What Do Our Federal Income Taxes Pay For?

April 24, 2017

We who didn’t request an extension (gloat) have filed our federal income tax returns. There’s a lot of chatter about where our taxpayer dollars go — even a Congressman who tells his constituents that they don’t pay his salary.

We do, of course. But more generally, what do we pay for? The National Priorities Project answers again this year. So I put what I owed into its online tool and converted the dollars into shares, since these would be the same for everyone.

Here’s what I learned.

The same shares would be true for everyone who owed income taxes. Only the actual dollars would differ.

The single largest share of my income taxes went for healthcare programs29%. About 80% of this helped pay for Medicaid and Medicare (one of its three funding streams).

Next largest share to the military — roughly 24%. Only about 20% of this went for personnel costs of any sort.

NPP also itemizes, for the interested, what the Pentagon pays for nuclear weapons and to Lockheed Martin, whose trouble-plagued F-35 fighter plane has cost us nearly $4 billion. An email from NPP tells me that we pay over six times more to Lockheed than what we spend on all foreign aid.

Third share went for interest on the debt — 13%. You may recall that Congressional Republicans used the government’s urgent need to borrow more so it could pay what it owed as a lever to force down spending through sequestration and the budget caps. And that they later actually shut down the government in hopes of defunding Obamacare.

Doubtful they’ll access their tax receipts. But the bill that simply suspended the debt ceiling expired a little over a month ago. And some are warning of another skirmish.

My fourth largest share paid for unemployment and labor programs — 7.5%, presumably everything federal agencies spend to get people into — or back into—the workforce.

This same share supports what the Labor Department contributes to unemployment insurance benefits when times are especially hard and the rules it issues and enforces to protect workers from workplace health hazards and wage theft. The latter now include updated overtime pay requirements, but may no longer, coming sometime next year.

Then veterans benefits — about 6%. This includes, among other things, payments veterans receive when they’re disabled while serving, the GI bill, home loans and pensions for low-income surviving spouses. Most of the rest of this share goes to the problem-riddled Veterans Health Administration.

Next come food and agriculture — nearly 5%. Here’s where we find, among other things, SNAP (the food stamp program) and the Agriculture Department’s other nutrition aid programs.

Also, in an altogether different mode, the subsidies Congress gives to farmers — mostly big agribusinesses — to cushion them against price drops, insure them against other business risks and more.

Government next — 4.2%. NPP breaks out only three pieces, all enforcement — and two clearly aimed at ramped-up actions against undocumented immigrants and would-be’s.

But we’ve got to assume, I think, that this line item includes spending for all non-military personnel and activities, including Congress members’ salaries — $174,000 this year, plus benefits.

Transportation gets a 3.2% share. Everything the Transportation Department does gets some share of this share. including controlling air traffic and, as all flyers know, vigilantly trying to keep us from hijacking or blowing up planes.

Education gets a 2.8% share, according to NPP’s analysis. I’d put it at 3.2% because NPP classifies Head Start and related programs as community spending.

It’s true that Head Start and Early Head Start for younger kids do more than ready them for kindergarten, e.g. screen them for health and developmental problems, link families to needed services. But their primary aim is starting low-income children off on as level a playing field as possible.

Wherever you put it, Head Start’s share is far from the largest NPP breaks out. That distinction goes to Pell grants, work-study and other forms of federal aid for lower-income college students. These rolled together receive a larger share than federal aid to elementary and secondary schools — 35 %, as compared to 27%.

And I’d be remiss not to note that the National Endowment for the Arts, which Trump wants to eliminate, gets less than .002% of education’s share, as NPP calculates it — and roughly a tenth of that for everything our federal government uses our income tax dollars for.

Shifting Head Start and EHS, as I have, leaves housing and community with a 1.7%, rather than a 2.1% share.

Here we have everything the Department of Housing and Urban Development spends to help make housing affordable for lower-income people, shelter and temporarily house those who are homeless and make lower-income neighborhoods better places to live, e.g., by attracting businesses and thus job opportunities, providing needed services.

