Where do our federal taxes go? A Wall Street Journal blog post recently reported on the results of a study done by a group called Third Way, which was designed to answer this question.
The Wall Street Journal asked Third Way to produce an “itemized receipt” for the federal taxes that would be paid by two different couples. The first has two children (13 and 17 years of age) and one spouse that earns $150,000 and another that earns $50,000. The second couple receives $100,000; both individulas are retired and have no dependents.
As I looked at the itemized receipt below, I was struck by the number of military related uses of our tax money. I therefore decided to see how much of our tax money was going to support military related activities.
First, I removed the tax money going to social security and medicare from my calculations. The reason is that both of these programs have their own specific taxes that can be used only to fund their respective operations.
I was more interested in considering how our general tax dollars are used. In other words, we pay lots of taxes that go into the general fund. These funds can be used anyway our government decides. It was the distribution of these general tax funds that interested me.
Because my staff of highly trained researchers happened to be working on other important projects, I was forced to do all the work on this post myself. Therefore, I decided to look only at the figures for the “working couple.”
I first added up all the itemized tax payments (leaving out social security and medicare for reasons highlighted above). The total came to $19, 005.82.
Then I added up all the itemized tax payments that went to activities that were obviously dedicated to military related purposes. This included operations, personal, weapons purchases, research and testing, veterans health care, and retirement benefits.
Then I added to that total 50% of the amount spent on the Department of Energy, because that is where our nuclear weapons program costs show up, and 80% of the amount spent on interest on the national debt, because it has been military spending that has generated most of our past deficits. Both of these adjustments are in line with the practice of other scholars. Finally, I also included in my military total the tax payments that go to fund the CIA.
The grand sum of all military items (including the three additions for nuclear weapons, interest, and covert operations) was $11,632.32.
So, divide $11,632.32 by $19,005.82, and it turns out that 61.2% of the general tax payments made by our hard-working couple are going to fund military activities, past, present and future. Said differently, out of every tax dollar that this couple pays into our general tax fund, Congress is sending approximately 61 cents to support military activities.
Assuming that this ratio is generalizable to other taxpayers, it is no wonder we have little left over to do other things.