Federal Government Revenue

An immense amount of money is needed to operate all levels of government, and the demand seems to be growing every year. To measure up to such costs, the government needs income or revenue. In the United States, the federal government gets its revenue from a number of sources. “The three primary revenue sources for subnational governments are income, sales and property taxes.” The government pays for such expenses through revenue acquired by taxing income, sales and property.

Individual and business earnings are both subjected to income taxes. Payroll taxes are an important source of revenue. Employers are responsible for paying these taxes, which include Social Security and Medicare, also known as FICA. Over the years, the amount paid in Social

“While state revenues are generally up, they fell so far during the recession that most states have not caught back up to where they were before”. Although making it simple is desirable, unexpected events often require new expenditures, which in turn may require changes in the tax code. Such example of an unexpected costs are the cost of the war in Iraq, along with the enormous damage inflicted by hurricane Katrina in 2005. Tax reforms can also result from political change, which tends to be sudden especially if one party leaves office and another enters. New government administrations often display a sense of insistence to finally do things the “correct” way, or to clean up the acts that their predecessors had

However, there is also some ambiguity because so many things can happen to the presented budget. For example, the economy may suddenly speed up or slow down and affect the amount of tax revenues collected. As a result, the federal budget only provides a rough estimate of the actual revenues and expenditures. The Colorado Constitution contains a section designed to protect citizens from their own government. TABOR (Taxpayer’s Bill of Rights) aims to do this by requiring voter approval of new taxes and by limiting annual increases in state spending to a certain level. “The Colorado Constitution requires state and local governments to obtain voter approval prior to imposition of a new tax, rate increase on an existing tax, mill levy increase, valuation for assessment,tax extension, or other change in policy that results in a net gain in tax revenues.” Under TABOR, Colorado residents have had a groundbreaking opportunity to set state fiscal policy through the ballot box. When the government spends more than it collects in taxes and other revenues, it borrows money. “The federal government has no constitutional debt limitation comparable to Colorado’s. For that reason, and also because the federal government has emergencies to meet unlike those faced by states, the federal government find itself trillions of dollars in debt.” The federal government is still dealing with