How will tax expenditures evolve over the coming decade? Q.How will tax expenditures evolve over the coming decade? A.Tax expenditures will decline as a share of GDP through 2024, as temporary provisions of the 2021 American Rescue Plan Act expire, and then will increase after 2026 as most individual income tax provisions in the 2017 Tax Cuts and Jobs Act expire. Throughout the decade, tax expenditures as a share of GDP will remain about the same, but itemized deductions will increase while refundable tax credits will decline. Read more about How will tax expenditures evolve over the coming decade?
What are the sources of revenue for the federal government? Q.What are the sources of revenue for the federal government? A.Over half of federal revenue comes from individual income taxes, 9 percent from corporate income taxes, and another 30 percent from payroll taxes that fund social insurance programs (figure 1). The rest comes from a mix of sources. Read more about What are the sources of revenue for the federal government?
What is mandatory and discretionary spending? Q.What is mandatory and discretionary spending? A.Lawmakers can control all spending except the interest due on government debts. However, discretionary spending often gets more scrutiny than mandatory spending or tax breaks that function much like spending programs. One reason for this imbalance is that discretionary spending must be re-approved each year. In contrast, most mandatory spending and tax expenditures continue from year-to-year without new approval. Read more about What is mandatory and discretionary spending?