Where Exactly Do Your Tax Dollars Go? Imagine If Your Paycheck Answered That Question.

by: countrycat

Wed Nov 11, 2009 at 20:46:41 PM CST

Rep. Stupak thinks that citizens shouldn't have to fund abortions - even indirectly - if that goes against their religious beliefs. Fake Consultant discussed this viewpoint in his diary at LIA.

That got me thinking... how many of us actually know how our federal and state taxes are spent?

In Fake Consultant's diary, we bandied about the idea that people should be able to direct their taxes to activities they agreed with. So if you're concerned about childrens' health care, you might direct 50% of your taxes to CHIP. If you're a defense hawk, you might want 75% of your money to fund the Pentagon.

The problem with this plan is that most people have no idea how much either their state or federal government spends on anything. For instance, public opinion surveys have consistently shown that Americans believe that 15 to 20% of the federal budget goes to overseas aid. In fact, we spend 1% of the budget for programs that feed hungry children, help refugees, and support family planning programs.

What if we could see those numbers on either our regular paychecks or even annual W-2 forms?

What if you could look at those withholding numbers and see that 21 cents of every dollar withheld from your pay is used to funds defense and war spending while 2 cents of every dollar withheld funds education?

Would that change your view of government and its role in society - and in your family budget?

Charts and graphs are on the flip. They're pretty eye-opening too.

countrycat :: Where Exactly Do Your Tax Dollars Go? Imagine If Your Paycheck Answered That Question.

Consider this graph I put together based on information from the Center on Budget and Policy Priorities: Where do our federal tax dollars go?

Note that these numbers combine Federal income tax, Social Security, and Medicare tax payments, even though your paycheck and W-2 form splits them out. But for ease of use, let's assume they're all lumped in together.

This chart shows how each dollar you have withheld is spent by the federal government - according to the 2008 budget: (h/t to chartgo.com for this neat utility)

How federal tax dollars are spent

Here's how the CBPP defines the spending categories.

And what about state spending? We hear from virtually every candidate running for statewide office in Alabama that many of our financial woes can be solved by eliminating those three deadly horsemen of budget apocalypse: waste, fraud, and abuse.

But that always avoids the crucial question: what exactly is wasted and what would you cut if you want to spend more in some areas but don't plan to increase taxes?

Note that this graph is the national "average" for state spending, so it's not tied directly to Alabama's budget. Although we are mentioned in the white paper:

Where do our state tax dollars go?

In some cases, this variation is significant. For example, Alaska and West Virginia each spend 11 percent of their budgets on K-12 education, while Michigan, at the other end of the spectrum, spends 31 percent. Similarly, Medicaid makes up 10 percent or less of state budgets in Alabama, Hawaii, and Wyoming but more than 30 percent of the budgets in Maine, Missouri, and Pennsylvania.

Where state tax dollars are spent

hmmm... Looks like "throwing those bums off Welfare" may not solve many states' budget shortfalls. Even though, often, "waste, fraud, and abuse" are synonyms for that very policy. Remember Ronald Reagan and his "welfare queen" talking points?

So... what do you think about this idea? Should withholding documents show you exactly what your state and federal taxes pay for - at least in general categories?

I'm wondering if it would change anyone's mind about the role of government and how we as citizens can influence government programs and priorities.

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Where Exactly Do Your Tax Dollars Go? Imagine If Your Paycheck Answered That Question. | 7 comments

At a minimum, there should be a pie chart with your W-2 form (4.00 / 3)

Showing where the federal money is going.

Actually, I think the pie chart is already in the instruction booklet for the federal 1040 form. Not sure if there's anything like it in the state form 40 instructions.

On the federal spending bar chart above, one thing that jumped out at me was that the amount spent on regulation, oversight, and law enforcement (as in Justice Department, for example) was so small that it was part of the 5% "Other" category.

I also wonder whether the secret parts of federal spending, such as the CIA, the NRO, the NSA, and all the classified defense programs are hidden in some of these categories. Or are they just completely off the books?

I'm guessing, "off the books".

"The War in Iraq is not the disease. The War in Iraq is a symptom. Arrogance is the disease" - Bill Richardson

by: herding old cats @ Wed Nov 11, 2009 at 22:20:18 PM CST

by: you @ soon

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This is a great post thank you (4.00 / 2)

I'm shocked that we spend 4 times on interest on debt than we do on education.

by: ImagineReality @ Wed Nov 11, 2009 at 23:40:44 PM CST

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Good info (0.00 / 0)

The federal spending chart you show highlights something I try to drive home whenever seriously discussing deficit spending. I usually simplify spending like this:

50% Entitlements (I lump in what the CBPP calls "safety net" spending here)
25% Defense
10% Debt servicing (MUST spend this)
15% Everything else

My estimates were made by looking at recent spending history. The goal of simplifying it this way is to drive home a point: if you really want to reduce the deficit there aer only two ways to do it: cutting entitlements and/or defense. Period. Can't stop servicing debt. And eliminating the ENTIRE rest of the federal government typically wouldn't close the deficit.

