The entire amount of tax the federal government receives each year is made up of U.S. federal tax income. The majority of it is covered by payroll taxes or income taxes. Income taxes will make up 50% of all taxes collected in fiscal year (FY) 2021; payroll taxes will contribute 36%; and corporate taxes will contribute 7%. Estate taxes, excise and custom taxes, as well as interest on the Federal Reserve’s Treasury holdings, make up the remaining amounts.
- Income taxes, payroll taxes, and corporate taxes make up the majority of the federal government’s tax revenue.
- Federal revenues for FY 2021 are insufficient to cover expenses. A $966 billion budget deficit results from this.
- Presidents Bush, Obama, and Trump all implemented tax cuts to promote economic growth, which further decreased receipts.
For FY 2022, the overall revenue of the U.S. government is predicted to be $3.863 trillion.
The amount coming from income taxes is $1.932 trillion. Add payroll taxes and you will total $1.373 trillion. $308 billion for Medicare, $1.011 trillion for Social Security, and $43 billion for unemployment insurance are included in this. Additional corporate taxes will cost $284 billion. The Tax Cut and Jobs Act significantly reduced taxes for businesses compared to individuals. Corporations paid 11% in 2015, while income taxpayers paid 47%.
The $71 billion contribution from the Federal Reserve, whose income is derived from a number of sources, is made. Federal government agencies deposit billions of dollars in operational cash with the Fed, which then pays interest on those deposits. The Fed also has $4 trillion worth of US Treasury assets that it obtained through quantitative easing.
Excise taxes ($87 billion), import tariffs ($54 billion), estate taxes ($22 billion), and other receipts ($40 billion) make up the remaining portion of the federal budget.
How Revenue Influences GDP, Deficit, and Debt
The government’s annual revenue is insufficient to pay for its expenses, resulting in a $966 billion budget deficit.
However, depending on where the economy is in the business cycle, some people contend that Congress should only spend what it takes in. In a downturn, Congress should simultaneously increase the debt and increase stimulus spending to spur job growth.
The government should turn from an expansionary to a contractionary fiscal policy once the recession is over, since this is the ideal time to increase taxes, cut the deficit, and pay down the debt. Additionally, it prevents the economy from overheating and creating risky bubbles. A country’s economic output is measured by its gross domestic product, which currently accounts for 16.5 percent of total revenue.
It is best to reinvest that much production into the economy in order to foster future growth when that much is going to the federal government.
The Bush and Obama tax cuts, which fought the recessions of 2001 and 2008 respectively by boosting consumer spending, which accounts for about 70% of economic growth, also had an impact on revenues.
Yearly Tax Collection in the United States
Here is a list of all of the fiscal years’ income since 1789. Tax revenues decreased during the crisis but began to rise by FY 2013.
Revenue for the Fiscal Year
- $3.86 (estimated) for fiscal year 2021
- $3.771 trillion for FY 2020 (estimated)
- 2019 YTD: $3.46 Trillion (Actual)
- 2018 total: $3.33 trillion
- 2017 total: $3.32 trillion
- 2016 total: $3.27 trillion
- $3.25 trillion for fiscal year 2015.
- 2014 total: $3.02 trillion
- $2.77 trillion in 2013
- $2.45 trillion in fiscal year 2012.
- $2.30 trillion for fiscal year 2011.
- $2.16 trillion in fiscal year 2010.
- $2.10 trillion for FY 2009.
- $2.52 trillion in fiscal year 2008.
- $2.57 trillion in fiscal year 2007.
- $2.41 trillion in FY 2006.
- $2.15 trillion for fiscal year 2005
- 2004 total: $1.88 trillion
- $1.78 trillion for fiscal year 2003
- $1.85 trillion for fiscal year 2002
- $1.99 trillion for fiscal year 2001
- $2.03 trillion in FY 2000.
- $1.82 trillion for fiscal year 1999
- $1.72 trillion for fiscal year 1998
- $1.58 trillion for fiscal year 1997
- $1.45 trillion in FY 1996.
- $1.35 trillion for fiscal year 1995
- $1.26 trillion for fiscal year 1994
- $1.15 trillion for fiscal year 1993
- $1.09 trillion in FY 1992.
- $1.05 trillion in FY 1991
- $1.03 trillion for fiscal year 1990
- $991 billion in fiscal 1989
- $909 billion in FY1988.
- $854 billion in 1987
- $769 billion in 1986
- $734 billion in 1985
- $666 billion in 1984
- $600 billion in 1983
- $618 billion in 1982
- $599 billion in 1981
- $517 billion in 1980
- $463 billion in 1979
- $399 billion in 1978
- $356 billion in 1977
- $298 billion in 1976
- $279 billion in 1975
- In 1974, the federal government spent $263 billion.
- FY 1973: $231 billion
- Fiscal year 1972: $207 billion
- $187 billion in fiscal year 1971
- $193 billion in fiscal year 1970
- $187 billion in FY 1969.
- $153 billion in 1968
- $149 billion in fiscal year 1967
- $131 billion in fiscal year 1966
- $117 billion in fiscal year 1965
- $113 billion in fiscal year 1964
- $107 billion for fiscal year 1963
- $100 billion in 1962.
- $94 billion in 1961
- $93 billion for fiscal year 1960
- FY 1789-1959
- $100 billion
Questions and Answers (FAQs)
What is the primary tax-collection source for municipal governments?
Unlike the federal government, most local governments rely heavily on sales or property taxes for the majority of their funding. Although they are less frequent at the municipal level, income taxes nevertheless contribute to local governments’ revenue in 11 states.
How does the federal government generate money?
Tax increases are the main method used by the federal government to raise more money. However, there are a number of solutions available, and economists and decision-makers regularly disagree about which is the most effective. Directly raising tax rates; increasing rates for richer taxpayers; decreasing tax exemptions and deductions; and stimulating the economy are a few examples of strategies to improve federal tax collections.
What is the federal tax rate?
The federal income tax system is set up with graded brackets that range from 10% to 37% of your adjusted gross income. Different rates apply to long-term capital gains, which can range from 0% to 20%.