What do your federal taxes pay for?

Here’s a brilliant idea: Show taxpayers exactly what their taxes pay for. Nobody likes paying taxes, and most taxpayers tend to believe a lion’s share of their taxes go for things they hate. They exaggerate federal spending on such things as foreign aide.
So a group called Third Way, a moderately liberal think tank, (h/t Matt Yglesias) has come up with a typical receipt for a taxpayer earning $34,140 and paying $5,000 in federal income tax and FICA:
Taxpayer-receipt

Third Way explained why they chose the $34, 140 figure:

According to the IRS website, in 2008 the median tax filer in America had an adjusted gross income of $34,140 and paid $2,790 in federal income taxes.2 Assuming that all of that income was earned through wages, this filer would also contribute $2,610 to Social Security and Medicare through FICA. That is a total of $5,400 in federal tax and FICA payments. For most people, that is an enor- mous sum of money—it certainly is for the median taxpayer.

148 comments Add your comment

Keep up the good fight!

October 1st, 2010
5:05 pm

Think of the savings if we just cut out the Smithsonian…why we could balance the budget! Oh look as the massive entitlements! Why its….miniscule!

Wait a minute…look at what the debt is costing each of us a year and the wingnuts still want tax cuts and giveaways to the rich?

Kamchak

October 1st, 2010
5:05 pm

TWENTY-FOUR CENTS TO FUND THE ARTS!!!

THE HORROR, THE OUTRAGE!

Skip

October 1st, 2010
5:09 pm

What a waste of $0.19

Kamchak's gerbil

October 1st, 2010
5:10 pm

Calm down – calm down.

Keep up the good fight!

October 1st, 2010
5:22 pm

Kam…I think the gerbil is saying “take 2 Clooney’s and call me in the morning?” Does the EPA not have gerbil off?

So basically Bush’s wars are costing 5% of $5000 tax bill. Not including the costs to lives, vet care and benefits…..Thanks George! Great job so that you can try to leave a “legacy.” Yep…definitely BLAMING BUSH for IRAQ!

John

October 1st, 2010
5:25 pm

CT always provides a good laugh to end the week. Maybe know the difference between mean, median, and mode before publishing such rubbish?

Joel

October 1st, 2010
5:25 pm

I dont see why most of that can not be cut by 1/3. Govt needs to be more efficient. I am getting sick and damned tired of wasteful spending. That is across the board!

ctucker

October 1st, 2010
5:28 pm

Joel@5:25, I’m all for cutting the military by 1/3. That’s great!

ctucker

October 1st, 2010
5:32 pm

John@5:25, That was hardly an argument. The “median” = half above and half below. The mid-point. And what makes that rubbish, exactly?

Scarecrow

October 1st, 2010
5:32 pm

Joel, why don’t you just keep all of your money and go live in a hole somewhere. How much do you think you pay? You think you may have a lot of money now and don’t want to pay your fair share — believe me “just get sick”!!! SELFISH!!

arnold

October 1st, 2010
5:32 pm

That $229.00 in the Middle East…Why?

Joel

October 1st, 2010
5:33 pm

I said across the board CT If you arent ready to cut all places, you are not ready for this discussion. Look, there is waste is every aspect of government. Have a private sector firm to come in and find the waste. They get paid a percentage of what they save the govt. I am tired of everyone b****ing and moaning about military spending only.

John

October 1st, 2010
5:33 pm

Fellow bloggers lib and right- pls google “tax calculator” and put in even 40k of salary- give the taxpayer a kid or two and and just one deduction and the 40k taxpayer is not a tax payer. NIce try but we are not drinking- yet.

ctucker

October 1st, 2010
5:33 pm

Joel@5:33, You have parents on Medicare and Social Security? Are you currently receiving either of those entitlements? You want to cut them by a third?

Joel

October 1st, 2010
5:34 pm

If I get sick, I deal with it. I go to the doctor and pay my bill. I have major medical if I get very sick. I am not asking for a handout. Tell me how I am selfish.

arnold

October 1st, 2010
5:36 pm

I’m on Medicare. With heart and cancer treatments, it’s a Godsend.

Reality Check

October 1st, 2010
5:37 pm

CT, the 1/3 of the military you would cut is the 1/3 you would need in a contingency.

Joel

October 1st, 2010
5:39 pm

CT, SS is a joke. The money has been used to pay for other things for a long time now. Medicare fraud is rampant. Lets start the cutting there.

John

October 1st, 2010
5:45 pm

Cindy- please. If you have 1 person that earns 1 million and pays 400k of taxes and 100 folks that earn 50k of wages and no taxes you then, according to you, the group has an average salary of approx 49k and pay an average of 3,960 of taxes. To insinuate that folks who make 35k pay that much in taxes is at best misleading. You are a lovable mess.

