Where Does the Federal Government Get All That Money?


Every year the U.S. federal government collects
more than $3 trillion in taxes, and almost half of that comes from you and me, the individual
income taxpayers. These are the taxes that come out of your
paycheck or maybe you pay quarterly. Either way—it’s a lot of money, so it’s
worth learning more about! So here are five things you didn’t know
about the individual income tax: Number one: The individual income tax has
been the largest source of federal government revenue since 1950—accounting for 47.3 percent
of revenue in 2016. Number two: While the name “individual income
tax” implies that only individual Americans pay the tax, many small businesses are subject
to it as well. A majority of small businesses are set up
as “pass-through” entities, which means that business profits are included on the
owner’s individual tax sheet and is thus taxed at the individual rate which is higher
than the rates big corporations pay. Number three: According to 2016 data from
the Tax Policy Center, 44 percent of Americans —or roughly 77 million people— don’t
pay any federal income taxes at all. Number four: A combined 2.6 billion man hours
is spent every year filling out tax returns. That’s an average of 17 hours per American
tax filer. If time really does equal money, we’re paying
even more than we thought to Uncle Sam. And lastly number five: According to the most
recent data from the Tax Foundation, the top one percent of taxpayers contribute roughly
40 percent of all federal income taxes collected. And the bottom 50 percent of taxpayers were
responsible for less than three percent. That’s a lot of taxes paid by very few people. The individual income tax is what makes many
of the benefits and programs provided by the federal government possible, but having the
rate set too high can have serious consequences on the financial situation of individuals
and their families, as well as overall economic growth. Small business tax cuts is not a partisan
issue, it’s an American issue. Both Republicans and Democrats should be able
to get behind legislation that accelerates job creation, raises wages, and strengthens
communities. It’s a win-win policy.

100 thoughts on “Where Does the Federal Government Get All That Money?

  1. Trickle-down economics is an epic failure of the Republican Party. Once you realize that trickle-down economics does not work, you will see the excessive tax cuts for the wealthy as what they are — a simple upward redistribution of income, rather than a way to make all of us prosperous as we were told.

  2. There is no such thing as Prager University. Like Trump University, it's all a scam, a lie, a ruse to dupe the gullible.

  3. Pretty good video. But while everything in here is true, the point about small businesses being taxed on the individual owners tax return. They attempt to make you feel bad for small businesses whose profits are taxed at the individual rate. This is a tax strategy that makes them pay far less in total taxes.

    If they were taxed at the corporate level, then the business would pay taxes, then to distribute the money to the small business owner, it would either have to come out in the form of dividends (taxed at 15% on the individual tax return) or in the form of a bonus (taxed at individual rates plus payroll taxes). For the pass through all profits are paid on the individual return, and when they take any profits out there is not additional tax on the dividends. Plus this strategy allows them to pay less in the payroll taxes as well.

    We can have the discussion as to whether small businesses are taxed too much, I think they likely are, but Prager U knows that this method of taxation helps most small business owners.

  4. Thumbs up…but…we need to understand that it's not the "left"…or "democrats" …it's simply communism. And the communist agenda is to control all of our lives and all of the economy. So…"compromise"???…NEVER gonna happen!

  5. Raising wages just to raise wages is a false pretext. Especially minimum wage. it increases the minimum payed to welfare recipients, that add to the over all tax burden, that adds to the number of people that dont't want to pay in to the tax/give me free shit when i can just fill out some paperwork and get the same thing, system. I believe the minimum wage should be lowered and the maximum pay to welfare should follow suit.

  6. Some folks here have not studied new tax law…Just repeat Dem propaganda. Middle class wins big….wealthy not so much.

  7. How does the 1%, whom have $3T+ stashed overseas to avoid paying taxes, supposedly pay most of the tax? Many people make minimum wage precisely because the 1% push politicians to freeze wage increases. So let's increase the minimum wage to $15/HR so that the poor can pay more taxes 😉

  8. Taxes by very few people that's because the highest amount of income,like bottom 80% have 7% percent of the wealth

  9. I don't know where to start with how wrong this video is.

    For starters, Federal spending isn't revenue constrained, and doesn't depend on tax collections.

    The top 1% pay so much more in taxes because their incomes are vastly larger (and they still pay less as a proportion of their wealth and income). It's indicative of inequality, and not of how much the top 1% "contributes."