Sure, it helps to make some cuts in the "everything else" category, but shouldn't fool ourselves into thinking it will solve the problem and we still need some government services. Democrats have to be willing to trim entitlements (which they won't) and Republicans have to be willing to reconsider how much spending is required to adequately defend the country (which they won't). Or we could raise taxes and suffer through the deleterious impact on the economy (sounds like a great idea to further cripple the economy!) Tough problem.

by: Brian @ Thu Nov 12, 2009 at 06:08:34 AM CST

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It's extremely tough. (4.00 / 1)

And more so, I think, if citizens don't have a clear idea of what's being spent where now.

That's why I thought the "how much do we spend on international aid" question was so important. Most people grossly overestimate that, so it's an easy talking point for a politician to say "we need to take care of our own people first!"

Which, in most cases, we do. But we can also garner a great amount of international good will if aid programs are run appropriately and address the actual needs of the people we're trying to help. And, as we see here, even if we shut those programs down entirely, it has very little impact on the budget.

This is why people in Washington (and everywhere) need to sit down in good faith and try to solve this issue. We have the twin snowballs of Pentagon spending and Social Security/Medicare rolling downhill - getting bigger every year - and we're all huddled together at the bottom desperately pretending we don't see them.

That's why I think including this information in something that every adult citizen sees at least one a year (if it's included with the W-2, for instance) is at least a start.

Never try to teach a pig to sing. It wastes your time and annoys the pig.

by: countrycat @ Thu Nov 12, 2009 at 07:08:05 AM CST

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Great idea! (4.00 / 1)

A simple chart in your paycheck or W-2 would be a very effective way to push accurate information on public budgets out to a wide audience. Information is power. Thank you so much for looking up this information and preparing the really nice charts -- chartgo.com is new to me but it's a great look.

Out of curiosity, I googled NASA's budget -- frequently cited as taxpayer dollars that could be better spent elsewhere -- and it's roughly 0.6% of the federal budget. That means of every dollar you pay in federal taxes, less than a penny goes to NASA. Not sure if it's included in "other" or in "research" or some of both, but it's a high-visibility (dare I say, high return on investment, piece of federal spending) but actually consumes a tiny, tiny part of the budget.

Work harder and work smarter!

by: mooncat @ Thu Nov 12, 2009 at 07:00:30 AM CST

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I learned something! (4.00 / 1)

Great post! And some equally solid comments. I'll share a recent LTE I dropped in the Randolph Leader, the weekly of my rural East Alabama hometown. It was mostly in response to a LTE from the local GOP Chairman. He'd, via a Halloween themed cartoon, advanced the idea that Democrats want to take half from those that work to give to those that won't. I dealt solely with the federal budget. I may have been a bit low on the means-tested, safety net spending based on additional information gleaned from sources cited herein. That I got to tackle a "climate change is a big scheme to hand the UN the keys to country" lunacy in another LTE was a bonus.

I do like the idea of sharing this spending information directly as I expect there are plenty of people who have no idea where our money is going. The way to frame the proposed law, or perhaps even Executive Order, might be as to transparency yet I imagine many on the right would be terrified to see this information go before some of their constituents.

While waiting for this information to be provided to Joe and Jill Sixpack, we can individually try to push back against the misinformation and in fact use such stunts to our advantage. Several years ago I started doing less blogging and more letter writing. I also drop comments on news site, especially the O-A News, when I see an opportunity. I've lately tried Facebook to reach out to folks I grew up with as so many of them have little if any exposure to a Progressive voice.

It's hard work and yet it seems to be one thing that I can do from pretty much anywhere.

by: Captain Plaid @ Thu Nov 12, 2009 at 11:06:24 AM CST

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Good point, CaptainPlaid. (0.00 / 0)

As much as we bloggers would like to be the center of the news universe, well... we're not.

A good LTE can reach even more people locally than a blog post. I like the multi-pronged approach: blog, write LTEs, and pester your Congresscritters and elected state officials like a terrier pulling on someone's pants leg.

Never try to teach a pig to sing. It wastes your time and annoys the pig.

by: countrycat @ Thu Nov 12, 2009 at 11:26:31 AM CST

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