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.
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
