Do You Know What Your Taxes Pay For?

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Today’s smart chart comes from Huff Post blogger Chuck Marr, the director of federal tax policy at the Center on Budget and Policy Priorities. Marr posted his top 10 federal tax charts, including this one that details what our tax money is spent on. Marr writes: “Three-fifths of federal spending goes for national defense, Social Security and major health programs like Medicare and Medicaid; the rest goes for safety net programs, interest on the debt, and a wide variety of other areas.”

where taxes go

You can see other telling charts on his post, including one that shows how little taxes we collect as compared to other developed countries, trends in U.S taxation over the past 50 years and a comparison of tax rates between middle- and upper-class Americans.

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  • http://www.facebook.com/cemott3rd Carl E. Mott III

    If you take FICA (Social Security, Medicare/caid) out of the equazation since it is a separate tax and is dealt with separately from the Fed. Gov’s budget, military is 33%.

  • Pthoege

    That 20% for the defense needs to come down to 1%, and infrastructure and education need to go UP to 20%, goddammit.

  • Nelson Blanco83

    Actually, when taking into consideration present expenditures for past military operations (Veteran’s benefits, interest on national debt created by military spending ) plus the cost of present wars minus the Social Security which is  separate from Federal funds, the military spending is closer to 50% of Federal funds.

  • Eliot Collins

    Of my 2011 TOTAL taxes, 28% was for Federal Income Tax. This was only 7.5% of  my adjusted gross income (no flat tax for me!).

    On the other hand, 36% of my TOTAL taxes went to my Regional School Tax (this was based on my assessed property value.)

    Bottom line, plenty of my money goes towards education. 

  • sdeatherage

    I really don’t understand why Social Security and Medicare are included.  They are self-supporting through payroll contributions (and for Medicare, premiums from current retirees), and have nothing to do with federal income taxes.  The S.S. surplus (after regular payouts) is, by law, invested in Special Treasury Bonds and it, alone, has invested about 2.5 Trillion in these bonds, so why are they counted as taking 20% of federal taxes?  

    Are the retirement funds for Congress and federal workers, the veterans, and whoever, counted?

  • sdeatherage

    I’ve read that it is 57%.

  • Jack_M

    Would be nice to see foreign aid (mostly military) sliver added as well.

  • Anonymous

     Hi,
    I think, we pay tax to government for making development & providing us public related services.  Like roads, lights etc. I think it is justified to pay taxes.

    Regards

    Prep
    Station

  • Di

    According to Sen. Conrad, senate finance chairman, voiced on the senate floor, in the mid 2000′s, that the social security trust fund only had IOU’s.  The govenment spends every penny at will.  They want it to exist because it has become their general fund but they do not want the people to benefit.

  • http://www.notarypublicwinchester.com/ Notary Public Winchester

    Hello..
    Paying the taxes you owe is very important, so it is vital that you explore all of your options before jumping to conclusions. Above all, file your return on time to avoid the late filing penalty. Then, take the time to consider how realistic it is for you to pay your taxes and what options are available to you. 

  • agelbert

    That 6% interest on the debt looks small but actually will double (or more) in less than ten years because of the out of control “defense” budget keeping a slew of corporations on government swag for the  benefit of the 1% (the jobs these corporations provide do not amount to a hill of beans, regardless of what you have been told) and even more audaciously criminal, the massive multi-trillian dollar bailout of banking pigs by the federal reserve on OUR TAXPAYER FUNDING GUARANTEES. Every penny of those banking bailouts went to the 1% here AND abroad! War on false pretenses and criminal bank bailouts are the two main reasons our national debt has DOUBLED in a mere 10 years. You go from 1776 to 2000 to get to to HALF what we have today. That is NOT insanity; that is Grand Larceny and Fraud for the 1%. This did not happen by accident! If Greenspan and Bernanke’s behavior isn’t treason, I don’t know what is.
     
