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The Whys of Taxes

Theme 4: What Is Taxed and WhyLesson 1: Federal/State/Local Taxes


Most federal revenue comes from income taxes. State and local revenue comes from transaction taxes, income taxes, and property taxes. The type and amount of tax varies from state to state and between local communities.

Sales taxes are the most common kind of transaction taxes. Taxes withheld from a paycheck include income taxes. Homeowners pay property tax, but renters may contribute to their landlord's property tax with each rental payment.


quick check
How does the major source of tax revenue for the federal government differ from that of state and local governments?

tax trivia
Did You Know?
The three largest Federal government expenditures are Retirement funding (such as Social Security, Medicare), National Defense, and Social Programs.
The single largest state level expenditure is _____.
  • A.
  • B.
  • C.
  • D.

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