Fifth Grade
Worksheets
Who Pays Taxes?
Who pays taxes? People and businesses both pay taxes. These taxes are collected in different ways. Citizens pay income tax. Each year they pay the government a portion of their income. They are required by law to report their annual earnings and pay a percentage of that money to both the federal government and their state government. Normally, people who earn more money pay more taxes. They must pay a larger percentage of their income to the government than those who earn less.
People also pay taxes when they buy certain goods. In most states, the government charges consumers a certain percentage of an item's purchase price. This is called a sales tax. Sales tax is a surcharge. It is an extra charge that is added to certain goods.
Businesses must pay taxes too. They pay tax on their profits. Companies owe the government a portion of all of the money that they make each year.
