Friday, August 12, 2011

Where do my tax dollars go? Find out what the White House says.

In their commitment to bring more transparency to the American public, the White House recently launched its new taxpayer receipt calculator. The intention of the calculator is to help everyone understand where their tax dollars go after they are received. To access this calculator, you can visit their page:

To use it, you will need to enter 3 items from your 2010 tax return. These are your: Social Security, Medicare, and Federal Income Tax amounts. After entering, press the "Calculate Receipt" button and the distribution of your tax dollars will be displayed.

The receipt consists of three groups of data. The first two are: Social Security and Medicare Taxes. The output of the receipt for these categories simply duplicates the amounts you enter and provides no other information. So, it is not particularily interesting.

The meat of the calculator is in the Income Tax breakdown section. Using its predefined percents of income, the receipt calculator shows how your tax dollars are allocated across 14 different categories:
  1. 26.3% - National Defense
  2. 24.3% - Health Care
  3. 21.9% - Job and Family Security
  4. 4.8% - Education and Job Training
  5. 4.1% - Veterans Benefits
  6. 2.1% - Natural Resources, Energy and Environment
  7. 1.7% - International Affairs
  8. 1.2% - Science, Space, and Technology Programs
  9. 2.0% - Immigration, Law Enforcement and Administration of Justice
  10. 0.8% - Agriculture
  11. 0.5% - Community, Area, and Regional Development
  12. 0.4% - Response to Natural Disasters
  13. 2.4% - Additional Government Programs
  14. 7.4% - Net Interest
Based on our first impressions, we must commend the Administration for creating this valuable tool. It provides a great overview of where our dollars go. We encourage all of you who pay Federal taxes to take a look at this tool and get a little more clarity about your tax dollar distributions.

However, like all good things, it can be criticized. For example, there is at least one item missing, and not enough clarity as to many of their descriptions.

Next week, we will take a deeper look into some of the individual line items and explain what we believe is missing.

On the overall, we believe this is a great start and a valuable tool for the American taxpaying population.

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