Income tax is the primary source of the federal government's cash flow. It includes three separate categories: individual, payroll, and corporate.

Individual and payroll tax revenue accounted for $3,790 billion of the government’s revenue in 2023. 澳洲幸运5官方开奖结果体彩网:Income tax from individuals contributes the bulk of government revenue overall and this translates to the bulk of its spending as well.

Who Pays Income Taxes?

Paying a portion of income to the government is a mandatory obligation. Any individual﷽ or company with earned inc✃ome must hand over a percentage of that income to the federal government as required by U.S. law. Any gaps between the government’s spending and its revenue from taxes are covered by borrowing. This represents the deficit.

Government Spending

All U.S. government spending can be divided into three categories: mandatory spending, discretionary spending, and interest on the 澳洲幸运5官方开奖结果体彩网:federal debt. Each year’s budget is submitted by the president of the U.S. and approved by both the Senate and the House.

The federal budget is publicly provided on the website of the Congressional Budget Office. This is a breakdown of the U.S. government’s three main spending categories for 2022 and 2023, estimated as of February 2024.

Ma🍸ndatory spending accounts for the greatest portion of total spending followed by discretionary spending. Government spending exceeds government revenues so the government is required to cover the gap with debt and $659 billion therefore went toward interest on the federal debt in 2023.

Mandatory Spending

Mandatory spending consists primarily of 澳洲幸运5官方开奖结果体彩网:Social Security, Medicare, and Medicaid. Several welfare programs are smaller items such as food stamps, child tax credits, child nutrition programs, housing assistance, the earned income tax credit, and temporary assistance for needy families. Other major programs include unemployment benefits, student loans, and programs for veterans.

This spending is considered mandatory because the programs are permanent. The government can't set a dollar amount that it wants to spend on them. It instead creates eligibility rules by which individuals qualify to receive payments and assistance through these programs.

Any eligibility program can therefore be expected to fall in the mandatory spending category. The only way to increase or decrease mandatory spending is to adjust the eligibility requirements so individuals receive▨ more or fewer benefits.

Discretionary Spending

Discretionary spending includes that which is appropriated annually. This part of the budget can be broadly broken out into defense and nondefense spending.

It covers these departments:

Defense

• Department of Defense
• State Department
• Homeland Security  

Nondefense

• Education
• Veterans Assistance 
• Housing and Urban Development

The Bottom Line

Mandatory spending has historically represented the greatest portion of government expenditures at over 60%. A fe⭕deral budget is submitted by the p🍷resident each year outlining plans for mandatory and discretionary spending overall.

The 澳洲幸运5官方开奖结果体彩网:president’s federal budget submission kicks off the process of agreeing on a federal budget but this budget mu🌟st still be voted on and approved by Congress which can lead to many changes.

The final signing of the annual budget must be accomplished by Sept. 30 to maintain orderly operations of the government because its fiscal year runs from Oct. 1 to Sept. 30. The government will shut down or spending will be based on temporary measures if Congress and the president can't agree on a final budget.