At about 226-230s the transcript says '#1.84', but the sales tax in the example is $1.80 (9% of $20). The interventions use $1.80.
The check-ins use the correct version. The video is Khan Academy's, unchanged.About this video
This video explains that governments pay for public things like roads, schools, parks and police by collecting taxes. It introduces three taxes people meet in everyday life: income and payroll taxes taken from paychecks, sales tax added at the shop, and property tax paid on the value of homes and land.
You'll be able to
- explain why governments collect taxes.
- describe income, payroll, sales and property taxes.
- calculate a simple tax amount from a percent.
Key words
- tax
- Money people pay to the government to pay for public services.
- income tax
- Tax taken from the money you earn, at the national (federal) or state level.
- payroll tax
- Tax taken from paychecks to pay for programs like Social Security and Medicare.
- sales tax
- Extra money added to the price when you buy something at a store.
- property tax
- A yearly tax based on the value of a house or land.
- assessor
- A government worker who works out how much property is worth.
Transcript
- [Instructor] An interesting thing to think about as you look at the world is who is paying for things? Now, a lot of things, it's obvious who's paying for it. If you were to go to a restaurant and order some food, you are going to pay for it or maybe your family will pay for it.
If you go buy some groceries, you're going to pay for it. You see, you pay them at the cashier. But what about for things like roads or schools, especially if we're talking about public schools, or libraries or parks or police or other emergency response or the military?
All of these are things that someone has to pay for. Policemen need salaries, parks need people to take care of them. Libraries, schools all have people working there. Roads, it takes a lot of money to maintain those roads. And the answer in most of these cases tends to be government.
Now, the question is where does government get the money? And that answer is in the title of this video. The government gets it through taxes. Now, in this video, we're not gonna talk about all the types of taxes that you might see in society, but I will tell you about the taxes that you are most likely to encounter in your life as an individual.
Now, in the United States, the biggest one that many of us will notice is income tax. In other videos, we go into detail on the difference between gross and net income, but in a lot of cases, let's say you think you are making $4,000 a month, but that might be your salary, but what you take home is going to be something less than that.
It might be $3,000 a month. And so where is that other $1,000 going, which is about 25% or is exactly 25% of that salary? And it's not always 25%. I'm just giving you this example. Well, that might go to things like income tax. Income tax, and there could be income tax at the federal level, so that's the national income tax, or you could have income tax at your state level.
Some states don't have an income tax. It can also go to something known as payroll taxes. Payroll taxes are used to pay for things like social security, which helps folks once they retire, gives them that benefit of giving them some income at that point. It could be used for things like Medicare, which once again, especially when people get older, it helps them with their healthcare expenses.
And payroll taxes have the interesting property that not only do you pay for 'em and they get taken out of your paycheck, but usually, your employer pays a comparable amount for that. So income tax is a big one, and you might not notice it when you're younger, but you'll definitely notice it when you get that first paycheck and as you get older.
Now, a tax that you might have already noticed, in fact, this was probably the first tax that I encountered in my life, is sales tax. Sales tax, so what we just talked about, income tax is one form of tax. You have payroll taxes, which is kind of like income tax, but it has slightly different properties to it, and then sales tax happens, in most cases, every time you go to the store, depending on what you're buying.
If I were to go to the toy store right now, and if I were to look at the price on something and I see that it is $20, many of you might have the experience that when you go to the register and you go to pay for that, all of a sudden they ask for, I don't know, let's call it $21.80.
So the example I just give, they're charging 9% more. What is that 9% more? What is that #1.84? Well, that $1.80 is going to go, usually, to the local government, in some cases, the state government. And that is sales tax. And the government will use that money to pay for these things and other things that it might have to pay for.
Now, the last kind of tax that I will talk about, that if you're young, you probably won't encounter, but hopefully once you own property, including a house or land, you'll notice it, and it actually can be a pretty significant tax, and that is property tax. Property tax is where the local government, usually, will look at the value of your house and the land that it's on, or even if it's just pure land, look at its value and tax you a certain amount of that property every year.
So let's say that you have a property that is worth $200,000 and where you live, they tax at 1% property tax a year. Well, then you are going to have to pay $2,000 every year to the government. Now, it's not always 1%, sometimes it's 2% or higher, and property values obviously can be very different from $200,000, and you might have heard of someone in the government called the assessor.
Those are people who go and assess the value of things so that the property tax can be properly measured in those circumstances.
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