Multiple Choice
Which of the following increases an employer’s payroll costs?
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9. Current Liabilities
Payroll and Payroll Taxes
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Which of the following is a type of federal payroll tax?
A
Progressive tax
B
Property tax
C
Medicare tax
D
Sales tax
Verified step by step guidance1
Understand the concept of federal payroll taxes: Federal payroll taxes are taxes imposed by the government on employers and employees to fund specific programs such as Social Security and Medicare.
Identify the types of taxes listed in the problem: Progressive tax, Property tax, Medicare tax, and Sales tax.
Clarify the nature of each tax: Progressive tax is based on income levels, Property tax is levied on property ownership, Medicare tax is a federal payroll tax used to fund Medicare, and Sales tax is applied to the sale of goods and services.
Recognize that Medicare tax is specifically categorized as a federal payroll tax because it is deducted from employees' wages and matched by employers to fund the Medicare program.
Conclude that the correct answer is Medicare tax, as it aligns with the definition and purpose of federal payroll taxes.
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