The Fed will have Income this year (2020) close to $120 Billion 1) Explain how the...

The Fed will have Income this year (2020) close to $120 Billion

1) Explain how the Fed will genrate/earn all this income!

2) Explain what the Fed will do with it's income...No need to use numbers here but you should be specific

Solutions

Expert Solution

1) Sources of revenue for the Federal Government:

1. Almost 50% of Fed's revenues comes from individual taxes which has been increasing progressively over the years. The higher income households pay lot higher in terms of these taxes

2. A great portion of revenue comes from payroll taxes, which is charged from paychecks of almost all workers and is utilised towards Social Security fund.

3. Corporate income taxes also account for the revenues of Fed. Organizations are bound to pay taxes on the profits made accprding to stipulated tax slabs.

4. Taxes like excise, estate taxes etc also contribute to Fed's revenues. Excise is collected on the sale of specified goods , estate taxes are charged upon assets like cash, real estate, stock transfer etc.

2) Sources of expenditures for the Fed:

1. Social Security forms a huge portion of expenditure for Fed

2. Medicare; taking care of the healthcare needs of the citizens via various schemes

3. Expenditures on defense to ensure availability of equipments, arms, security for the families etc

4. Income security programs like unemployment compensation, SSI, SNAP etc.

jeff jeffy answered 1 year ago

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