  10. All the more reason to do away with how taxes are currently collected. A simple 3% national sales tax would close all loop holes in the current tax law, amongst other things. We could also shut down the IRS and prevent that office from being used as a tool to attack certain groups for political reasons.

  11. 00:56 44% of Americans pay no income tax. >> 77 million of you: get some skin in the game — you GOTTA PAY something!!!!!!!!!

  12. Another thing that you might not know is that there is no written law that requires you to pay income tax. But that doesn’t mean that the IRS won’t come after you…they most definitely will, and they will even bully and threaten you with jail until you pay it.
    https://youtu.be/1UCcW0RoNdc

  13. You youngsters have it easy. Your employer with-holds for you. Wait until you retire and the withholding stops. You have the privilege of writing a check every quarter.

  14. You left out the largest source of money for the federal government: Debt! That's right debt! The Federal Reserve creates money out of nothing and lends it to the government (T-bills, bonds, notes) to sell to us and around the world at large. Taxpayers pay the "interest" on the national debt which is included in the annual budget. Currently the amount owed is rapidly rising, and accounts for 105% of GDP (Gross Domestic Product). When governments for political reason will neither cut services nor raise taxes to pay for them; they "borrow." At the core of this scheme is the Federal Reserve which enables this to go on, distorting makets, plunging us, (and the world via other Central Banks) into debts that can never be repaid in the same way Greece and Cyprus became financial basket cases. We are gaining speed on the same downhill slide they are on. Why? We are becoming an Insolvent country with government and personal debt! it's not rocket science folks!

  15. I find it incredibly hilarious that prager is whining that the top 1% pay so much tax, it's unevenly distributed! Yet they just sorta sidestep that the top 1% have 50% of the wealth.

  16. The FBI has a budget of $8,000,000,000 dollars. That’s 8 BILLION dollars! Other federal agencies who also have no checks and balances and insufficient oversight are out of control, funding needs to be cut by 25% for all federal agencies. And federal employment needs to be reduced by at least 10%. If the FBI scandal is any indication there is massive waste and corruption that needs to be defunded. This would save taxpayers enormously.

  17. If the libtards in the comments thought this was a Killary, Bernie plan they'd be all for it. Democratic cattle following the flow. And these kids pay 40-60k a year for college? Scary

  18. Well actually in America the 1% richest earn more than 80% of national GDP so It seem normal they pay a little bit more

  19. Back in the day corporation s used to pay more in taxes but thanks to Republicans and Neo Liberals that burden has ever increasingly been shifted onto you the people.

  20. Stupid U.
    The money the government spends is borrowed by means of issuing US Treasury instruments. Rich people buy them. Income tax goes to pay the rich people back when their Treasuries mature. Much of the borrowed money is given to rich people to run privatized government programs.
    Spending borrowed money drives inflation.
    Inflation forces theconsumption of cash reserves.
    When inflation is allowed to continue after cash reserves are consumed, more borrowing is forced – driving more inflation.
    Stop giving tax breaks to the rich. They're getting rich off of the National Debt. Tax every one enough to get the national debt paid off. That will bring about deflation, the opportunity to engage in meaningful savings programs, and the reclamation of freedom from bankers.

  21. This entire video did not mention the Federal Reserve 1 time. I am absolutely in shock how people eat this crap up as useful information.

  22. Remind us again how much wealth the 1% has in order to pay the almost 40% of income taxes. Just for instance I pay double what they do in Europe for my internet, cable, phone and way more in Gas then an American. So just like in monopoly if someone has all the wealth of course they are going to have more wealth to be charged income tax on. Make sure to point out the rapid increase in wealth for the 1-5%er's and the completely non growth or almost no growth for everyone else.

    Giving the rich more money does not work, they do not create more jobs.

  23. "That's a lot of income tax paid by just a few individuals." No shit, they get over 90% of all the wealth in a year!!!! Why didn't they point that out?

  24. Top 5!
    This is best you could come up with genius?
    When did we exactly start paying taxes?
    Why federal reserve bank, a privately owned entity that is not part of government what so ever, as its name may sounds like, was created in 1913 and IRS just happen to be created also in 1913 is loaning money to our government which we have to pay back with interest through our federal taxes?
    Did we pay federal tax before 2913?
    Why do we pay taxes?
    Who should pay taxes?
    Where does tax money go?
    Who supplies money to government?

