Questions on Revenue and Expenditure for the Federal Government

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1. The three major categories of revenues for the federal government are personal income taxes, corporate income taxes and social insurance taxes. According to the CBO's estimates for 2012, personal income taxes account for 50.3% of federal revenues, while corporate income taxes account for 10.65% and social security taxes account for 33%. Other income sources only account for 5.9% of the total budget. Thus, when considering changes that will have the most significant impact on the budget, personal taxes need to be given the most consideration. 2. The main categories of expenditure for federal government are known as mandatory spending, discretionary spending and interest. Mandatory spending accounts for 56.2% of total spending. Discretionary spending accounts for 35.2% of total spending. Interest accounts for 8.5% of total spending. 3. One of the proposals that I agree with the most is to tax capital gains and dividends as income. This would increase the tax on these items, especially on capital gains considerable. Capital gains is one of the most significant sources of income for the wealthy classes, and the lower tax rate means that they pay proportionally less their share. More important from a budgetary perspective is that this proposal will create significantly more revenue on the personal income side. Investors are not going to abandon the world's strongest capital markets because they are annoyed at paying extra taxes. Another proposal that I agree with because

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