Mathematics with Business ApplicationsChapter 2:Business Math in ActionWhere Do Your Tax Dollars Go?No matter how prepared you think you are for your first paycheck, the amount you actually get to take home-your net income-may come as a surprise. Businesses are legally required to withhold the following items from your paycheck. Federal Income Taxes. The amount of taxes withheld depends upon the amount you earn and the number of exemptions you claim. If you’re single, just entering the workforce, have no other source of taxable income, and make $20,000 a year, your federal withholding tax will probably be around $2,600. State Income Tax. These vary according to state.Alaska, Florida, Nevada, South Dakota, Texas, Washington, and Wyoming have no state tax. Two others, New Hampshire and Tennessee, tax only dividend and interest income. Social Security (FICA). This deduction funds the Social Security Administration, which provides income for retired people, the disabled, and survivors of deceased workers. As of 2004, this is how your federal tax dollars were spent:
Federal tax dollars are not distributed according to how many taxpayers live in each state. It’s a matter of which state needs what, and how influential its politicians and lobbyists are with the people in Washington who dole out the federal money. For every dollar a taxpayer in Connecticut contributes, that state gets back 65¢. Meanwhile, for every dollar a taxpayer in North Dakota contributes, that state gets $1.75. The state that received the most bang for its federal buck was New Mexico, at $1.99. The state that got the least: New Jersey, at 57¢. |  |
