Alternative Government Revenue

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Where does all of federal government revenue come from for the USA? And how can we create news ways to bring more?

The first source I looked at in order to learn more about the revenue flow in the USA talked about the different categories in which this revenue came from. This article was written by The Tax Policy Center, a credible urban institute and Brooking institution, claims that almost ¨80% of the incoming revenue for United States comes from income taxes.¨ After reading this, I realized that a lot of work and research must be done in order to find an alternative for the highly taxed income, since it does take up 80% of our revenue. I connected this finding to my economic principle of Institution because the government is the one that mandates these taxes and collects the revenue.

I believe that since 80% of the revenue comes from income taxes, we need to find a different way to implement new options to lessen this percentage. As I was doing research, I found out that the most effective way to do this would be to target the state and local governments in order to get the most number of people the help they need. But starting off at the federal level, there are so many assets that the US owns, which are not beneficial in the long run. This article, written by Scott A. Hodge, president of this Washington D.C. organization called Tax Foundation, talks about how we could save over 300 billion dollars by selling these ineffective assets. This will drastically increase the amount of revenue the US has available and can put that into helping the poor. This would be an interesting alternative. After this is done, we can start to use this money for aiding the poor.

Other ways government could raise revenue without raising income taxes include:

• Capping deductions:
• It gives taxpayers the choice in deciding which deductions were best for their situation
• Allowing “temporary” expensing to expire:
• These temporary measures are considered tax cuts, but in reality they are more like tax shifts. Instead of businesses taking their deductions in future years, they take them now. This timing shift actually produces a long-term revenue loss of nearly zero. The idea behind bonus depreciation is to encourage capital purchases earlier and hopefully encourage the use of that capital to increase production. 

In order to allow this to be effective, baby steps must be taken. For example, we should slowly start to sell off assets and pool the money together. Then, after having a certain amount of money, we should target the people who are the most poor in order to bring the poverty level up by a little. This way, more people will at least have something to rely on. I believe that solving the problem of creating more revenue is one of the first steps to help aid the poor, without taxing heavily on the rich.

I think that my next blog post will be the other bullet-pointed ideas about raising income and about this one case study which can help to enhance my topic question at hand.