Economy Watch – Here’s where your federal income tax dollars go

You worked hard for that money you’re about to send to the IRS in less than two weeks. Like many tax filers you’re probably asking yourself where all that money goes when the state and federal governments get their hands on it.

If you have trouble balancing your checkbook, imagine trying to keep track of where $3.6 trillion goes every year. That’s roughly what Uncle Sam spent last year.

For the complete, gory details, you can check the latest estimates from the official budget at the Government Printing Office, where you’ll find the government’s finances sliced and diced — by agency, department, function and source. But we’re going to skip reading the 250-page version and get our numbers from a summary analysis from the Center on Budget and Policy Priorities.

A $3.6 trillion budget has a lot of large numbers. To make it a little easier to imagine which of those tax dollars is yours, here’s roughly how the federal budget compares to your budget and mine. Picture Uncle Sam, sitting at the kitchen table, trying to make ends meet.

Let’s assume for this exercise that the federal budget came to $52,000 a year — or $1,000 a week — which is about the median household income in the U.S. For our purposes, that $1,000 a week is tax free. (Uncle Sam doesn’t pay taxes, he collects them.)

Last year, the three biggest federal budget items were Social Security, health care and defense spending. So if Uncle Sam was a median wage earner, he’d have spent more than $600 of his $1,000 weekly paycheck on just those three programs.

On his annual salary of $52,000, the cost of federal health care works out to a little more than $11,000 a year. The biggest chunk of that about $125 of his weekly paycheck went to pay for Medicare, which provides health coverage for people over 65. The rest $95 went for Medicaid, which covers low-income families and individual, and state-administered health coverage for children.

via Economy Watch – Here’s where your federal income tax dollars go.

Strange Random Tax Quote:

Why does a slight tax increase cost you two hundred dollars and a substantial tax cut save you thirty cents? – Peg Bracken

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Posted on April 5, 2012, in Article and tagged , , , , , , , , , . Bookmark the permalink. Leave a comment.

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