Who primarily uses your tax money?
Who primarily uses our tax money? While all levels of government use collected taxes, the federal government generally uses the most per person. The government can sometimes help pay for private school education, but not often and not directly, and certainly not as much as public schools.
| Category | Percentage of Expenditures |
|---|---|
| Social Security | 22% |
| National Defense | 15% |
| Net Interest | 14% |
| Health | 14% |
The federal taxes you pay are used by the government to invest in the country and to provide goods and services for the benefit of the American people. The three biggest categories of expenditures are: Major health programs, such as Medicare and Medicaid. Social security.
Taxes provide revenue for federal, local, and state governments to fund essential services--defense, highways, police, a justice system--that benefit all citizens, who could not provide such services very effectively for themselves.
Article 1, Section 9 requires that appropriations from the Treasury be explicitly decided by the Congress. Over the years various laws have been passed specifying the budget process in more detail.
The rest includes investing in education; investing in basic infrastructure such as roads, bridges, and airports; maintaining natural resources, farms, and the environment; investing in scientific and medical research; enforcing the nation's laws to promote justice; and other basic duties of the federal government.
In practice, except for refundable tax credits like the Earned Income Tax Credit (EITC) and Child Tax Credit (CTC), tax expenditures primarily benefit the top 20% of households. That's why tax expenditures have often been referred to as “welfare for the upper middle class.”
Nearly half of mandatory spending in 2022 was for Social Security and other income support programs such as the Child Tax Credit, food and nutrition assistance, and federal employee benefits (figure 3). Most of the remainder paid for the two major government health programs, Medicare and Medicaid.
- New York: 12.47%
- Hawaii: 2.31%
- Maine: 11.14%
- Vermont: 10.28%
- Connecticut: 9.83%
- New Jersey: 9.76%
- Maryland: 9.44%
- Minnesota: 9.41%
- Social Security.
- Health care like Medicare and Medicaid.
- National defense.
- Economic security programs.
- Transportation and emergency services.
- Veterans benefits.
- Public infrastructure like bridges and roads.
What are the four most used tax bases?
The four most used tax bases are income for income tax, value of real properties for property tax, gifts for gift tax and donations for donor's tax. Each tax base is subject to a different tax rate.
If you don't pay your taxes on time, the IRS begins charging penalties and interest on the tax you owe as soon as the tax deadline passes. It can also begin collection actions against you that include tax liens and seizure of assets.
Federal income taxes are used to provide for national programs such as national defense; veterans and foreign affairs; social programs; physical, human, and community development; law enforcement; and interest on the national debt.
In the United States, Article I, Section 8 of the Constitution gives Congress the power to "lay and collect taxes, duties, imposts and excises, to pay the debts and provide for the common defense and general welfare of the United States. This is also referred to as the "Taxing and Spending Clause."
Who Does Not Have to Pay Taxes? Generally, you don't have to pay taxes if your income is less than the standard deduction, you have a certain number of dependents, working abroad and are below the required thresholds, or are a qualifying non-profit organization.
As the chart below shows, three major areas of spending make up the majority of the budget: Social Security: In 2023, 21 percent of the budget, or $1.4 trillion, will be paid for Social Security, which will provide monthly retirement benefits averaging $1,836 to 48.6 million retired workers.
| State | Income Tax | |
|---|---|---|
| 1 | New York | 10.90% |
| 2 | New Jersey | 10.75% |
| 3 | Illinois | *4.95% |
| 4 | California | 13.30% |
The long-troubled west African country Ivory Coast has the highest income tax rate in the world.
According to a 2021 White House study, the wealthiest 400 billionaire families in the U.S. paid an average federal individual tax rate of just 8.2 percent. For comparison, the average American taxpayer in the same year paid 13 percent.
Currently billionaires effectively pay far less personal tax than other taxpayers of more modest means because they can park wealth in shell companies sheltering them from income tax, the group said in its 2024 Global Tax Evasion Report.
Why do the rich pay less taxes?
In contrast to the 99% who earn most of their income from wages and salaries, the top 1% earn most of their income from investments. From work, they may receive deferred compensation, stock or stock options, and other benefits that aren't taxable right away.
Defense. Approximately 20 percent of the federal budget is spent on defense and security. Most of that 20 percent is for the Department of Defense, which covers the cost of military operations, troop training, equipment, and weapons research.
A Generational Breakdown of Overall Spending
Overall in 2021, Gen X (anyone born from 1965 to 1980) spent the most money of any U.S. generation, with an average annual expenditure of $83,357. The second biggest spenders are Millennials with an average annual expenditure of $69,061.
The $34 trillion gross federal debt equals debt held by the public plus debt held by federal trust funds and other government accounts. In very basic terms, this can be thought of as debt that the government owes to others plus debt that it owes to itself. Learn more about different ways to measure our national debt.
New York has the highest overall tax burden, while Alaska has the lowest. Maine has the highest property tax burden, while Alabama has the lowest. California has the highest individual income tax burden, while seven states (including Texas, Florida and Washington) have the lowest.
