What type of tax is collected from wages to fund programs like Social Security and Medicare?

Employment tax is the type of tax collected from wages specifically to fund programs such as Social Security and Medicare. This tax is a significant component of the overall payroll tax system in the United States. When employees receive their paychecks, a portion of their earnings is withheld for these taxes, which directly support the essential social safety net programs providing benefits to retirees, the disabled, and other eligible individuals.

Social Security tax contributes to the federal Old-Age, Survivors, and Disability Insurance (OASDI) program, while Medicare tax supports health insurance for individuals aged 65 and older and for some younger people with disabilities. This system ensures that funds are available for these vital programs, which many Americans rely on for financial security in retirement or during periods of health-related challenges.

Other types of taxes, like sales tax, property tax, and excise tax, serve different functions and fund various public services or infrastructure, but they do not specifically target the funding of Social Security and Medicare like employment taxes do.