Question

Which statements about payroll taxes are true? Check all that apply.

Education and infrastructure receive a portion of the funds from payroll taxes.
Everyone pays the same percentage, regardless of income.
Payroll taxes are progressive based on income.
Payroll taxes support Social Security and Medicare.
Employers pay a set percentage of payroll taxes.

Answer 1

True:
- Payroll taxes support Social Security and Medicare.
- Employers pay a set percentage of payroll taxes. (Employers generally pay a required employer share/matching FICA taxes and separate employer unemployment taxes.)

False:
- Education and infrastructure receive a portion of the funds from payroll taxes. (Payroll taxes mainly fund Social Security/Medicare and related programs, not general education/infrastructure.)
- Everyone pays the same percentage, regardless of income. (Not true in effect — Social Security tax applies only up to a wage cap and Medicare has an additional surtax for high earners, so effective rates vary.)
- Payroll taxes are progressive based on income. (They are generally proportional up to the Social Security cap and become regressive overall because high earners pay a smaller share of their total income to Social Security once above the cap.)