Where Does All Your Tax Money Go?

Tax day is nearly here. Millions have chatted with†accountants, shuffled through paperwork and sent off their†tax returns.

The average U.S. family pays at least $10,000†to the federal government. But it can be hard to keep up with where that money actually goes.

Here’s a basic breakdown of how the national government spends your taxes.

Social Security, Medicare and Medicaid

“Think of the government as a gigantic insurance company with a sideline business in national defense and homeland security.” That’s how former Treasury undersecretary Peter Fisher once explained†federal spending.

And he was right. As†The Balance†notes, nearly two-thirds goes to insurance programs that help seniors, those with disabilities and poor people.†

Your taxes flow into two types of spending: mandatory and discretionary. The law requires the government to fund programs like Medicaid, Social Security and Medicare.

Congress sets a budget for almost everything else†each year.

Safety Net Programs

Sixty percent of the federal budget is mandatory, which includes welfare programs.

Keep in mind programs like food stamps and unemployment benefits make up a smaller portion of the budget than often expected, accounting for just 9 percent†of spending in 2016.

National Debt Interest

The United States is now buried more than $20 trillion in debt. Your tax dollars help pay off the interest, so the country doesn’t default.

This expense is skyrocketing. According to†The Balance, national debt interest could grow to be the second biggest demand on the budget in the next decade, besides Social Security.

Defense


Add up the military budgets of China, Russia, Saudi Arabia, France, the United Kingdom, India and Germany. That total is less than what the U.S. spends on defense.

A lot of discretionary spending goes there.

As†The Balance†notes, “The next largest department,†Health and Human Services ($69.5†billion) is less than one-tenth of total†military spending.”

Other Programs


According to the Afterschool Alliance, only a few cents of every federal tax dollar goes to education — one of the many remaining programs that your taxes fund.

From transportation to public broadcasting, this spending accounts for about 6 percent of the budget.

What should you take†from†all this?†The Motley Fool‘s Daniel B. Kline says it well:

While individual Americans have no direct control over how their tax dollars are spent, it’s important to know where the money goes. It’s especially important to understand that any major increasesósay in defense spending, as President Donald Trump has proposedórequire cuts elsewhere,” Kline writes. “Most of your tax dollars go to taking care of other Americans, followed by paying for defense. The amounts devoted to everything else, including the most controversial and hotly debated government programs, amount to a relative pittance compared to the overall amounts being spent.

Photo Credit: Chris Potter/Flickr

46 comments

Sarah Hill
Sarah Hill4 months ago

Social Security is supposed to be a separate fund that government cannot touch. But they have now mixed it up with all other taxes so they could spend it. It is supposed to be OUR money for our senior years! That’s when it began to become insolvent.

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DAVID fleming
Dave f5 months ago

NOTED

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Eric Lees
Eric Lees5 months ago

"NATIONAL DEBT INTEREST
The United States is now buried more than $20 trillion in debt. Your tax dollars help pay off the interest, so the country doesn’t default.

This expense is skyrocketing. According to The Balance, national debt interest could grow to be the second biggest demand on the budget in the next decade, besides Social Security."

Some would say it's already too late to avoid the collapse of the dollar. Interest rates are rising, the FED will not be able to stop it once it reaches the tipping point. Rand Paul tried to pass a balanced budget bill but it failed to pass in the house. Why would this be a partisan issue? This will be the downfall of the USA not some foreign power.

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Winn A
Winn A5 months ago

Thanks

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Winn A
Winn A5 months ago

Noted

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Danii P
Past Member 5 months ago

Thanks for sharing

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Debbi W
Debbi W5 months ago

Another promise broken. Hope Herr trump's voters are keeping track of his broken promises. He has 'fixed' Nothing! Absolutely nothing, just screwed up everything. That's a swamp lover for you.

Make sure YOU VOTE in the next elections! Every Vote Counts!

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Angela J
Angela J5 months ago

Thanks

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Anne M
Anne Moran5 months ago

Infrastructure,, gotta fix that infrastructure... - We have a gazillion potholes,, old bridges,, uneven sidewalks,, etc. - Infrastructure is at the bottom of gov. agenda... Maybe when they legalize pot in a few months,,, and the billions start rolling in,, maybe then the government will start looking at our infrastructure... - maybe...

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Ellie M
Ellie M5 months ago

ty

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