Answer:
- The government primarily generates revenue through the imposition of taxes – individual income taxes, Social Security/Medicare taxes, and corporate taxes.
- The government also generates revenue through issuing debt instruments such as Treasury bonds, Treasury bills, and Treasury notes – securities with varying rates of maturity.
- One less traditional method of generating income is the imposition of the so-called “inflation tax,” when the Federal Reserve simply prints more money.
Step-by-step explanation:
- 45% comes from individual income taxes
- 39% comes from Social Security and Medicare taxes
- 12% comes from corporate income taxes
- 4% comes from estate, gift, and other miscellaneous taxation