Scarecrow

October 1st, 2010
5:48 pm

So you have major-medical to pay your bills when you get sick — so what about your fellow Americans, Veterans, and older Americans who may not be able to pay and you want to cut spending — that is why you are selfish!! Keep living my friend and your selfish deeds will surely come around and bite you on your selfish a@#$! Put those “crazy” Republicans in Congress and it may be sooner than you think!!!!

Scarecrow

October 1st, 2010
5:49 pm

Cynthia, why do your bloggers attack you on every article you write? All you do is present the facts. It amazes me how they twist everything you say into “knots”!

ctucker

October 1st, 2010
5:53 pm

Scarecrow@5:49, You ask a profound question. I, too, am amazed.

Joel

October 1st, 2010
5:53 pm

I never attacked anyone accept the federal government and its frivilous spending. If you want to keep living your land of sunshine and daydreams then go right ahead. As for me, I understand that we can not sustain this level of spending. I am selfish because I want to keep more of my money? Ha, I say you are selfish for wanting my money.

ctucker

October 1st, 2010
5:55 pm

John@5:45, Surely you are not so ignorant of tax laws as your comment suggests. There are many folks earning $34K who pay that much in taxes. It all depends on their deductions. The more children you have, the more deductions you get. If they have no children and don’t own a house, you end up paying more. You surely understand that the amount you pay doesn’t depend strictly on your income.

ctucker

October 1st, 2010
5:56 pm

Joel@5:43, Are your parents living?

Joel

October 1st, 2010
5:58 pm

ctucker

October 1st, 2010
6:00 pm

BTW, John@5:45, I don’t think you read my post very carefully. Third Way says that “according to the IRS Web site, the the median tax filer in America had an adjusted gross income of $34,140.” They paid $2,790 in federal income taxes and the rest in FICA. You think the IRS is lying? Why? What would be the point?

ctucker

October 1st, 2010
6:01 pm

Joel@5:58, Do they receive Social Security or Medicare?

Scarecrow

October 1st, 2010
6:02 pm

Hey Joel buddy! I do not need your money or want your money, I work and have worked for 35 years plus and I am still working — I have health care and I have a home, I drive a car and I am quite comfortable — but I do not have a problem with sharing with those who are less fortunate and when I do, I feel that I have made a difference. You, Sir, just sit home and complain about who is getting your tax dollars and what they are doing with it — hell, it may be some of your folk you may be helping — buddy, the answer is — people are trying to survive. Keep your ole money — if I thought I was getting any of your money — I would give it back!! You are still selfish!!!

John

October 1st, 2010
6:07 pm

Not lying- “average” income and “average” taxes paid are statistically irrelevant. The IRS puts out 100s of data points. Using these two together without explanation is misleading. Kind of like the Braves putting a player on the roster who is 1 for 50 and the 1 hit was a home run. “Every time he hits that darn ball it goes”.

Nice try- too late in the day to say anything but you are a mess.

ctucker

October 1st, 2010
6:08 pm

John@6:07, The IRS didn’t use the misleading term “average.” They used the term “Median.” Midpoint. Half above and half below

ctucker

October 1st, 2010
6:09 pm

BTW< John@6:07, Are you looking down on people who earn $34,000 a year?

Wahoo

October 1st, 2010
6:13 pm

Cynthia,

If you add up the items in the chart, you get a total of about $3,260. What is the bridge to get to $5,400 referenced

Jethro

October 1st, 2010
6:20 pm

I would have no problem cutting 1/3 of military spending. I’d bet 80% of that cut would come simply by implementing more efficient accounting principles. Give me the military budget, I’ll crunch the numbers. I think that’s a big boil on the butt of it all. Nobody watches how the money is spent. Bush gets chastised for Iraq – no argument for that. As to the rest, that’s not the President’s domain. That belongs to Congress.

I say vote in fewer lawyers and more accountants.

John

October 1st, 2010
6:20 pm

Nice try again CT but my business life is devoted to employing the disabled and disadvantaged- who by the way are the best workers in the world.. It is always interesting to hear commentary on you from your old non profit board members. You are a lovable mess with loads of opinions.

A Voice

October 1st, 2010
6:20 pm

What about all the nare-do-wells on SS disability!! There are alot who aren’t seniors who are on SS disaiblity. What about our fine congressmen who have raided the SS trust fund to pay for other things besides for what it was intended. What about all the fraud that is eating up the funds in Social Security. I see there was a category left off of “Third Way’s” breakdown . . . Pork Barrel Spending.

John

October 1st, 2010
6:22 pm

You accomplish absolutely zero for the needy by dreaming, wishing, and lashing out. You could change your ways and be an incredible enabler of those less fortunate.

Joel

October 1st, 2010
6:23 pm

Scarecrow, buddies we are not. You think you deserve a gold star because you work and support yourself? I never once said I pay too much in taxes. I said the federal government spends too much. Kind of like a drunken college student with their parents credit card.
CT, no my parents are not on medicare. Are you getting at something here? Lets hop to it.