    People need to understand that the rationale of institutions like the Federal (which consists of 12 PRIVATE banks) Reserve and the major banks has NOTHING to do with patriotism or the defense of the economy or the country and EVERYTHING to do with guaranteeing an income stream to the elite 1% through ‘needed’ national funding ginned up for that purpose. From ginned up wars to nuclear power subsidies (12 billion dollars and counting according to Senator Bernie Sanders’ investigation) to so-called “Oil Depletion Allowances” with an even greater number of billions funded by ‘we the people’, the press NEVER talks about the fact that, unlike social programs funded by actual witholding and taxes like Social Security, Medicare and unemployment taxes, the corporate welfare programs pay ZERO dollars day in and day out for the wars, energy subsidies and interest swag for the fed. Let me make this clear: The interest on the debt is an artifice created for the benefit of the 1% because the US Government could just as easily print the money without the Fed middle man taking a cut.

    Remove the midddle man (the Fed) and you go a long way to eliminating convenient excuses for manufactured wars and ‘depletion allowances’ for contrived shortages of resources. You will still have the corporate welfare queens ike medical insurance corporations and the pentagon friends of war anytime anywhere but it would be a bit harder for them to pull the wool over our eyes.

    It reaaly torques me that when Social Security is shown in a budget breakdown, not one word is mentioned stating how other budget drains like ‘defense’ and interest ARE NOT funded through withholding. Perhaps the comparison is deliberately presented falsly as apples to apples so people don’t see what total LEECHES ‘defense’ and fed reserve interest swag are on the USA.

  • MooreMan

    Re:
    “Do you know what your taxes pay for?”
    I’d really like to know.
    As a soon to be dual citizen living permanently (over 50 yrs.) outside the US, and subject to ever more onerous and punitive citizenship based taxation and bank reporting obligations;
    I’m interested in how any taxes collected from US citizens born and living permanently abroad,  and their FBAR (and soon FATCA) penalties would be spent – and what services they would get in return. The push is on to pursue those deemed US citizens – including duals living permanently in the Non-US countries of their birth. Some are  ‘accidentals’ with two Canadian parents; born in border community hospitals – for example between New Brunswick and Maine. Most (as the IRS Taxpayer Advocate reports) don’t actually owe any US taxes – on top of the ones they pay in full already to the countries where they work and live – due to reciprocal tax treaties (ex. Canada-US). Having never lived, worked or earned in the US, they won’t qualify for Social Security, may never be eligible to vote, but cannot give up inherited US citizenship without paying a >500. fee, plus 5 years certified IRS filings.

    But that hasn’t stopped Congress and the IRS from continuing to claim (with no robust data – as the GAO and IRS have admitted in writing) that those living permanently outside the US aren’t paying ‘their fair share’ and piling draconian penalty and reporting structures on top of ever more punitive legislation.

    The IRS commissioner Geithner (of Turbotax fame) is dedicated to making us pay (whether we owe any US tax or not) through the FBAR and FATCA penalty regime – which is full of pitfalls and fraught with perils for those not US tax experts – through confusion and inadvertence – but which has the virtue of being able to exponentially exceed any amount in our everyday non-US accounts – entirely legal and post-tax, and reported to the government tax agency where we live. By making it hard to comply, easy to err, confusing, and expensive to prepare (one form takes a day to complete – according to the IRS itself), and adding draconian penalties in the tens of thousands per error, the IRS seeks to amass revenues in reporting penalties where it has not been able to assess any tax liability.

    We are also to report on any accounts at our non-US workplace, and charitable groups, and any other non-US accounts if we have the ability (whether we use it or not) to co-sign – all accounts that are legal, overseen or reported to tax agencies and boards, and other governance structures in the countries where we live. But the IRS says that they need to know about this – even if no tax is owing, just in case our soccer team’s cupcake fundraiser in Canada, is actually a Cayman island account in disguise.

