2008 Woodie Awards
How Washington will spend your taxes in 2006
Brian Riedl ; The Heritage Foundation (KRT)
Issue date: 4/19/06 Section: Opinion
As the April 15 tax deadline edges closer, taxpayers frantically completing their 1040s may be wondering just what their hard-earned federal tax dollars pay for, anyway.
Washington will spend $23,760 per household in 2006 - the highest inflation-adjusted total since World War II, and $6,500 more than in 2001. The federal government will collect $20,044 per household in taxes. The remaining $3,716 represents this year's budget deficit per household, which, along with all prior government debt, will be dumped in the laps of our children.
Here's a breakdown of how Washington will spend that $23,760 per household:
Social Security/Medicare: $7,875. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs. This system can remain sustainable only if there are enough workers to support all retirees, which is why it risks collapsing under the weight of 77 million retiring baby boomers. If nothing is done, taxes eventually will need to be raised by the current equivalent of $11,000 per household to pay all promised benefits. The unpredictable costs of the new Medicare drug entitlement could add thousands more to each household's tax bill.
Defense: $4,701. The defense budget covers everything from military salaries to operations in Iraq and Afghanistan to the research, development and acquisition of new technologies. Lawmakers drastically reduced defense spending following the collapse of communism in the early 1990s. The 9/11 attacks reversed this trend, and the $1,900 per household increase since 2001 has returned defense spending to its historical levels.
Low-income programs: $3,579. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. Other low-income spending includes: Temporary Assistance for Needy Families, food stamps, housing subsidies, child-care subsidies, Supplemental Security Income and low-income tax credits. Despite recent rhetoric about "cuts for poor," anti-poverty spending now tops 3 percent of GDP for the first time ever.
Washington will spend $23,760 per household in 2006 - the highest inflation-adjusted total since World War II, and $6,500 more than in 2001. The federal government will collect $20,044 per household in taxes. The remaining $3,716 represents this year's budget deficit per household, which, along with all prior government debt, will be dumped in the laps of our children.
Here's a breakdown of how Washington will spend that $23,760 per household:
Social Security/Medicare: $7,875. The 15.3 percent payroll tax, split evenly between the employer and employee, covers most of these costs. This system can remain sustainable only if there are enough workers to support all retirees, which is why it risks collapsing under the weight of 77 million retiring baby boomers. If nothing is done, taxes eventually will need to be raised by the current equivalent of $11,000 per household to pay all promised benefits. The unpredictable costs of the new Medicare drug entitlement could add thousands more to each household's tax bill.
Defense: $4,701. The defense budget covers everything from military salaries to operations in Iraq and Afghanistan to the research, development and acquisition of new technologies. Lawmakers drastically reduced defense spending following the collapse of communism in the early 1990s. The 9/11 attacks reversed this trend, and the $1,900 per household increase since 2001 has returned defense spending to its historical levels.
Low-income programs: $3,579. Nearly half of this spending subsidizes state Medicaid programs that provide health services to poor families. Other low-income spending includes: Temporary Assistance for Needy Families, food stamps, housing subsidies, child-care subsidies, Supplemental Security Income and low-income tax credits. Despite recent rhetoric about "cuts for poor," anti-poverty spending now tops 3 percent of GDP for the first time ever.
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