This study develops a two-sector endogenous growth model to discusses the relative merits of income tax financing and bond financing from the point of view of long-term economic growth and social welfare. We find that which financings get a higher economic growth rate depends on the interest rate and bond growth rate. Moreover, income tax financing is superior to bond financing from the perspective of welfare. (1)From the point of view of long-term economic growth,the best financing policy is decided on the weights of bond interest and growth rate of bond issue. (2)We also find that income tax financing that maximizes welfare is better than bond financing, no matter whether the productivity have Externalities or not.