#478. As Tax Day Nears, Where Does Your Money Go?

We are a week past Tax Day, April 15^th. We found an interesting piece from the Wall Street Journal that answers the question, where do your tax dollars go? In addition, the report also tells us this year’s Tax Freedom Day. Here are key excerpts from the report.

As Tax Day Nears, Where Does Your Money Go?
by: Laura Saunders, April 11, 2014

Where do your tax dollars go? And how long must people work each year to pay Uncle Sam his due? Those issues may be on the minds of many taxpayers as they make their contributions to the common purse. The answers underscore how much the government relies on the income tax on individuals, which supplies nearly half of total federal revenue.

The corporate income tax, by contrast, contributes about 10%, while excise taxes such as customs duties and cigarette taxes raise just 3%.

• Where does your money go? How revenue was divided up among federal programs in 2013.

(Share of every $100 in taxes paid; Source: Committee for a Responsible Federal Budget)

Defense and Military Benefits                      $ 23.68
Social Security                                                       23.39
Health Care                                                             22.23
Interest                                                                       6.41
Veterans Benefits                                                   4.02
Transportation                                                        2.65
Civilian Federal Retirement                              2.65
Refundable Tax Credits                                      2.43
Food Stamps                                                             2.39
Unemployment Insurance                                 2.00
Supplemental Security Income                       1.53
Housing Assistance                                              1.35
Education                                                                 1.32
Foreign Aid                                                              0.97
Agriculture                                                              0.85
Congressional Salaries                                       0.004
Other                                                                          2.13

How long does it take to pay Uncle Sam?

For decades the Tax Foundation has publicized Tax Freedom Day, a date that reflects the group’s estimate of how long it takes the nation collectively to pay its tax bill for the year. The group arrives at the figure by dividing the combined amount of federal, state and local taxes paid by total income.

This year’s Tax Freedom Day is April 21, which is three days later than last year. According to Kyle Pomerleau, the author of this year’s report, the date is later mainly because the recovering economy is boosting revenue collected by individual, corporate and payroll taxes.

This estimate doesn’t include the effect of federal borrowing. Including it pushes the date to May 6, which is two days earlier than last year, because of a smaller federal deficit.

What was the latest Tax Freedom Day ever, for the country as a whole? According to Mr. Pomerleau, it was May 21, 1945—including the cost of federal borrowing—because of the expense of World War II.

Full article.