Current Revenue
The U.S. government’s total revenue is estimated to be $4.71 trillion for FY 2023. Per the White House’s projections, income taxes are slated to contribute $2.35 trillion. Another $1.59 trillion will come from payroll taxes. This includes $1.10 trillion for Social Security, $342 billion for Medicare, and $55 billion for unemployment insurance. Corporate taxes will add another $284 billion. The White House also predicts the Federal Reserve, whose revenue comes from a variety of sources, will contribute $76 billion in 2023. The Fed is the bank for federal government agencies, and it pays interest on the billions of dollars in operating funds deposited by these agencies. The remainder of federal revenue comes from excise taxes, tariffs on imports, miscellaneous receipts, and estate taxes.
How Revenue Relates to the Deficit, Debt, and GDP
The government’s annual income doesn’t cover its spending, which is projected to create a $918 billion budget deficit in 2023. Deficits add to the national debt Many argue that Congress should only spend what it earns, but that depends on where the economy is in the business cycle. For example, Congress should use deficit spending to expand economic growth in a recession and stimulus spending to create jobs. Once the recession is over, the government should switch from expansionary to contractionary fiscal policy because it’s the best time to raise taxes and reduce the deficit and national debt. It also keeps the economy from overheating and forming dangerous bubbles.
U.S. Tax Revenue by Year
Here’s a record of income for each fiscal year since 1962. Tax receipts fell off during the recession but started setting new records by FY 2013.
