The major revenue sources for government income are: the profits tax, the salaries tax and the property tax, which correspond to the three major classifications of taxes. The major expenditure sources are: transfer payments to persons, defense consumption and social security (BLS, 2007). For state governments, the revenue is generated by land and municipal taxes and the expenditure is generated by retirement and disability, other direct payments and grants. The 2 major tax philosophies are: the single and the progressive one. Sales taxes are designed to be proportional, but in fact they are also called regressive because people with low income usually spend a higher % of their income on taxable sales, than people with higher incomes.

If the government doubled or tripled the taxes, the first impact would be to slow down the economic expansion, because companies would have less money to invest and investment is important to grow....
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