Tax (Photo credit: 401(K) 2012)

The only things that are certain in life are DEATH and TAXES!  We know about death but how much do we really know about taxes…where do they go…what do they do and who benefits the most from tax cuts and breaks.

I was sitting in my doctor’s office the other day reflecting on the fact that with the vision and guidance of a lot of people, including the President of the entire U.S. of A., I would soon be able to afford and have quality healthcare.  Being a diabetic and also being someone who is moving up in years, I am duly aware of my personal war with health.  Like many, there are good days and there are bad days and today was one of those bad days or I wouldn’t have been sitting here.  As usual, I read into a stack of old magazines and came across an old issue of Reader’s Digest (printed for seniors with large print…is that a hint?).  It had a very fascinating article about the taxes that we pay and where the money goes…to what program…to what service.  Personally, I was surprised as to how so little goes so far.  I have subsequently asked several people do they know where their tax dollars goes and they like me, before I read the article, didn’t have a clue.  So with that in mind, I hope to shed some light on YOUR tax dollars, the tax program and how it benefits you, your family, your neighbors and your community.

Let’s start with a worker (single w/o dependents) with an annual income of $55,000.  This person makes roughly $1,000 per week, right?  On a yearly basis, nearly two-thirds of your taxes went to the federal government and the rest goes to your state, county, or city government.

Using the standard deduction for an annual salary of $55,0000, your taxable income would be $49,300.  Your effective tax rate would be 23.1%.  That would make your total federal taxes approximately $12,720.

Here is a simplified table that shows where your $1,000 goes (Federal Taxes only).

  Program/Service  TaxRevenue  %Category %Total$1000
Income Security $220.00   22.0
·        Social Security $115.00 .52 .115
·        Welfare   $46.00 .209 .046
·        Disability   $35.00 .159 .035
·        Unemployment     $7.00 .031 .007
Health Care $203.00   20.3
·        Medicaid      
·        Medicare      
Nation Security $200.00   20.0
·        Defense $132.00 .66 .132
·        Public Order/Safety   $65.00 .325 .065
                Police   $27.00 .135 .027
                Prisons   $18.00 .09 .018
                Courts   $12.00 .06 .012
                Fire Protection     $8.00 .04 .008
Education $158.00   15.8
·        Elementary/Secondary $117.00 74.0 .117
·        College   $28.00 17.7 .028
·        Library(s)     $2.00 .013 .002
Government $143.00   14.3
·        National Debt   $90.00 63.0 .09
·        Executive/Legislature   $21.00 14.7 .021
·        Tax Collection   $11.00 .077 .011
Highway/Transportation    $79.00   .079
·        Highways    $25.00 31.6 .025
·        Agriculture      $8.00 10.1 .008
·        Air Transport      $4.00 .051 .004
·        Air & Water Quality      $7.00 .088 .007
·        Space Program      $3.00 .04 .003
Housing/Community     $10.00 12.65 .01
Recreation/Culture       $7.00 .088 .007

