Hi friends this is Laura Adams and you're listening to the Money Girl

Podcast. Since presidential candidate Mitt Romney revealed his tax return

which showed an effective tax rate of 15% there's been a lot of talk about

whether the rich get away with paying less income tax than ordinary folks.

Today I'll reveal how income is taxed and how much millionaires really do pay. The first tax that we're all familiar with is income tax. It's a

right of passage to receive your first paycheck and be stunned by how much the government takes.

There are four main types of taxes that employers are required to withhold from your paycheck.

Number one, federal income taxes. Number two, federal income taxes.

Number two, state income taxes.

Three, Social Security taxes, and four, Medicare taxes.

Additionally, depending on where you live and the industry you work in, you may also have

unemployment, disability, and local income tax withheld. I'll summarize each of the

four payroll taxes so you know what they are

and how much you're paying for them. So let's start with federal income tax.

It's collected by the Internal Revenue Service or IRS to fund the country's expenses for everything

from education to the military. You pay federal taxes according to tax brackets, which

are ranges of income that are subject to different tax rates.

As your income goes up, the amount that falls into each of the six brackets

is taxed at a progressively higher rate.

In other words, federal income tax is stable. is taxed at a progressively higher rate.

In other words, federal income tax is staggered,

with part taxed at 10%, part at 15% and so on,

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