Where do our taxes go?

Mark Palko links to a blog by Megan McArdle which reproduces a list entitled, “What You Paid For: 2009 tax receipt for a taxpayer earning $34,140 and paying $5,400 in federal income tax and FICA (selected items).”

McArdle writes, “isn’t it possible that the widespread support for programs like Social Security and Medicare rests on the fact that most people don’t realize just how big a portion of your paycheck those programs consume?” But, as Palko points out, the FICA and Medicare withholdings are actually already right there on your W-2 form. So the real problem is not a lack of information but that people aren’t reading their W-2 forms more carefully. (Also, I don’t know if people are so upset about their withholdings for Social Security and Medicare, given that they’ll be getting that money back when they retire.)

I’m more concerned about the list itself, though. I think a lot of cognitive-perceptual effects are involved in what gets a separate line item, and what doesn’t. For example, I see the FBI but not the CIA, the NSA, or weapons procurement. There’s a line for “salary and benefits for members of Congress” but nothing for the courts system or the White House. And so on. So, while I agree with McArdle that “more information is generally better,” I’m not quite sure how to get there. I’d be very very suspicious of the choice of items that happens to end up included on the hypothetical itemized tax bill. Especially If it’s really true that people don’t notice those boxes on their W-2 form with FICA and Medicare payments, I also seem to recall seeing some glossy government documents with charts showing where the money is coming from and where it goes. Maybe there’s some place other than a W-2 form to put this information where people will notice it.

4 thoughts on “Where do our taxes go?

  1. Yes, I also noticed how the defense spending portion of the bill was also nice broken out and not grouped (a main line with subgroups below it would be a better way to display this data in a table).

    But the two largest totals are displayed on tax forms already and nobody is talking about 3 and 4 (total defense spending or interest on the national debt) as serious debt reduction targets.

  2. Yaroslav: That list isn't the top 26 anything. That was my point. It includes some minor items while excluding some biggies such as several categories of military spending.

  3. If you really want to see your tax dollars:


    I'm no authority, but apparently people who are think it's fantastic (and it's certainly pretty). Only the discretionary part of the budget though – I suppose if you added the entitlements the picture would be a couple giant blobs with some freckles.

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