It’s tax time again, and as you look over your tax payments for calendar 2016, you’re undoubtedly wondering where those dollars are being spent.
The Wall Street Journal recently published a chart which breaks down spending for every $100 of tax receipts—and concludes that the U.S. government spends like a very large insurance company that also happens to have an army.
For every $100 you pay in taxes, $23.61 goes to Social Security payments and administration. Another $15.26 goes to Medicare, the government health insurance program. Medicaid, the health insurance program for the poor, accounts for another $9.55 of that $100 tax bill—bringing the total costs for various civilian insurance programs to 48% of the total budget. And that army? It costs $15.24 of every $100 the government collects in taxes, not counting veterans’ benefits (which cost $4.58 of the $100).
One item of note that isn’t apparent from this chart is the gap between revenues and expenses, aka the federal deficit, which equaled $15.24 out of every $100 in 2016. This troubling figure raises the challenging question: What expenses would you cut to bridge that gap?
Things like federal expenditures and grants for education ($2.08), food stamps ($1.89), affordable housing ($1.27) and foreign aid ($1.14) comprise a very small part of the budget, smaller than interest payments on the national debt ($6.25).
You also may have heard about reducing the budget by cutting the budget for the National Endowments for the Arts and Humanities, which together represent eight tenths of one cent of that $100 tax bill. This would be comparable to trying to pay off your mortgage by looking for coins under your sofa cushions.
We can easily help you create a better strategy for paying off your mortgage but reducing the deficit is going to be a tough job for the President and Congress. It will entail cuts in programs (“I’m looking at you Social Security!”) that are going to be unpopular but the alternative is to raise taxes to increase revenue and I haven’t met anyone, yet, who thinks they should be paying more in taxes! Anyone? Anyone? Bueller?
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