is prohibited by the United States Constitution unless the receipts are distributed to the States by their populations, state and local government property tax amount to a wealth tax on real estate, and because capital gains are taxed on nominal instead of inflation-adjusted profits, the capital gains tax amounts to a wealth tax on the inflation rate. U.S. taxation is generally progressive, especially at the federal level, and is among the most progressive in the developed world. There is debate over whether taxes should be more or less progressive. According to the Tax Justice Network in 2022, the US fuels more global financial secrecy than Switzerland, Cayman and Bermuda combined. Expenditure The United States public-sector spending amounts to about 38% of GDP (federal is around 21%, state and local the remainder). Each level of government provides many direct services. The federal government, for example, is responsible for national defense, research that often leads to the development of new products, conducts space exploration, and runs numerous programs designed to help workers develop workplace skills and find jobs (including higher education). Government spending has a significant effect on local and regional economies, and on the overall pace of economic activity. State governments, meanwhile, are responsible for the construction and maintenance of most highways. State, county, or city governments play the leading role in financing and operating public schools. Local governments are primarily responsible for police and fire protection. In 2016, U.S. state and local governments owed $3trillion and have another $5trillion in unfunded liabilities. The welfare system in the United States began in the 1930s, during the Great Depression, with the passage of the New Deal. The welfare system was later expanded in the 1960s through Great Society legislation, which included Medicare, Medicaid, the Older Americans Act and federal education funding. Overall, federal, state, and local spending accounted for almost 28% of gross domestic product in 1998. Federal budget and debt During FY2017, the federal government spent $3.98trillion on a budget or cash basis, up $128billion or 3.3% vs. FY2016 spending of $3.85trillion. Major categories of FY 2017 spending included: Healthcare such as Medicare and Medicaid ($1,077B or 27% of spending), Social Security ($939B or 24%), non-defense discretionary spending used to run federal Departments and Agencies ($610B or 15%), Defense Department ($590B or 15%), and interest ($263B or 7%). During FY2017, the federal government collected approximately $3.32trillion in tax revenue, up $48billion