Payroll taxes are based on an individual’s salary, while income taxes are itemized deductions from an individual’s paycheck.
D
Payroll taxes are paid by individuals who have a job, while income taxes are partially funded by employers and employees.

Explanation

Payroll taxes, such as Social Security and Medicare taxes, are withheld from an employee’s paycheck as deductions. Income taxes are calculated based on a person’s income or salary, though they may also be withheld from paychecks throughout the year. Choice A reverses these descriptions, and the other choices incorrectly describe who pays the taxes or when they are paid.

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