Private and public sectors in the US have undergone tremendous growth over the years. Private business entities produce most of the goods and services and are approximately two-thirds of the US total economic output. About one-third of the economy is through the contributions of the government sector. According to a recent report from the World Bank (WB), domestic credit to the US’s private sector is approximately 192%.
The private sector is expected to undergo rapid growth in the next five years. The US public sector employs about 20.2 million people, constituting approximately 14.5% of the workforce. The growth of the private sector is a critical determinant of the continued improvement in the country’s gross domestic product (GDP). The complementary roles between the private and public sectors have resulted in increased job opportunities, the production of goods and services, and the general improvement in service delivery.
The historical growth of local, state, and federal governments and the reasons for that growth over the decades. The size and scope of the government are crucial for numerous reasons. For instance, under taxing, spending, and regulating, the government affects economic resource allocation. The US federal government’s size and scope expanded tremendously, especially in the last quarter of the nineteenth century. For example, growth has been significant in areas such as immigration. The government did little to regulate immigration, especially in the periods preceding the Civil War.
The growth in the sizes of different levels of government is for political and economic reasons. For instance, the US government’s growth has been motivated by the need to increase political representation and enhance the administration of essential services. It also allowed for improved accountability and prudent use of financial resources by creating effective checks and balances from various government arms.
Various levels of government in the US use various sources of revenue to fund different government expenditures. The federal government’s main sources of revenues include individual income taxes, payroll taxes, and corporate income taxes. Other critical sources include tax revenues such as excise taxes, estate tax, and other fees and levies. State government revenues are collected from sales, charges, fees, and transfers from the federal government.
Other sources of income include intergovernmental transfers from other local governments. The large sources of government revenues enable it to finance various recurrent and development expenditures in different fiscal years. The federal government finance various projects in local states. The collaboration and partnership between the states and federal governments have remained significant in attaining development agendas in the US. Direct taxes are the main sources of government revenues, both the states and federal governments.