Where does your tax money go when it’s taken out of your paycheck every two weeks? Or, in the case of contractors and small businesses, when you send in your quarterly payments to the IRS?
While knowing this information won’t make filing your taxes any easier, you’re probably interested in hearing how your money is being spent.
Here are the top five government sectors that receive your federal tax money.
1. Health care (25.19%)
Medicare doctor payments and prescription drug payments
Medicare helps those older than 65 to get their checkups and prescription pills. It was designed so that older people don’t have to suffer literal pain and indignity in the face of expensive medical care.
However, the program is absolutely huge now. In fact, Medicare is such a behemoth that in 2011 it accounted for 47.2% of all inpatient hospital costs in the U.S. And it shows no signs of slowing down. Medicare is projected to grow in cost from $523 billion in 2010 to a $932 billion by 2020.
Medicaid and Children’s Health Insurance Program (CHIP)
Medicaid and the Children’s Health Insurance Program (CHIP) are government programs that offer free or low-cost health coverage for eligible children and other family members. You have probably heard of these, but what you may not know is that by 2021, estimates put 86.9 million Americans insured through Medicaid/CHIP.
2. National defense (24.79%)
Ongoing operations, equipment, and supplies
Have you heard of Operation Iraqi Freedom? How about the War in Afghanistan?
Well, those two wars have been pretty costly. Think trillions. In Afghanistan alone, estimates run $1 million per year per one soldier deployed.
Research, development, weapons, and construction
America has the most advanced military in the world. That’s just common knowledge. How do you think we got this way? Hard work, discipline?
Well yes, but we also have a military budget that is dedicated to not only policing the world, but also making sure that we have the most stuff that allows us to fight, like weapons, and the most advanced weapons, at that.
The United States spends more on the military than the next eight highest spending countries combined, including China, Russia, Saudi Arabia, France, the United Kingdom, Germany, Japan, and India.
3. Job and family security (18.77%)
Federal military and civilian employee retirement and disability
Those who served in the public sector, either in the military or not, receive benefits from the government when they retire from service.
Military pensions alone cost the taxpayer $50.4 billion in 2010 and represent an unfunded liability of over $1.3 trillion. To compare, during that same year, $76.2 billion went to federal civilian retirement pensions, which represent a $1.6 trillion unfunded liability.
Food and nutrition assistance
This is the Supplemental Nutrition Assistance Program (SNAP), the federal school lunch program, and the food program for Women, Infants, and Children (WIC). These programs supplement individual and family budgets for the purpose of supplying proper quantities of food.
These programs have been growing at a very fast clip in recent years, most likely due to the lasting effects of the Great Recession. From 2005 to 2013, SNAP has grown from a $28.6 billion to $76.6 billion program.
4. Net Interest (8.64%)
This innocuous heading of “net interest” is anything but. It’s the interest on the national debt. A whopping $221 billion must be paid just to service the national debt and keep it from going into default.
5. Veterans’ benefits (5.44%)
Within the veterans’ benefits umbrella are things like disability compensation, pensions for low-income veterans, life insurance, healthcare, and housing assistance.
From 2009 to 2013, these programs are purported to have reduced veterans’ homelessness by a significant 23%. The rental assistance program alone has helped more than 300,000 veterans to secure adequate housing.
The silver lining
Whether or not you like where your tax money goes, if you make it, you owe it.
Dino Tax Co can take the stress out of calculating your annual federal income taxes, while maximizing your refund. If you need help with your taxes this upcoming season, click here to learn more about our tax preparation services.