    For corroboration, see these resources:
    As noted here: http://www.irs.gov/taxpros/article/0,,id=250746,00.html
    and here: http://www.gao.gov/products/GAO-12-403
    As a result, many see no option but to leave the US behind permanently
    see:
    http://www.reuters.com/article/2012/04/16/us-usa-citizen-renounce-idUSBRE83F0UF20120416
    and,
    http://online.wsj.com/article/SB10001424052702303592404577362050670738024.html?mod=WSJ_article_comments#articleTabs%3Darticle
    and,
    http://www.youtube.com/watch?v=2vcvTSj7Ytw

  • MooreMan

     Correction, Timothy Geithner is not the Commissioner, he is the Treasury Secretary, who didn’t report or pay a large portion of his own personal taxes – until he had to.  His mistakes were characterized as understandable, and innocent. http://www.cbsnews.com/8301-250_162-4745567.html Ours result in massive FBAR (and now FATCA) penalties – even in the absence of any tax owing, penalties assessed on entirely legal ,  post-tax and registered (in the country where we live and pay taxes) everyday accounts.

    IRS Commissioner Shulman acknowledges that the US tax code is too complex, and doesn’t do them himself – he hires someone else to do that. http://thehill.com/blogs/blog-briefing-room/news/75119-irs-commissioner-doesnt-file-his-own-taxes Outside the US, preparers like H&R Block now charges a base rate of 350. per ‘basic’ US return, with additional fees per each form and schedule. Outside the US, we have many more forms, of more complexity – and for many of us, we end up with Zero US tax owed – since we already pay where we live and earn. So why should we pay an average of 500.-1000. every year to file massive complex forms – just to prove that we still owe zero US tax, AND that we aren’t banking in the Cayman islands.

  • Anonymous

    The War Resistor’s League displays a slightly different Pie Chart, one that does not include Social Security, because that does not come out of the federal budget.  The government practice of  combining Trust and Federal funds began during the Vietnam War, thus making the human needs portion of the budget seem larger and the military portion smaller.  See
    http://www.warresistors.org

  • 19obert63

    It seems to me if we eliminate the bomb droppings, our money nest would provide better
    education, research, and universal health care; but I guess we can’t ignore that big bad cat at the at the bottom of our money tree.

  • http://www.facebook.com/michael.e.wharton1 Michael Wharton

    When are we going to define the line between defense and war? This pie chart would look very different if we defined war as what it is instead of defense. Department of Defense, what a crock…

  • discus town

    Cut 10% from defense and raise education to 4%. Good idea, but we’re already spendiing WAY more than we take in, so gross cuts across the board would maintain the priority balance and make everybody suffer somewhere.

  • http://www.facebook.com/people/Patricia-Stidham-Burns/100003119369128 Patricia Stidham-Burns

    Social Security should not even be in the BUDGET! It should be completely separate. It is funded by the people for the people. It has NOTHING to do with the debt or deficit. I find it hard to believe we spend as much on Social Security as we do on DEFENSE!

  • http://www.facebook.com/DJStuCrew Stu Chisholm

    Problem is, our TAXES don’t pay for Social Security… not from the same fund as, say, the military. Social Security is self-funding. Not exactly sure of the details, but I think the same is true for Medicare.

  • http://www.facebook.com/BeLoveJoy Ben Lovejoy

    Ike warned us, U.S. Allied Military Industrial Complex Inc. is in control.

  • http://www.facebook.com/people/WRobynne-McWayne/100001104062937 WRobynne McWayne

    ah-hem! Am I wrong in mentioning that Social Security IS NOT IN THE BUDGET!!??? It is a savings account each of us contributes to our entire working lives and is self funded. AS such it is NOT available for re-allocation to other areas when that seems convenient!

  • http://www.facebook.com/Halo.2u Sandra Hamilton

    I think they have included SS Medicaid and Medicare only because the Government owes the separate Social Security Trust Fund over 2.6 Trillion Dollars which is money they now have to pay back based on the bonds in the account. What needs to be kept clear here is that is money we and our employers paid in and even if the government took it, it doesn’t make it their money which I feel is something that is becoming unclear and some are using the fact that money is now on their books to down right steal it from us.

