The resulting combination is that taxpayers over a wide range of income levels end up paying roughly the same percentage of their income in taxes. The tax is levied on employers, employees, and certain self-employed individuals. The employee's part of the Social Security payroll tax applies only to wages, salaries, and other personal income. People with income from interest and dividend payments do not have to pay any Social Security tax on this income. A state has a 10 cents per gallon excise tax on gasoline.
Economists use two criteria to help determine the relative fairness of a particular tax.
People should pay taxes in rough proportion to the benefits they receive from them. People should pay taxes in rough proportion to their ability to pay. To be fair, people who differ according to these criteria should pay different amounts of taxes, but it is often difficult to apply these criteria to a particular tax. Fairness is not the only thing you should consider when you judge a tax system.