Prior to Obama's administration, the primary sources of government revenue in the United States were derived from a combination of taxes, fees, and other miscellaneous sources. The main categories of government revenue included individual income taxes, corporate income taxes, social insurance
taxes, excise taxes, and various other sources such as estate and gift taxes, customs duties, and fees.
Individual income taxes constituted a significant portion of government revenue. These taxes were levied on the income earned by individuals and households. The tax rates varied based on income brackets, with higher-income individuals generally subject to higher tax rates. Additionally, deductions and exemptions were available to taxpayers, which could reduce their taxable income.
Corporate income taxes were another important source of government revenue. These taxes were imposed on the profits earned by corporations. The tax rates for corporations were also progressive, with higher rates applied to higher levels of profits. Various deductions and credits were available to corporations, which could lower their tax liability
Social insurance taxes, such as those for Social Security and Medicare, were a crucial source of government revenue. These taxes were levied on both employees and employers, with each contributing a specific percentage of wages or salaries. The revenue generated from these taxes was primarily allocated to fund social insurance programs that provided benefits to eligible individuals and retirees.
Excise taxes were imposed on specific goods and services, such as gasoline, tobacco, alcohol, and luxury items. These taxes were typically levied at the point of sale or production and were intended to discourage the consumption of certain goods or to generate revenue from specific industries.
In addition to these major sources of revenue, the government also collected revenue from various other sources. Estate and gift taxes were imposed on the transfer of wealth from one generation to another, while customs duties were levied on imported goods. The government also collected fees for services provided, such as passport applications or national park entry fees.
On the expenditure side, prior to Obama's administration, the government allocated its funds across various sectors and programs. The largest portion of government expenditure was dedicated to mandatory spending, which included entitlement programs such as Social Security, Medicare, and Medicaid. These programs provided financial assistance and healthcare benefits to eligible individuals, particularly the elderly, disabled, and low-income populations.
Another significant area of government expenditure was defense spending. The United States allocated substantial resources to maintain its military capabilities, fund national security initiatives, and support military personnel and veterans.
Discretionary spending accounted for a smaller portion of government expenditure. This category included funding for various government agencies, departments, and programs, such as education, transportation infrastructure, scientific research, and environmental protection. The allocation of discretionary spending was subject to annual appropriations by Congress.
Interest payments on the national debt also constituted a significant portion of government expenditure. As the government borrowed funds to finance its operations and initiatives, it incurred interest obligations on the outstanding debt.
In summary, prior to Obama's administration, the primary sources of government revenue in the United States included individual and corporate income taxes, social insurance taxes, excise taxes, and various other sources such as estate and gift taxes, customs duties, and fees. Government expenditure was primarily allocated to mandatory spending on entitlement programs, defense spending, discretionary spending on various sectors and programs, and interest payments on the national debt.