What does the Federal Government do with our Tax Money?

Nobody in the entire population is happy about the portion the U.S federal government takes out of their paycheck. Similarly paying taxes on all sorts of properties and consumer goods is not one of the things we love about living in this country. At some point, we all wonder where our tax dollars go. Are we simply funding the government and military expenses, or are the finances contributing to our welfare as well? The IRS collects around $3.5 trillion per year, through taxes paid by our hard-earned cash. According to Tax Attorneys In New Jersey, where tax money is spent can be divided into three main categories:

• Mandatory Spending
• Discretionary Spending
• Government Debt Interest

Mandatory Spending

Mandatory spending sometimes referred to as ‘Entitlement Funds’ make up for at least 60% of the total tax money. This category covers Medicare, Medicaid, Social Security, and Veteran benefits. You pay for these programs out of your paycheck and later redeem their services when you become eligible. Social Security accounts for almost 40% of mandatory spending. It is used to provide financial assistance to retired workers (age 65 and above), disabled workers, and dependents of deceased workers. At present, about 64 million Americans are receiving social security benefits worth beyond $1 trillion.

Next in line is the Medicare, which is an insurance program designed to provide affordable long-term healthcare for the aging population. Younger people with disabilities and patients suffering from last stage renal diseases are also supported. Medicaid is a similar healthcare program constituted for supporting low-income adults and their families. In the year 2018, a whopping $705 billion were spent on Medicare and roughly, $389 billion were spent on Medicaid.

Discretionary Spending

Discretionary spending takes up at least 30% of the total accumulated tax capital. This category encompasses a range of public sectors, including military/defense, education, transportation, and health. The Congress reviews each department regularly and allots funds accordingly. As you may have guessed, military operations utilize most of the reserves, which is nearly 50% of that assigned to discretionary spending. Believe it or not, the percentage of tax money contributed to national defense was more than double of what is donated now.

Maintenance of public transportation, including airplanes, trains, and buses too fall under this section. Together with road/highway/bridge construction and repair, transportation accounts for 7% of discretionary spending. Education and training services provided by the government also utilize about 7% of discretionary spending. The remaining tax money in this category supports certain health agencies like CDC (Centers for Disease Control), FDA (Food and Drug Administration), and NIH (National Institute of Health). While Veteran benefits are primarily covered in mandatory spending, some of them are designated to discretionary spending as well.

Government Debt Interest Currently, the U.S government is over $22 trillion in debt. If you are wondering that who the U.S government owes money to, then prepare yourself for a complicated answer. About three quarters of the debt is owed to public, which includes local investors, banks, foreign investors, and foreign governments; the remaining is owned to intra-governmental holdings. The interest to be paid on this debt is subject to regular changes, corresponding to the rise and fall of interest rates and the size of debt. 8% of our tax dollars are spent on paying off the government debt interest.

John Adams writes about travel and best for He encourages his readers to improve their quality of life by incorporating positive and good things. As he loves to share his insight about life experiences, he has contribute on various online platform in