Over the tax season, a couple of clients wondered where the government got most of their money from in taxes (sure seeing their tax bills had something to do with the question!). So, I did some digging (Congressional Records & Department of Treasury releases) and found that approximately $2.8 trillion was collected by the US Government during 2013. The largest percentage of tax revenue came from Individual Income Tax (47%), followed by Payroll Taxes (32%) and Corporate Income Tax (10%). These percentages have no doubt changed over the years, especially when corporate tax rates were much higher and Estate & Gift Taxes were lower.
The ‘Miscellaneous’ category is probably made up of various fees (such as penalties & interest) collected by the revenue agencies, as well as smaller taxes, such as the highway use tax paid by truckers & other cargo carriers, among other items.
Payroll taxes are split between companies and individual and companies also pay Unemployment Insurance. Your paycheck withholding for ‘Medicare & Social Security’ is in this category.
Please note that companies that have employees get a deduction on their income tax return for their portion of payroll taxes, as well as employee wages.
Have any thoughts or questions? Please feel free to leave them below:
Thomas C. Hodge, CPA
The Hodge Group
3040 N. Menard Avenue
Chicago, IL 60634