By Jay Thompson
Where did my money go?
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If you’re like most Americans you’ve just passed two milestones this year, Tax Freedom Day, which is recognized on April 12, and Income Tax Filing Day, which is usually recognized as April 15 but for 2017 was Tuesday, April 18.
Tax Freedom Day is the day of the year when the country as a whole has earned enough income to pay its taxes for the year. No explanation is needed for Tax Filing Day!
The average American pays approximately 20% of their income towards their federal income taxes. To some people, it doesn’t seem like a lot of money, but to others, it seems like a small fortune.
It is evident to most Americans that the federal government wastes billions of dollars every year. We’ve all heard the stories of them spending exorbitant amounts for everyday items such as $1,500 for hammers and $2,000 for toilet seats, but where do our tax collected dollars really go?
According to the Center on Budget and Policy Priorities here’s the breakdown.
In the fiscal year 2015, the federal government spent $3.7 trillion on their various funded programs. Over $3.2 trillion was financed by federal revenues collected in the form of taxes and the remaining amount, $438 billion, was financed by borrowing. Yes, that’s right, the US government spends more than it brings into its coffers.
The largest expense, about $.50 out of every dollar, goes to Medicare or Medicaid. The second largest expense, about $.15 out of every dollar, goes to funding the military for everything except veteran care. Veteran care is about another $.04 out of every dollar. Next is education, it comes in at $.02, transportation at $.02, food stamps at $.01, and Affordable Care Act subsidies at $.01. The Justice Department, at $.01, housing assistance at $.01, and then the overall management of the government takes an additional $.08 of every dollar of revenue received. If we’re going to have a serious conversation about controlling the budget we need to have a serious debate about what the government spends on Social Security, Medicare, and Medicaid. These three items make up 60% of the budget. Also, we need to deal with the budget deficits. We can’t keep spending more money than we have if we want to maintain our current lifestyle. If this situation isn’t addressed and corrected, we will be on the path to becoming a third world nation. What’s the solution? I don’t know, most of us don’t want to pay any more in taxes, and the rest of us don’t want our benefits reduced. We can’t have it both ways. What I do know is, it’s going to take some people way smarter than me to figure this out, and they need to do it soon.
The best thing you can do in the meantime is to invest and save for your future and know that the only one you can depend on for sure is you!
Jay Thompson is a Business Consultant with the CSU Bakersfield Small Business Development Center. The CSUB SBDC provides premium, one on one, no cost consulting to small business owners in Kern, Inyo and Mono Counties. For more information visit their website at http://www.csub.edu/sbdc.