Joel

October 1st, 2010
6:25 pm

Jethro, Thats exactly what I am saying. These numbers are insane. I say let you find the waste and you can keep 5%.

Joel

October 1st, 2010
6:25 pm

Scarecrow, when I want to give, I write a check to my favorite charity.

carlosgvv

October 1st, 2010
6:26 pm

I paid Federal taxes for over fifty years. Cancelled Government projects have long since thrown all my tax money out ;the window.

John

October 1st, 2010
6:27 pm

The far right watched as our jobs left overseas because “we” didn’t want the jobs. The far left thinks the gov’t needs to control the market.

To make the commentary more correct you would need to point out that more than 40% of taxpayers pay no federal income tax. This doesn’t mean you need to be simple minded and believe that I look down on them. The “average” american employee is the best employee in the world and wall street and dc continually fail us/them. There should be pride in paying taxes. Raise the top rate to 45% on those making over 250k for the next two years- do something a lay out a plan.

Creamy Crack

October 1st, 2010
6:29 pm

Tax creamy crack! It’s an epidemic.

dcdawg

October 1st, 2010
6:32 pm

Joel — If your parents are 65, then they are on Medicare. If they’re not that old yet, then they will receive Medicare when they reach 65. So you want to cut 1/3 of their Medicare benefits and 1/3 of their SS benefits?

Wahoo — If you read the right side of the chart, you’d note that the hypothetical taxpayer also pays 2790 in FICA taxes (his contribution to SS and Medicare). Since both programs are currently underfunded the $1040 (SS) and $625 (Medicare) he contributes in income taxes is to cover the deficit so that current recipients will not have their benefits cut. As one blogger noted, Congress years ago raided the SS trust fund for other purposes so that isn’t enough to pay current recipients.

marko

October 1st, 2010
6:33 pm

Let’s call the wars in Iraq and Afganiistan W’s gift to America. Interest on debt as Reagan said, is only money we owe ourselves. Ever wonder why the checks are made out to China. So we’re only paying our elected heros 19 cents. No wonder they have to sell their votes to the special interest to scrape by. Kinda tugs at the old heart strings if you know what I mean.

dcdawg

October 1st, 2010
6:33 pm

Joel — If your parents are 65, then they are on Medicare. If they’re not that old yet, then they will receive Medicare when they reach 65. So you want to cut 1/3 of their Medicare benefits and 1/3 of their SS benefits?

Wahoo — If you read the right side of the chart, you’d note that the hypothetical taxpayer also pays 2790 in FICA taxes (his contribution to SS and Medicare). Since both programs are currently underfunded the $1040 (SS) and $625 (Medicare) he contributes in income taxes is to cover the deficit so that current recipients will not have their benefits cut. As one blogger noted, Congress years ago raided the SS trust fund for other purposes so there isn’t enough to pay current recipients.

marko

October 1st, 2010
6:33 pm

Let’s call the wars in Iraq and Afganiistan W’s gift to America. Interest on debt as Reagan said, is only money we owe ourselves. Ever wonder why the checks are made out to China. So we’re only paying our elected heros 19 cents. No wonder they have to sell their votes to the special interest to scrape by. Kinda tugs at the old heart strings if you know what I mean.

jconservative

October 1st, 2010
6:45 pm

The taxpayer is paying $5400. in income and FICA taxes. That is after income tax cuts that started in 1981. Thirty years after the income tax cuts started the national debt is $13.5 trillion.

Spending cuts? Oh, there have not been any spending cuts. If you cut spending you make a bunch of voters mad and they may vote for the other guy. And that is not a good thing.

So, to stay in office, congressmen vote to lower taxes but never get around to cutting spending. They promise they will, but just do not get around to it. And why should they? We can always borrow the money from China and Japan.

And so this fall Lucy, the Incumbents, is holding that football and promising Charlie Brown (you voters) that she will not jerk the ball away at the last second. And all you Charlie Browns are gonna believe her! And you will run up and kick the ball. But Lucy will jerk it away. And all you Charlie Browns will holler “AAUGH!” and hit the ground.

And next year, next election, you will do the same thing again!

AAUGH!

Red Hill Rebel

October 1st, 2010
6:47 pm

There are 585 Federal Agencies that WE fund. Seems CT left out a few things on her list ?
And then there’s the earmarks and grants…oops again I guess ? But why let the truth get in the way ?

mmm, mmm, mmm, Barack the LIAR Obama - BEND OVER, Here comes the CHANGE!

October 1st, 2010
6:55 pm

And can you tell me why the Smithsonian is FREE, especially to foreigners – Go to a foreign country and you PAY for their museums.

TAX and SPEND, TAX and SPEND…how’s that hope and change workin’ fer ya?