Calculate Where Your Federal Taxes Go

A Taxpayer Receipt: Calculate Exactly Where Your Tax Dollars Go

April 15, 2011

Yahoo! News - Just how much do you spend to foot the bill for U.S. troops in Iraq and Afghanistan? What's your share of the tab for interest on the national debt? How about to fund Medicare and Social Security, or to support foreign aid or the FBI?

With by $514 billion over the past two years.

Social Security and Medicare are directly funded by "Payroll Taxes" (FICA); 80% of federal revenue comes from taxing wages (individual income tax and payroll taxes).][Source]

Tax Day upon us and Washington consumed by an intensifying battle over government spending -- a fight that's likely to be at the heart of the 2012 election — it's surprising just how little most taxpayers know about where their money goes.

The simple truth is most of us don't have any idea how much we each spend personally on government services like the military, the national parks or National Public Radio. Nor do we have a clear picture of how Uncle Sam divvies up the money we send him every year. That makes it harder to understand the real choices the country faces as Congress and the President debate how to get our fiscal house in order.

To help U.S. taxpayers figure things out, a prominent centrist think tank called Third Way has come up a "taxpayer receipt" that allows you to see exactly where your tax dollars go. Plug the amount you paid in federal income and payroll taxes into Third Way's interactive calculator and the resulting receipt will tell you — down to the penny -- just what you paid for those U.S. troops or to keep the parks up and running.

The results can be quite illuminating. Take a typical married couple with two kids who earn the median U.S. income, $69,800. After taking standard deductions, they would pay federal taxes of $6,993. Where does their money go?

The biggest chunk — some 20.4%, or $1430.03 -- goes to Social Security. Defense comes in a close second. Our average family would pay $1,410.59 to fund the military — fully 20.2% of the total they send to Uncle Sam.

How about Homeland Security and Law Enforcement, which includes everything from the Coast Guard and the FBI to the U.S. Courts and immigration system? Just 2.4% of our average family's tax bill — only$167.95 — goes to pay for those.

As for foreign aid? They lay out just $39.60 a year. While many people think cutting foreign aid would solve our fiscal woes, it's less than 1% of what Uncle Sam spends.

Here's a look at how the rest of our average family's tax bill would break down:

Now for the fun part: Want to calculate exactly how much you pay for different government services? You can find Third Way's interactive tax receipt calculator available at their website. Add up what you paid in federal income taxes along with the payroll taxes you contributed to fund Social Security, enter the total in their calculator, and your own personalized receipt will come up. The White House liked the idea so much that they've launched their own version, called the 2010 Federal Taxpayer Receipt, as well.

On the Third Way site, there's plenty more information available, as each of the broad expenditure categories is broken into more detail. Of the 20.2% of your tax bill that goes to defense, you can see how much you're paying for Iraq and Afghanistan, how much goes to the CIA, or how much helps keep nuclear weapons safe.

Under the Arts & Culture tab, you can check out your share of the bill for the National Endowment for the Arts or for the Corporation for Public Broadcasting, the parent company to NPR.

Rand Paul: Spending Cuts Must Include Pentagon

April 17, 2011

The Washington Times - Freshman Sen. Rand Paul, one of the leading voices of the tea party in Washington, said on Sunday that military spending will have to be cut if the country is going to get its debt problems under control.

“I think there is a compromise, but the compromise is not to raise taxes,” Mr. Paul, Kentucky Republican, said. “The compromise is for conservatives to admit that the military will have to be cut.”

Mr. Paul, speaking on CNN’s “State of the Union,” brushed aside questions about supporting tax increases.

“They (the federal government) don’t need more money; they need less,” he said.

He said he would vote to increase the country’s $14.3 trillion debt ceiling only if Congress passes a balanced-budget amendment to the Constitution.

“The people of Kentucky elected me to shake things up; they didn’t elect me to raise the debt ceiling,” he told host Candy Crowley.

On the same program, Rep. Anthony Weiner, New York Democrat, signaled that Democrats may be willing to accept some concessions in the upcoming battle over the debt-ceiling vote.

“I think the debt ceiling should be passed as clean as possible,” he said, “but we need to have a reasonable discussion.”

IRS, CPA Bureaucracy Cost Taxpayers $431 Billion a Year

Tax compliance employs more workers than Wal-Mart, UPS, McDonald’s, IBM and Citigroup combined

April 18, 2011

Wall Street Journal - There is a lot more to taxes than simply paying the bill. Taxpayers must spend significantly more than $1 in order to provide $1 of income-tax revenue to the federal government.

To start with, individuals and businesses must pay the government the $1 in revenue plus the costs of their own time spent filing and complying with the tax code; plus the tax collection costs of the IRS; plus the tax compliance outlays that individuals and businesses pay to help them file their taxes.

In a study published last week by the Laffer Center, my colleagues Wayne Winegarden, John Childs and I estimate that these costs alone are a staggering $431 billion annually. This is a cost markup of 30 cents on every dollar paid in taxes. And this is not even a complete accounting of the costs of tax complexity.

Like taxes themselves, tax-compliance costs change people’s behavior. Taxpayers, whether individuals or businesses, respond to taxes and tax-compliance costs by changing the composition of their income, the location of their income, the timing of their income, and the volume of their income. So long as the cost of changing one’s income is lower than the taxes saved, the taxpayer will engage in these types of tax-avoidance activities...

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