Question

Which of the following federal taxes comprises the highest percentage (almost half) of all tax revenues collected by the U.S. government?

A) Corporate Income Tax
B) Excise Tax
C) Individual Income Tax
D) Social Security and Medicare Taxes (Payroll Taxes)

Answer 1

Individual Income Tax is the federal tax that comprises the highest percentage, almost half, of all tax revenues collected by the U.S. government. It, along with payroll taxes, accounts for over 80% of federal revenue.

Step-by-step explanation:

Out of the options given, C) Individual Income Tax comprises the highest percentage of all tax revenues collected by the U.S. government. In fiscal year 2010, individual income taxes and payroll taxes together constituted 82% of all federal revenues, with individual income taxes alone being the largest single source.

While this category is substantial, it constitutes less than half of the total federal tax revenue. Corporate income taxes, excise taxes, and other sources make up the smaller shares of the federal revenue.

The patterns of federal taxation have changed over the years, but individual income taxes have remained a constant major source.

Payroll taxes, which fund vital programs such as Social Security and Medicare, represent a large portion as well. Conversely, corporate income taxes, excise taxes on specific goods like alcohol and tobacco, and estate and gift taxes contribute less to the overall federal tax revenues.

Therefore, the correct answer is C) Individual Income Tax.