Revenue is the money that the government collects from taxes, fees, borrowing, and other sources. Before 1913, when the Sixteenth Amendment was passed, Congress didn't have the power to enact an income tax. Before then, the federal government's chief revenue sources had been tariffs and excise taxes. Things have changed quite dramatically since then. In 2003, approximately 40 percent of all revenues came from individual income taxes, while 35 percent came from Social Security (payroll) taxes, 12 percent from corporate taxes, 7 percent from borrowing, and 5 percent from excise taxes.

Lawmakers have several ways to increase government revenues: raise marginal tax rates on income (as they did in 1993), increase the payroll tax, close tax loopholes, eliminate corporate subsidies, or increase government borrowing.