The money goes to local communities as grants. The largest of these is the Community Development Block Grant — another program on the Trump hit list because it’s “not well-targeted to the poorest populations and “has not demonstrated results.”

Followers already know what I — and many others — think of that line of argument.

Energy and environment get a 1.6% share of our income taxes. Seems it’s likely to shrink to an even smaller fraction, what with Trump’s seeking a 31% cut in the Environmental Protection Agency’s budget, crippling its ability to fulfill its legal responsibilities for protecting us from range of environmental health hazards, including climate change.

Lastly, we have, in rank order international affairs and science. These together get about 2.8% of the total.

Say you don’t like the way the budget apportions your federal income tax dollars. NPP has a tool that lets you reallocate them — and gives you trade-offs.

These are mostly shifts from the $528.5 billion Defense Department budget, which NPP has long viewed as excessive. Interesting to see what even small nicks could do for lower-income people.

Advertisements

Doing Our Bit for Defense

April 14, 2014

Having exhausted all possibilities for procrastination, I finally prepared my tax returns. Then I got a receipt from the National Priorities Project. You can too — and as I did, also get a receipt for the typical taxpayer in your state.

Here are some things I learned.

First off, District of Columbia filers paid, on average, $5,560 more than the average for taxpayers nationwide. The District’s average is, in fact, higher than the averages for all but one state — Connecticut.

This, of course, speaks to how very well the better-off households in the District are doing. How the less well-off are doing is a different story. It’s doubtful that those in the bottom 20% earned enough to owe any federal income tax this year.

But however much or little we owe, we pay the same portions for each and every item in the federal budget.

So about 27 cents of every dollar we pay goes to defense.* For the average D.C. taxpayer, this translates into $4,681, plus nearly $873 for veterans benefits, which NPP tabulates separately.

Skimming down the receipt, I see that this same taxpayer will contribute about $1,744 to Medicaid and the Children’s Health Insurance Program, but only piddling amounts to other programs for low-income people. For example, s/he’ll chip in:

  • $42.07 for WIC  — probably about 60% of the cost of one month’s worth of the healthful foods supplement for one low-income mother or child in the District.
  • $23.36 for the Low Income Home Energy Assistance Program — just a few dollars more than the cost of restoring SNAP (food stamp) benefits for one of D.C. household that receives them.
  • $106.24 for Temporary Assistance for Needy Families — about 25% of the current maximum cash benefit for a D.C. family of three.
  • $215.87 for Pell grants and other student financial aid.

Now, the receipt doesn’t account in detail for all income tax dollars that support programs for low-income people. SNAP and free and reduced-price schools meals, for example, are included in the Food and Agriculture category, but not broken out.

And I haven’t cited above two the receipt itemizes that benefit low-income people, as well as others, i.e., job training and employment programs and the Community Development Block Grant.

But even adding them in still leaves the average D.C. taxpayer — and me — spending nearly 10 times as much on defense. I’m sure as can be that the federal budget could “provide for the common defense” with less.

That would leave more to patch the frayed safety net and to help more people achieve economic security without it. There’d be more to meet other essential needs too, e.g., protecting public health and safety, refurbishing our neglected infrastructure, enforcing civil rights and labor laws.

Perhaps not enough more, however. I, for one, would be willing to pay higher taxes — painful as that would seem at this time of year — if a larger share went to these priorities.

Congressman Paul Ryan and his Republican colleagues in the House would instead cut my taxes — or so it seems. The Center for American Progress, among others, says they’d actually rise.

Whichever, the just-passed House budget plan will clearly shift more of our tax dollars into defense  — and drastically reduce our relatively small contributions to major safety net and other non-defense programs.

Obviously not a budget reflecting my priorities — or those of most of my fellow taxpayers either, according to the polling data NPP cites.

We’ve got to do more than grumble at tax time to get a budget we like.

* The Center on Budget and Policy Priorities reports a considerably lower figure. This is mainly because it includes Social Security and Medicare. NPP excludes spending from dedicated revenue streams like payroll taxes.