Now that you understand your paycheck, let's explore one of your biggest deductions: taxes!

Taxes are payments you make to the government from your income. They fund important services like roads, schools, and emergency services.

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Name one public service you believe taxes help fund?

The government uses your tax payments to provide services that benefit everyone. This includes things like maintaining highways, funding public schools, and supporting the military.

Think of taxes as your contribution to shared community resources and national infrastructure.

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What government services do you use most often?

Here's something important: not everyone pays the same tax rate! Many countries use a "progressive" tax system with different tax brackets.

Tax brackets are income ranges, each with its own tax rate. In this system, higher earners pay higher rates on their additional income.

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Does it make sense that higher earners might pay higher rates?

Let's clarify a common misconception. If your income falls into the 22% tax bracket, it doesn't mean you pay 22% on all your income.

You only pay 22% on the income within that specific bracket. Lower portions of your income are taxed at lower rates.

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Give one reason a country might use a progressive tax system?

Remember those tax deductions from your paycheck? Your employer often estimates how much tax you'll owe and withholds it throughout the year.

But this is just an estimate! You might have withheld too much or too little compared to what you actually owe.

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What happens if the estimate is wrong?