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What is the difference between an income tax and a payroll tax?

  • Question 4b of 10 - Taxes

  • Maximum Attempts: 1
  • Question Type: Multiple Choice
  • Maximum Score: 2
  • Question: What is the difference between an income tax and a payroll tax?
  • Answers:
  1. Income taxes are used for a wide variety of government activities while payroll taxes pay for specific programs.
  2. Income taxes are collected based on income while payroll taxes are collected based on wealth.
  3. Income taxes reduce the demand for harmful goods while payroll taxes don't affect this demand.
  4. Income taxes increase the purchasing power of the government while payroll taxes increase the purchasing power of workers.

The correct answer is: Income taxes are used for a wide variety of government activities while payroll taxes pay for specific programs. Payroll taxes are used to support specific government activities, such as the Social Security program, while income taxes are used to support the government in general.

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