How does the federal government raise revenue? What is the largest source of revenue for the federal government? Do state governments also raise revenue from the same sources as the federal government?

Question

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Answer 1

The government raises revenues by collecting taxes. The federal government's largest source of revenue is the individual income tax. The other major federal taxes are the payroll tax, the corporate income tax, and excise taxes.
The sources of revenue for state and local governments are quite different from that of the federal government. The largest source of revenue for state and local governments are miscellaneous taxes and fees that state and local governments collect. These include tolls on roads, public transportation, ticket sales, vehicle licenses, hunting and fishing licenses, etc. States rely on the sales tax, individual income tax, and corporate tax. Local governments rely heavily on the property tax. State and local governments also receive funds from the federal government.