  • Anonymous

    Discretionary and non-discretionary budget spending needs to be separated out in the charts and the discussion. Those things funded by dedicated tax revenues (e.g., social security, medicare and medicaid) are non-discretionary and do not contribute to the deficit. The discretionary spending, that which is debated and subject to congressional manipulation year to year, is where the problems are, and where the issues and priorities for how income tax dollars are spent are amiss.

  • http://www.facebook.com/cindy.steffens Cindy Steffens

    they borrower from this fund to make other obligations…………which needs to STOP!!

  • Bill

    I thought Social Security was solvent and self sustaining at this time. If it is then why is it a budget item. Defense spending needs to be reduced and domestic programs increased.

  • wanderingi

    These figures look very different from those on the National Priorities Project page. Any comments about why?

  • http://www.facebook.com/dean.eveland Dean Selby Eveland

    @google-5a9eab6fee7624190687cf03df404260:disqus Exactly my question. It must be for overhead-including that going to other agencies who do employment background checks using HHA resources.

  • Tim Nyberg

    Defense down to 1% and split the 19% between education and infrastructure.

  • bmiller

    Do you ever stop to wonder why we need to pay taxes in the first place? If the federal govt is theoretically the issuer of currency, it should be spending it into circulation in order to fund its programs and the general economy (drawing excess away with a demurrage charge in order to avoid inflation). Instead, we’ve ceded that power to a private banking system, resulting in the govt becoming a hat-in-hand borrower like the rest of us.

  • http://www.facebook.com/fred.hoagland Fred Hoagland

    Social Security was initially supposed to be a separate “secure” fund, paid by it’s members to benefit said members at retirement…As far as Military spending or cuts go, instead of the cutting of overspending projects, why do they always cut benefits, money from low ranking members and families? I would think an astute member of our society would pick up on these issues…

  • http://www.facebook.com/profile.php?id=1805776876 Doug Myerscough

    There is a glaring mistake in this chart – Social Security is separate. It is not part of income tax.

  • Anonymous

    That 6% on interest needs to come down to 0%. Infrastructure and education have always been the responsibility of the States, not the Feds. Those need to come down to 0%, too, so that the States actually have some money for their works. Tell your boyfriend to stop living beyond his (our) means.

  • http://www.facebook.com/mary8winter8wilson Mary Anne Winter

    SIX PERCENT INTEREST on our debt. What ? Usury!!!!!

  • Anonymous

    They are included because Lyndon Johnson needed to cover his a$$, and Congress has never had the courage to call BS on using that money that way.

  • milkweed57

    I would like us to follow the lead of the United Way in how our taxes are allocated. Instead of being at the mercy of a Congress that is unduly influenced by corporate lobbyists, each tax payer should have the opportunity to complete a score card denoting which area of the budget she or he wants his or her tax money to go. I wonder if we would retain the current proportions if this were made a reality.

  • http://www.facebook.com/bronwyn.fryer.37 Bronwyn Fryer

    I’d happily add more to the rest of the pie in exchange for a big shrinkage of the defense budget.

  • Afieldjuma

    What proportion of soical security spending comes from the specific social security tax? I think ss tax and spending should be removed from the chart since that is a dedicated fund, except where ss spending comes from the general fund. Whouldn’t that be more accurate?

  • http://twitter.com/DrLearnALot DrLearnALot

    Imagine if we changed things up a little, and spent 7% on defense, and 20% on infrastructure, research and education. We’d all be immortal, driving around in flying cars by now.

  • Bill

    Seems like smoke and mirrors to justify another raid on Social Security. Also, I thought Medicare was part of Social Security. Again I ask Congress “What is Social Security doing in the Budget?”. Republican political corruption is the problem here and it is not going to stop unless voters wake up.

  • Anonymous

    Infrastructure and education are as much about national security and the national economy as anything. You think the poorest red states run by a few rich people are going to really raise money for either one? It hasn’t proven to be necessarily true.

  • http://www.facebook.com/people/Jim-Easton/100001052954219 Jim Easton

    The education of every citizen is a constitutional guarantee, which means, at the very least, that we all help states to fulfill this responsibility. I do not see how that translates to “being the responsibility of the States.” What about the defense of the country being based on ready militias of each state (the basis for the 2nd amendment)?

