Federal Income Taxes – What Are You Buying?
No one likes paying Federal income taxes, but most of us do like the things that those taxes provide. In our eagerness to complain about paying our taxes, we forget that there are some things that are necessary, such as roads and schools and defense, that are funded by those very taxes we hate paying. In an ideal world, we’d get all of those things from some fairy and wouldn’t have to pay for them out of our pockets, but we don’t live in that world.
Instead, we live in a country with more than three hundred million people and those people have needs that have to be met on a large scale. For that, we need the things that only Federal income taxes can provide, like it or not. In this blog post, we’ll look at the things that our Federal income taxes help provide, in order in which they receive the most funds. There won’t be many surprises on this list, really, but it is nice every now and again to take a look at what we’re buying with our hard earned money.
What Your Federal Income Taxes Buy
Below is a listing of the top 10 things that our Federal income taxes pay for.
Defense – You’d think, from hearing the annual cries of politicians, that our national defense is getting short shrift when it comes to funding. That’s not the case; our military gets nearly 25% of all of our Federal income taxes, and the amount of money that we spend on defense goes up on an annual basis. There are lots of arguments to be made about whether we should be spending this much money on defense, but that’s a debate for another Website. On this one, just note that for every dollar you pay in Federal income taxes, about 25¢ is going to the military.
Healthcare – It might come as a surprise to see healthcare second on this list, since unlike most developed countries, the United States does not have a national healthcare system. We do, however, have such a system for senior citizens and the poor, and Medicare and Medicaid take up a big chunk of our Federal income taxes. They’re not the only recipients of this funding; some of it goes to other agencies, such as the Centers for Disease Control, food safety and additional health research.
Funding for individual need – This covers retirement benefits for government employees, and also the Supplemental Nutrition Assistance Program, popularly known as food stamps. Earned Income Tax Credit and Child Tax credits come from this funding, which makes up about 17% or so of spending from Federal income taxes.
Interest on government debt – The U.S. government may be able to print money, but they don’t print as much as they spend. At the moment, the government owes more than $17 trillion dollars, and those debts incur interest. That interest has to be paid whether the principal is paid down or not, and that interest takes up nearly 10% of the money from Federal income taxes submitted to the government each year. As the debt rises, so will the amount of the interest payments.
Benefits for veterans – Spending on the needs of veterans is independent of the spending on the military, believe it or not. Older veterans need health care, which comes from Federal income taxes, and funding for post-military education and other training is also funded here. Most of the money goes to healthcare.
Education – This would be education for the public, which is independent of the expenses for military veterans, as outlined above. This funding would include funds for public schools, including elementary, junior high and high school. Specialized training for people with disabilities and financial aid for college student is included in this spending, which takes up about three percent of all Federal income taxes.
Law enforcement – This is a rather broad category that takes up just a bit over two percent of Federal income taxes. This area includes both law enforcement itself, such as funding for the FBI and the Secret Service, but it also funds related agencies, such as the Supreme Court and the Federal court system. Also included in this group would be any spending related to immigration, such as the issuing of passports, visas and green cards for resident aliens.
Energy and natural resources – This portion of Federal income taxes goes to such things as the Bureau of Land Management, national parks, and the Environmental Protection Agency. The Department of Energy gets money from here, too, as do a few other departments that have anything to do with the environment or pollution.
Foreign aid and international issues – These take up a much smaller portion of Federal income taxes than most people realize, with all of it taking up no more than 3% of our budget. This would include such things as foreign aid, but also the funding of foreign embassies and diplomatic missions, along with other humanitarian expenses.
Technology and space – For a country that put men on the moon, we don’t spend nearly as much on science and technology as most people would think. In total, about 1% of our Federal income taxes go to such things as NASA and other scientific and research organizations.
Federal Income Taxes and Spending Summary
It’s nice to see every now and again exactly how we spend our Federal income taxes, even if we aren’t too crazy about paying them. What many people fail to realize is that there are lots of ways to spend less on taxes, as the government allows people to take all kinds of deductions that lower the taxable income and in turn, lower the amount of Federal income taxes that we have to pay.
The problem is that our tax code is so complex that people have a hard time keeping track of such things. We can recommend a great resource for lowering your taxes by allowing you to pay the least amount of money legally possible. This resource was created by a longtime tax attorney who explains everything in easy to understand English, rather than complex tax talk. Even better – the cost of this resource is tax deductible, which saves you even more.