What is the purpose of payroll tax?

The purpose of payroll tax is primarily to support Social Security and Medicare programs, which are essential components of the United States' social safety net. Payroll taxes are collected from employees' wages and matched by employers, and they specifically contribute to funding these vital programs. Social Security provides retirement, disability, and survivor benefits to millions of Americans, helping ensure financial stability in various life situations. Meanwhile, Medicare offers health insurance to individuals aged 65 and older, as well as some younger individuals with disabilities. Thus, the revenue generated from payroll taxes is crucial for maintaining the financial health of both of these programs, ensuring that they can continue to serve the population effectively over the long term.