Where do our Tax Dollars Go?

Evan Moreland |

April 2014

The April 15th tax filing deadline is passed – and most of us have “settled up” with Uncle Sam.
 
Well, how will the federal government actually spend your “contribution”.
 
Your Social Security payments are easy; they go to pay Social Security benefits to current retirees, and for now, they fully fund that obligation.  (The future is another matter.)  Some of the Social Security payments also go to cover a portion of Medicare's expenses; the remainder of which are covered by general federal revenue.
How about the rest?  (The following breakdown is of course approximate and open to interpretation):
 
Your income taxes are divided among several broad budgetary categories:

  • the military (27%) and military-related veteran's benefits (5.1%)
  • various forms of healthcare for U.S. residents (22.7%)--  including the remaining Medicare costs plus Medicaid
  • interest on Uncle Sam's debt (13.9%) --paid out to Treasury bill and bond holders.
  • Unemployment benefits (9.8%)
  • Everything Else:
    • running the government (4.5%) -- including various agencies such as the FBI and immigration services
    • housing programs (4%) -- community development and block grants,
    • education (2%)-- programs like Head Start, and  Pell Grants for college students.
    • scientific research, international affairs, transportation and energy (<2%)

This graph also helps to break down how your tax money is spent:

Thumbnail

If you'd like to get a receipt from the government for your taxes paid, which itemizes how that money is spent, well, good luck petitioning the IRS. But you can get a fairly accurate receipt from the National Priorities Project here: http://nationalpriorities.org/interactive-data/taxday/.  Just type in this year's tax payment from your 1040, find your state, push a button and you'll see what you paid for in terms of government services, interest and overhead.  Depending on how you feel about our government spending priorities, it may make your tax experience more or less painful.