Where do my taxes go?

what do my taxes go to

Where does my tax money go? From USA Today, a calculator and graph that lets you enter your salary and shows you how your tax dollars are spent. You can also change the year shown, so that you can compare now and then.

What does "net interest" mean in this context?

posted by amro at 6:08 AM on February 3, 2010

This is really fantastic information design. I do have one complaint, though: past years' comparative salaries are adjusted for inflation, which is helpful, but in turn it means that it's difficult to compare the tax breakdown from year to year. I wish they had used percentages instead of whole numbers, as that would give a clearer indication of the differences between where my money used to go and where it's going now.

Budgeted net interest on the public debt was approximately $240 billion in fiscal years 2007 and 2008. This represented approximately 9.5% of government spending. Interest was the fourth largest single budgeted disbursement category, after defense, Social Security, and Medicare.

posted by jckll at 6:12 AM on February 3, 2010

In 2009, my single highest expense was "Other".

Actually, the most revealing thing here is how fast the income line grows relative to the effective tax rate. Conservatives have been winning the "government is stealing from me" vs "contributing to the public good" debate for decades.

In some ways this is great design, but why on earth did they do it in nominal dollars? The effect is to make the lines appear to increase rapidly, so that the first-glimpse impression is "wow, people just keep getting charged more and more taxes." And most people are going to come away with no more than that.

posted by escabeche at 6:19 AM on February 3, 2010

As a Dane I'm surprised at how much you guys get to keep of your money. I guess you get what you pay for :)

Paying for government contractors to browse Digg and forward Youtubes to each other on company time!

I worked for a government contractor last year (one of the biggest) and we only had access to about 1/4 of the internet at work. Almost everything fun was blocked off including YouTube, all blogs and all social networking. For what it's worth, at least in that little corner of defense contracting, almost everyone there were hard working and dedicated to their projects.

Just out of curiousity:

NEA: For FY 2009, the budget is US$155 million.*

Its budget can fit inside a rounding error at this point.

Where's the NEA on this?

The NSF project that was working on making pixels that small unfortunately had its funding canceled.

I kept turning off no-script, and ad block, until I had 125 scripts running on that page, and still no flash app. So if that happens to you, just go here, I found it in the HTML source: http://i.usatoday.net/money/graphics/2010/taxes/flash.swf

I'm upset that less of my family's dollars are going to war! Doesn't NOBAMA know that this is just like pouring gasoline on us?

Where's the NEA on this?

posted by EmpressCallipygos at 6:24 AM on February 3

The NEA counts for 0.004% of the federal budget. The sub-pixel jokes are accurate.

The NEA counts for 0.004% of the federal budget. The sub-pixel jokes are accurate.

See, I'd love for there to BE some kind of graphic representation of that so as to stave off any future "I ain't givin' my tax dollars to no performance artist" complaints.

Then again, I was in college during the whole "Piss Christ" kerfluffle and I work in the arts, so I have a somewhat personal interest in this.

This is fun for calculating how tax rates changed.

Your tax rate is 33%.

In 1981 your tax rate was 60% (for an equivalent income adjusted for inflation to $209,853).

In 1989 your tax rate was 29% (" " $286,268).

Reagan screwed you.

Yep. The "overspending" we are doing now is actually undercollection brought on by "fiscal conservatives".

posted by DU at 6:51 AM on February 3, 2010

See, I'd love for there to BE some kind of graphic representation of that so as to stave off any future "I ain't givin' my tax dollars to no performance artist" complaints.

Here you go. I offer people five dollars if they can find the NEA on that graphic in less than two minutes. I've still got my five bucks. (or rather, I did, but now I comment here, Wheeee!)

Budgeted net interest on the public debt was approximately $240 billion in fiscal years 2007 and 2008. This represented approximately 9.5% of government spending. Interest was the fourth largest single budgeted disbursement category.

We're gonna end up with what both the Republicans and Democrats want: a very limited government with punishing taxes for everyone.

Reagan screwed you.

