Question

• Visit the Fiscal Year 2016 Historical Tables Budget of the US Government.
  • Use the PDF bookmarks to find the tables and sections needed to complete the tasks below.
• Prepare a brief summary by performing the following items and answering those questions posed:
  1. Consider revenue Sources. Go to Table 2.2, "Percentage Composition of Receipts by Source."
     1. What are the main sources of revenues for the federal government?
     2. Before World War II, what was the key source of revenues of the federal government?
     3. What has been the key revenue sources since World War II?

Answer 1

a) Main sources of revenues for the federal government(2016) :
1. Individual income tax (amounting to 60.4% of total on budget receipts)
2. Corporation income taxes(amounting to 17.33 % of total on budget receipts)
[Both these income tax receipts made up around 83% of the sources of revenue]

b) Before World War II, what was the key source of revenues of the federal government(on budget) :
[The figures have been calculated on an average from 5 years of data 1934-1938; pre world war 2 ]
1. Excise Tax (amounting to 38.73 % of total revenue)
2. Other sources (amounting to 21.38% of total revenue)
3. Individual income tax ( amounting to 17.43 % of total revenue)
[These three sources accounted for almost 78% of the total sources of revenue]
[Note : If off budget receipts are to be considered , then Corporation income taxes could be neglected while Social insurance and retirement has been a key source of revenue since World war 2]

c) Key revenue sources since World War II(on budget) :
1. Individual income taxes (growth from around 17%(pre world war 2) to almost 44-48 %(post world war 2  
2. Corporation income taxes (remained almost steady with periods or rise and fall)

[Note : If off budget receipts are to be considered , then Corporation income taxes could be neglected while Social insurance and retirement has been a key source of revenue since World war 2]