With Tax Day now behind us, it’s worth looking, again, at where our tax dollars come from and also how our tax dollars are spent. The Brown Bear helpfully sent me an article reporting on the Taxpayer Receipt prepared by a nonpartisan group called the Committee for a Responsible Federal Budget. While the original article is behind the Wall Street Journal website paywall, a Fox Business reprint of the article’s text is available on-line.
The Taxpayer Receipt shows how every $100 in federal taxes was spent in 2016 — and, to give a sense of the trend lines, how that same $100 was spent in 2011, too. The result supports the conclusion memorably expressed by the line I’ve used as the headline for this piece: the United States has become a “giant insurance company with an army.”
Why? Because half of all federal spending goes to Social Security, Medicare, Medicaid, and health programs, and that number is growing, with Social Security spending up 17% since 2011, Medicare up 15.1%, and Medicaid up 25.4%. Social Security gets by far the biggest piece of the federal spending pie, receiving $23.61 of every $100 in tax dollars. Medicare places second, with $15.26.
And what about that army? National defense comes in third, with $15.24 of every $100 in taxes paid. That amount dropped 22.3% from 2011 to 2016, incidentally.
On the spending side, the lesson from these numbers is clear: we’ve become an enormous social welfare state, with benefits continuing to expand. As the percentage increases from 2011 to 2016 indicate, the growing spending on such programs is crowding out our ability to fund other programs, like transportation infrastructure, federal parks, space exploration, and every other federal initiative you can name. And the increased spending isn’t helping the nagging problem of Social Security solvency, either. The program is underfunded by at least 20 percent, and under current projections the Social Security Trust Fund (not exactly an accurate moniker) will run out of money in 17 years.
Oh, and here’s another interesting data point — fully $6.25 of every $100 in tax revenue goes to pay interest on the national debt. That number is growing, too.
On the tax generation side, the individual income tax provided 47% of the $100, with payroll taxes producing 34%, corporate income taxes 9%, and customs duties and excise taxes another 9%.
Now, get back to work!