    Having a debt is fine if it is to fund our investments in future readiness for defense and competition. In fact debt (or other fund raising beyond the budget) is necessary to fund the growth of a non-profit entity. That would mean that we have a robust commitment to capital developments in infrastructure, R&D, secondary education, as well as the health and well-being of every citizen.

    We talk of the government as if it were some alien overlord. It is not. The government is us. We the people enjoy the consequences of what we have allowed to be. Big government is when everyone has a stake and participates; small government is when, as now, the masses are disenfranchised and a small elite group runs everything.

    We have stood idly by while the resources of our country have been plundered without regard for royalty returns to the owners of those resources, us. Now the people we put in power will not even tax those usurpers to pay down the debt accumulated to fund their false profits. Where is the payback? We need to do serious work to reclaim our squandered birthright and place wrongfully sequestered currency back in circulation. OH, how powerful we could be!

    We all need to step-up and take responsibility for the current situation and act to change the way WE do business nationally. Write a letter to the editor; to your representatives, call them, Stand on a soap-box and spew truth, attend your town meeting and speak up, join an advocacy group for a cause you believe in. Stop whining and DO SOMETHING. We all have a civic responsibility to participate in our governance, yes, that’s big government, in the highest sense.

  • Shediac

    Where’s the CIA, FBI, NSA, ATF, paying for past wars etc.?

  • http://www.facebook.com/dryheaves.daily Dryheaves Daily

    what are we defending? who is going to attack us. 12 chinese teenage hackers. It should be called offense.

  • Chapped

    Some differently sourced charts should be posted, since the veracity of this one is in question: Both because of the inclusion of Social Security/Medicare and because there are also “black budgets” which never show up on these charts but would raise the “defense” budget outlay percentage significantly if included.

  • http://twitter.com/WraithKenny Kenneth Newman

    So you’re saying that the 2% of your 7.5% (15% of a penny out of a dollar) going to federal eduction is just too much to bear because you have other non-federal tax burdens? Sounds like you should be griping about your local government, not the feds. (The local governments, by the way, increase their taxes when the fed’s gets trimmed.)

  • Anonymous

    false– Congress has consistently borrowed from SS and left a pile of IOU’s in the box. As sdeatherage said- they are self-sustaining- if congress stops raiding the surplus.

  • Justice Now

    Well the reason that medicare and medicaid are the most we spend on is simply because there is no regulation of healthcare costs in this country to speak of. Nor is there a law that states you must see patients with medicare/medicaid. This makes it difficult to find care. We as a nation need to correct this asap. The cost of medical care is completely out of line with a civilization that has people as the most important thing not profits. Democracy does not mean we are free to take to the point of injury and we are an injured nation that needs to be healed. Let the medical costs come back into line with the rest of society.

  • Anonymous

    You’ve said what I believe more clearly than I could have. Since becoming an active member of Move To Amend my eyes have been opened to the collusion between corporations and government. In the name of almighty capitalism we are ruining our environment, decimating a once health middle class and impoverishing our grand-children’s future. The ‘stock market’ is at an all-time high again while millions of citizens are either unemployed or underemployed.
    Where does our constitution say that corporations are entitled to life, liberty and the pursuit of happiness?

  • Anonymous

    What I meant is that by including the Social Security surplus as a part of the Federal Budget, then Johnson’s deficit didn’t look so god-awful. You are right: the funds were never mixed with or used with the general funds. But they were and are used as a gimmick to make the budget deficits not look as horrible as they really are.

  • http://www.facebook.com/ben.schmidt.165 Ben Schmidt

    No ss396, you aren’t correct. Please return to the deficit/debt charts Johnson’s deficits weren’t bad at all. If you want to see bad, look at current deficits (the result of Bush/Reagan policies), Bush deficits, Bush 41 deficits, and Reagan deficits. Regardless, every president since Johnson had larger deficits than Johnson, so your point makes no sense.