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M. <br />to different governments, etc. Table 3 shows the sources of spending and receipts by federal and <br />state /local governments and displays some interesting mechanisms of fiscal federalism.$ Note <br />that approximately 30% of state and local government receipts are from grants from the federal <br />government to the various subnational governments. We also see that state and local <br />governments actually account for 63% of government expenditures on goods and services, while <br />the federal government accounts for 73% of transfer payments to persons and households. <br />Additionally, one should note that of the $978.1 in government expenditures for goods and <br />services made by the federal government, $732.2 billion is for national defense. Therefore, state <br />and local governments account for 87% of non - defense related government expenditures for <br />goods and services. In short, most government expenditures occur and the state and local level <br />and most transfer payments occur at the federal level. Because of the structure of the current <br />progressive tax code and the fiscal federalism system, there will always be some <br />states /counties /cities/households that will pay `more' in taxes than they `receive' in benefits. <br />Table 3. Government Receipts and Spending, 2016 ($ bn) <br />8 Bureau of Economic Analysis, NIPA Accounts. www.bea.gov. Please note that not all columns and rows add up <br />due to rounding and the nature of fiscal federalism. <br />CCM Economics, LLC Orange County Tax Equity Page 9 <br />All Govt <br />Federal <br />State /Local <br />Government Receipts (all sources) <br />5,319.6 <br />3,497.8 <br />2,372.9 <br />Taxes <br />3,744.3 <br />2,153.6 <br />1,590.8 <br />Social Insurance Taxes <br />1,251.9 <br />1,232.6 <br />19.3 <br />Current Transfer Receipts from others /govts <br />214.2 <br />73.4 <br />691.9 <br />Income from assets <br />131.6 <br />49.2 <br />82.4 <br />Expenditures for goods /services <br />2,655.2 <br />978.1 <br />1677.1 <br />Transfer Payments to persons <br />2,796.3 <br />2,047.9 <br />695.2 <br />Transfer Payments to other govt <br />604.4 <br />Interest <br />666.3 <br />474.1 <br />192.3 <br />Subsidies <br />59.2 <br />58.7 <br />0.5 <br />8 Bureau of Economic Analysis, NIPA Accounts. www.bea.gov. Please note that not all columns and rows add up <br />due to rounding and the nature of fiscal federalism. <br />CCM Economics, LLC Orange County Tax Equity Page 9 <br />