Major component of government outlays, sources of revenue and difference in composition of state and local government outlays and revenue with that of Federal government.
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Explanation of Solution
Government outlays done for the Federal, state and local governments make up a significant portion of the economic activity in the US. The types of spending and the sources of their funds can differ significantly, however.
The major components of government outlays are:
- Government purchases of goods and services.
- Transfer payments (e.g., social security)
- Net interest payments on debt. Comment
The sources of government revenue are
- Personal taxes
- Contributions to social insurance.
- Taxes on production and imports.
- Corporate taxes.
Spending and sources of funds for the federal government are:
- About 30 percent of spending on goods and services.
- Spending weighted more for transfer payments.
- Spends to help fund education, transportation and welfare.
- Net interest payments a significant proportion of federal spending.
- Federal government receives 80 percent of its revenue from personal taxes and less than 10 percent from corporate taxes.
Spending and sources of funds for state and local governments are:
- About 75 percent for spending on goods and services.
- Spending less heavily weighted for transfer payments.
- Net interest paid is small.
- About one-third of revenue comes from personal taxes.
Introduction:
Government outlays are the expenditure done by a government for betterment of economy. Government revenue is the income earned by imposition of taxes, aids etc.
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