Introduction

Merriam Webster’s Dictionary defines taxes as “a charge imposed by authority on persons or property for public purposes.” Taking this definition and applying it to the United States it is easy to see the different players involved in the process. The charge that is imposed is in the form of money on the citizens of the country of the state.
All citizens of the United States pay some sort of tax and in most cases are legally bound to do so. These taxes are both overt and covert in nature. And overt tax is a tax such as an income tax. Taxes that are paid on an annual or monthly basis by workers and citizens to the federal or state coffers. Covert taxes are those that people may not realize they are paying. These taxes come in the form of sales taxes and use taxes.

There are a host of different types of taxes that are utilized in the United States, but it is important to realize that there are three main categories of tax. These categories are based on the institution that levies the tax. The first category is federal taxes the second is state taxes with the third being local or civic taxes.

Federal taxes include those taxes such as income tax, social security, Medicare and other payroll taxes. These are generally taken from citizens in a process called withholding. It is important to note that politically speaking the Congress of the United States, not the president is responsible for the passage of tax rates, and all Tax bills that might eventually become law must originate in the House of Representatives. This power to tax is enumerated in the 16th amendment of the Constitution of the United States.

State taxes can include many of the same types of taxes and are dependent on the specific state that the citizen lives in. For example while North Carolina imposes a state income tax that must be paid separately from the federal income tax, Texas does not. Texas however may have a higher state sales tax rate to make up the difference.
Civic and local taxes are those taxes paid directly to the city playing online games or municipality within which an individual lives. This can include county taxes. These taxes are primarily used to pay for local law enforcement, local fire departments, municipal utilities and other local needs.