  25. Who is federal reserve bank?
    You may think they are part of our government!
    They are as federal as federal express!

  26. Why does our country borrows money from federal reserve bank, a privately owned organization, instead of supplying money itself?

  27. Democrats are Nazi socialists, almost like Hitler's government used to be (there are many parallels between American Democrats and the Nazi Socialist Party of 1933). They are even more so now that they used to be. socialists' core values are high taxes and wealth redistribution economically. That is why they will never get behind your low tax program to spur American economy.

  28. great vid– but the detail about the top 1% paying all that tax is intentionally misleading — take another look http://www.pewresearch.org/fact-tank/2017/10/06/a-closer-look-at-who-does-and-doesnt-pay-u-s-income-tax/

  29. This is the third video I've watched from prageru and I have to say so far what a misleading provider of misinformation you are. A simplistic and easy to follow structure no doubt, but only scratching the surface on the subject matter.

  30. I don't get the way that Americans think. Here in Norway we are glad to pay are taxes, every social service gets cheaper or free because of high taxes, the richest does not need all that money, and the poor could surely get a cheaper health care system so they dont have to work 20 hours and sleep 4 as well as raising a kid that they paid 40k USD for because they could not afford insurance.

  31. #3 "44% don't pay federal income taxes at all." @ around 1:06. You should know that you don't pay taxes at all, if you live below the poverty line. That aligns with the UN's 40% of Americans are living in poverty. #4 In a capitalist society, you earn wealth by providing a service. So when there are billions of man hours spent on paying taxes, then that's just "paying even more than we thought to Uncle Sam." This is another distraction. Those man hours are jobs for people, not more taxes. This is misinformation. I subscribed to PragerU's channels, because there's some good stuff on here. They blatantly pick and choose facts though; it's just another form of propaganda. Here's something I think PragerU would agree with me on: You have an individual responsibility to read between the lines, and educate yourself. Don't count on the media to do it for you, because you'll get far more agenda than you will knowledge. This includes PragerU.

  32. I'm for small business tax cuts and big business tax increases. We don't need big corporations to have more money to open more walmarts and create more 8 dollar per hour jobs. Give small businesses a chance to compete.

  33. Takes half the business owners turnover , then you pay regulations as well , plus the money left over pays the workers , how much money do you really think a small business owner take home yearly ??

  34. Not every item described, explains "where are that money comes from"..as far as i can tell.
    And i am on your side

  35. please do a video on where the income tax actually goes. we do not get funding from the income tax. the income tax goes directly to pay back the federal reserve for lending our government money to pay for welfare and other socialist benefits. our taxes never reach the government, but the private corporate bank. lets talk real in terms of what the income tax really is. it is slavery. lets talk freely about abolishing the fed and gaining control of our income and outrageous tax invasion.

  36. S-corps accommodate small business owner’s tax issues.. Also US tax inefficiencies is technically good for the economy. Paying professionals is still “consumer-spend” ha!

  37. When in England you have a soccer star N'Golo Kante pay more in taxes than Amazon and Google combined (FACT) then this video wouldn't make sense in England. Warren Buffet tax rate is probably less that the rates of the cleaners in his office. Nah don't think Prager telling the full story on this one, just picking out the bits that support their argument. Don't get me wrong, sometime Prager does make sense, just not this time (no one makes sense all the time)

  38. Government shouldn’t have all that money and good reasons ( that I can’t say but it’s true ) well kinda but it’s actually a good thing to talk about with them 😂

  39. They seemed to have left-out the most important things about the income tax.
    #6) The income tax was designed SOLELY to tax CORPORATE PROFITS.
    #7) Wages paid in exchange for individual work performed ARE NOT TAXABLE and are considered by the IRS to be VOLUNTARY.
    #8) There IS NO LAW, NOR HAS THERE EVER BEEN A LAW, stating we must pay taxes on personal income.
    #9) Not ONE SINGLE NICKEL of the $3 trillion collected for annual income taxes is used to help finance ANYTHING in the United States.

  40. The Federal Reserve is not a government branch . Is privately owned . Why do we have to pay taxes .to this motherfukers. And every year or every two years billions of dollars go missing. And we are the criminals hahaha.

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