Government Spending and Taxation - Report Example

Introduction

This paper analyses Federal and State spending and taxation about health care, social security, unemployment, and labor issues. The discussion is based on the scale of spending, source of funding, social justice issues, economic growth and stability, and lastly, the national debt issues. Focusing on the scale of spending and sources of funding, in 2018 the current receipts of the federal government were below $3.5 trillion. 56 percent came from the tax receipts, 38 percent from the contributions to government social insurance programs, and the rest from other sources. In 2018, $1.8 trillion was the receipt for the state government. One percent and 4 percent were contributions to social insurance programs and 58 percent came from the tax receipts. The state government revenues of $644 billion formed 36 percent, $533 billion of the total came from the intergovernmental transfers from the federal government (US Bureau of Economic Analysis, 2020).

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Appropriations Acts Control

Laws other than the appropriations acts control the federal mandatory spending. Expenditures depend on an individual's participation and eligibility. The resulting costs are covered at whatever level is needed. It is important to note the U.S mandatory spending has grown to 61 percent in 2019 from 1962 (US Bureau of Economic Analysis, 2020). The child tax credit introduced in 1997, earned income tax (1957), and Medicaid and Medicare both introduced in 1965 have largely impacted the rise of mandatory spending (US Bureau of Economic Analysis, 2020). Moreover, Medicare and social security spending has increased rapidly due to the growth of the disabled and the elderly population. Other income support programs and social security accounted for nearly 60 percent of mandatory spending. However, the two major government health programs, Medicaid and Medicare accounted for the remainder.

On social justice issues, the state, the federal governments, and individuals ought to share the responsibilities. For instance, through the payments of taxes and premiums for the insurance, an individual plays a critical role in supporting the running of the government functions, while the government has to provide quality services to its citizens. For instance, For fiscal 2019, the federal government spent approximately $ 1.2 trillion on health care (US Bureau of Economic Analysis, 2020). Of this amount, it claimed the veteran's medical care of approximately $ 80 billion, Children's Health Insurance Program (CHIO) and Medicaid of about $427 billion, and Medicare of roughly $644 billion (US Bureau of Economic Analysis, 2020). The provision for health care and the direct outlays reduced the tax revenues by approximately $234 billion. The taxable income of employers' contributions for the medical care and medical insurance premiums accounted for over $152 billion. The payroll taxes were substantially reduced due to the exclusion of the employers' contributions to medical care. In 2019 the government revenue was reduced by $273 billion due to the payroll and income taxes.

Taxation Measures

The federal and the state government have ensured economic growth and suitability through the spending and taxation measures put in place. For instance, discretionary spending has fallen to about 30 percent from two-thirds in 1962. The discretionary spending requires regular renewal by Congress, unlike mandatory spending. National defense accounted for more than 50 percent of discretionary spending in the financial year 2019 (US Bureau of Economic Analysis, 2020). The rest went to domestic programs such as health care, income security, veterans benefits, training and education, and transportation. International activities such as foreign aid accounted for about 4 percent of the discretionary spending.

Conclusion

On the national debt issues, both the federal and the state governments have ensured that national debts are within the limits. For instance, the size of the interest and the debt rates and the interest on the national debt has fluctuated over the past half-century. For instance, in 2019, it climbed to 8.4 percent from 6.1 percent in2015 (US Bureau of Economic Analysis, 2020). In the mid-1990s, the interest in the national dept was more than 15 percent after rising from 6.5 percent of the total outlay in 1962 (US Bureau of Economic Analysis, 2020). The interest rates and the national debt are projected to increase due to the rise of interest payments as a share of the outlays.

Reference

US Bureau of Economic Analysis (2020). National Income and Product Accounts.
http://www. U.S. Bureau of Economic Analysis (BEA)> accessed on 3rd December 2020.