Contractor License Practice Exam

Which tax ensures that employees contribute to Social Security?

1. Medicare Tax

2. Federal Income Tax

3. Social Security Tax

4. State Income Tax

The correct answer is: Social Security Tax

The Social Security Tax is the correct answer because it is specifically designed to fund the Social Security program, which provides benefits to retirees, the disabled, and survivors of deceased workers. This tax is deducted from employees' wages and is matched by employers, creating a system in which both parties contribute to the social safety net. The Medicare Tax, while also a payroll tax, is designated for funding post-retirement medical care and does not directly support Social Security benefits. Federal Income Tax varies depending on individual income levels and is not dedicated to Social Security. State Income Tax, which is imposed by state governments, also does not contribute to Social Security. Each of these taxes serves different functions within the broader tax system, but it is the Social Security Tax that is specifically allocated for Social Security.