Posted
Sep 08 2009, 08:28 AM
by
Karen Datko
This post comes from J.D. Roth at partner blog Get Rich Slowly.
Note: Although I try to keep GRS a politics-free zone, today's topic is inherently political. I've stayed as neutral as possible in the article, but I know that there'll be some political discussion in the comments. Please keep conversation civil, as always.
Because I was frustrated with my own ignorance about the U.S. federal budget and our tax system, I recently spent 12 hours researching a variety of tax topics. From my research came two articles: my recent short guide to the federal budget and today's post, which answers some of my personal questions about taxes.
In the earlier post, we tried to take a few small steps toward understanding the federal budget. We looked at where the U.S. government spends its money. But where does it actually find the cash to spend?
Of the $2.333 trillion in U.S. government receipts:
- $1050 billion (45.0%) comes from individual income taxes.
- $939 billion (40.2%) comes from social insurance/retirement receipts.
- $221 billion (9.5%) comes from corporate income taxes.
- $76 billion (3.3%) comes from excise taxes.
- $20 billion (0.9%) comes from estate and gift taxes.
- $28 billion (1.2%) comes from Federal Reserve deposits.
- $16 billion (0.7%) comes from other miscellaneous sources.
As you can see, nearly half of government receipts come from individual income taxes. Naturally, taxes are a hot-button issue. They have been since this nation was founded. (To be fair, though, the driving force then was "taxation without representation." Modern complaints are against taxes in principle, I think.)
During my research, several questions about taxes occurred to me. In today's article, I'll do my best to share the answers I found.
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