Final answer:
The government collects U.S. Social Security and Canadian Pension taxes, which are planned savings/retirement funds. These programs exist to help individuals save for retirement, complementing disappearing pension plans and offering alternatives like 401(k)s with tax benefits. The correct option is 1.
Step-by-step explanation:
U.S. Social Security and Canadian Pension taxes are essentially planned savings/retirement funds, and the government collects the money. Social security is a type of pension that constitutes a significant portion of the social insurance and retirement receipts that the government taxes.
In the United States, for instance, workers contribute 6.2% of their wages to Social Security, with an equal employer share, up to a certain income limit. These contributions are part of the automatic payroll taxes that workers pay.
The reason the government is involved in these savings programs is largely because many individuals are not very effective at saving for retirement on their own. Moreover, pension plans both in the private and public sectors are increasingly being eliminated, adding to the significance of government-sponsored retirement savings programs like Social Security.
In addition to Social Security, retirement savings can also be supported through workplace investment options such as 401(k) plans, which offer special tax advantages and allow individuals to invest in various financial products like stocks, bonds, and annuities.