So by the chart, how do your tax dollars work for you?  Let’s see…

  • You pay $7.00 into unemployment for 52 weeks for a total of $364.00.  If you have ever been unemployed, how long did it take you to get that investment back?  And since they make such a big deal over the unemployment numbers, do you know the actual break out.  Use this link 2011 Unemployment Figures to see what’s that all about.  You will see what groups are really unemployed and how they affect the numbers.  Did you know that Teens (16-19) make up 22.9 percent of the unemployment numbers?  Shouldn’t they be in school anyway?  Or, not surprisingly Blacks in 2011 represented 15.5 percent of the total where only 7.9 percent of the White population 16 years and older were unemployed?  And only 5.3 percent of white males were unemployed in 2011.  What are really the working years?  I know that many of us start young out of necessity, but should that really be counted, without explanation, in the reported totals?
  • Welfare looks like a really big chunk.  At $46 per week (annual total $2,392) that is a serious deduction from your pay that you hope that you never need.  But just like car, house or life insurance you are better off having made that investment than you are without.  A single man or woman without children, regardless of previous income, gets a minimum payment of $200.00 a month (based on the state of Michigan payouts).  I’m guessing that your previous income and the length of time you were employed may have something to do with the payouts.   I can see why this can have a negative effect on the entire financial system.  Because, if you have kids you do get more.  It’s a major problem today and it will be tomorrow if it is allowed to persist.  The answer, though, is not to kill the program when you can make smart adjustments to the current program and find ways to deal effectively with the external issues that create toxic environments that hamper and negatively impact what is still a good and very necessary  program.  There are a lot of cheats and ne’er-do-wells and they make it very, very hard for everybody in the program.
  • Social Security is a tricky for me.  The way I see it, I have X-amount taken from me on a paycheck-by-paycheck basis.  Using the chart again, I see that $115 is taken out of my paycheck every week for a monthly total of $460 and an annual total of $5,520.  How is this money managed really?  Does the government hold onto it until I need it?  What’s the percent of the “rebate” I get at retirement age?  What does the government do with the difference?  What has the government done with the difference?  You see, I am afraid because I don’t really know what happened to the financial security we had during President Bill Clinton’s last term in office.  Sept. 11 happened that’s what I do know.  And we entered in a war with Saddam Hussein and his boys in March 2003, preceded by the tremendously expensive search for Osama bin Laden.  And before we finished the job in Iraq completely we were in Afghanistan fighting the Taliban.  Why?  Because it was believed that there were forces within the country that were harboring bin Laden.  Our president had declared that any country that harbored terrorists was not a friend of ours.  I stood with him on that, as I know everybody did.  But they found him in Pakistan where he had been hiding for so long.  Almost as long as the Afghan War.  So is this where the budget surplus of the Clinton years disappeared under the Bush years?
  • The amazing thing is how small the contributions to things like schools, libraries, housing, recreation and culture, public radio and television, public order and safety are and they are always among the first tier of programs/services that get cut.  What makes it even more amazing is that these are what I call “quality-of-life” services that should be covered under our government.  With our tax dollars we are being asked to fight wars overseas while we are losing the war on our streets.  Is this not our priority…therefore, their priority?
  • We are taxed on a regular basis to support our highway and transportation system, yet our roads and bridges are in such a state of disrepair.  Now that I see how things are taxed and for what purpose, I am beginning to wonder if our elected representatives really understand that they represent us…the people.  Where does it say that they can spend our money any way that they decide?  Our roads are worn…our bridges are breaking down…schools are closing…welfare is struggling…social security is nearly bankrupt…why…Why…WHY?
  • Since part of our taxes are used to pay our representatives, why aren’t their salaries affected like everything else we pay for when “times are hard”?  They borrow from one area after another to account for what they want to do, but it never hits them in the wallet like it does the common man or woman.  How many essential programs have been modified or shutdown to pay for the wars they wanted to fight?  As I write this, special interest groups, national and international, have bought a lot of our congressional representation.  Who benefits?  Not me!  Do you?  Have your family/friends?  If not me, or you, then who?
  • Defense spending, which accounted for 27 cents of each tax dollar during the Vietnam War in 1970, fell to 11.1 percent of government spending by 2000.  The cost of the Iraq war, beginning in 2006, pushed defense spending back up to 13.2 percent of all federal, state and local government spending.  How can we afford that?  I was taught that “wars” were good for the economy.  And maybe from a historical perspective the saying is true.  But we have recently learned that all wars are not good…not for the economy or for anything else.  Surely somebody had an idea as to how this was going to work.  What was the plan and why didn’t it work?

The chart from above clearly shows how a shift of a few percentage points of your tax money can create serious…significant problems for programs that serve the largest number of people of our society.  Unfortunately, we have elected lumberjacks not tree surgeons when it comes to handling our financial interests.  And besides being lumberjacks, they are some kind of  “whore” that sells our interests for their gain. Sadly, they have been able to do this with the assistance of the Supreme Court of the United States.  Appointed for their lifetime, the SCOTUS justices have rendered a lot of decisions that seemingly have followed the party line of the party that put them on the bench.  The Affordable Healthcare Act (aka Obamacare) was the rare decision that went against the political balance of the court.

Speaking of the AHA (Obamacare), why all the fuss?  Why can’t they use the savings accrued from the ending of the two wars to fund the program or part of it?  How does a program with the lofty goal of saving lives while saving money produce such vitriol and anger?  How can the “greatest country on the planet” show so little value and support for the citizens, young and old who make this country so great?

Even though I am a lifetime Democrat, I have tried not to let that influence my thoughts on this.  I watched both conventions just so I could hear what both sides had to say about the problems/issues that we face today and the solutions they were going to use to solve them.  I think I am a like a lot of people who say, “they don’t care where a good idea comes from” as long as it works.  So to my Republican and Democrat friends, I want to ask the following questions…

  1. How would you save Social Security?
  1. How would you save Medicare?
  1. How would you deal with Healthcare?
  1. How would you fix the Economy?
  1. Why do you think your party (or any party) has the best idea/method to address these issues?

I can’t wait to hear your answers.  I believe a healthy debate among us the taxpayers would be real beneficial.  I will post all responses as long as they are not filled with insults and swearing.  If you can’t talk intelligently and emotionally without being offensive, your problems run deeper than the problems we need to solve.