In all honesty, please help me understand this. For a 30k salary over the course of like 30 years your tax rate essentially stayed the same, fluctuating maybe 1 to 2 percent. In all this time, the tax on a 500k salary came down to still something like twice the rate you pay on 30k. So how is that Reagan screwing us? I could see if a 30k tax rate went to 28% and a 500k tax rate came down to 28%. I hope I'm not being dense, I just don't see the unfairness.

posted by spicynuts at 7:14 AM on February 3, 2010

I hope I'm not being dense, I just don't see the unfairness.

A progressive tax rate is generally considered a good thing. As you make more money, you pay more taxes back to society (via the IRS). The first $5-6000 is tax-free, followed by about $10,000 at only 10%, and so forth.

It used to be that the very rich paid high marginal rates, 60% or more, with the notion that either they'd give to charitable foundations, or they'd pay taxes back. I mean, if you're taking in $100 million, keeping $40 million is still huge!

Reagan promised that he'd lower taxes, but it was implicitly promised that it'd be for all. Instead, taxes were lowered only for the very rich, those who can definitely afford to be taxed highly. The rest of us got either no tax cut, or even a small tax increase. The extra $1000 nibbled off the average working stiff is going to matter a lot more (relative to lifestyle) than the extra million nibbled off Warren Buffett's or Bill Gate's fortune.

More fun with Reagan!

If you are making minimum wage now.

Your annual salary comes out to be $15,080.

Your tax rate is 14%.

If you were making minimum wage in 1981

Your annual salary was $6968.

Your tax rate was 9%.

If you were making minimum wage in 1989.

Your annual salary was still $6968. (Reagan presided over the longest pause in adjusting the minimum wages)

Your tax rate was 12%. And that $6968 was equivalent to $5120 in 1981 dollars. So, Reagan in total screwed you out of $2008, 29% of your income.

If you accept the essential premise of progressive taxation (that accumulating larger amounts of wealth yields an exponential rather than a linear increase in real spending power) then it's pretty obvious why it's unfair to keep taxes flat at lower income levels while halving them at the upper end. If you believe in progressive taxation, a 60% tax rate on an income of $500,000 is effectively proportional to a 16--18% tax on an income of $30,000. The more dollars you have, the more each individual dollar is effectively worth, so you have to adjust

the tax rate higher at the upper ends just to maintain a fair, proportional equivalence.

Spicynuts: Reagan was responsible for the time period of 1981 to 1989, not for the 30 year fluctuations. In the time period of 1981 to 1989 the income tax rate went up in the $30,000 per year example from 16 to 18%. This helped pay for the huge reductions in $500,000 per year people. The 16 to 18% was an additional $600 per year. Six hundred per year when you are making little is significant. Furthermore, the increase was even more acute for those further down the income scale.

My income for the 1980s totalled sixty-some thousand dollars. I worked in the inner city at a charity for several years ($10,000 per year) and then with a graduate student stipend ($5,000 to $7,000 per year). I felt Reagan's tax increases at the time and was particularly annoyed when he talked about cutting taxes.

On another topic, he shifted Federal programs to the states and the states had to raise tax rates. That can't be calculated at the linked website.

Reagan presided over the longest pause in adjusting the minimum wages

But hey, with all that extra cash I have after the tax cuts, I can afford to pay my employees more than minimum wage!

Just kidding, let's get some blow and turn an old factory into luxury condos!

Ah, great explanation, kids! Thanks so much.

posted by spicynuts at 7:48 AM on February 3, 2010

You know I figure the counter-argument from Republicans on this is probably that it should act as an instigator and stimulant for the 'disadvantaged' to "work hard", educate themselves, and climb up the economic ladder. Of course, if you're asked to pay and additional 600 bucks of taxes, that's 600 bucks you can't use to pay for your education, or even buy clothing/transportation to get you to an interview/job.

posted by spicynuts at 7:51 AM on February 3, 2010

I just wanted to comment and say that I really liked the tone and civility of the explanations. I'm actually a little surprised that it wasn't as snarky as it sometimes is. Hell I was feeling snarky, but then seeing spicynuts' "thanks" really made me realize how effective your answers were :)

Pats the collective mefi back :P

posted by symbioid at 7:51 AM on February 3, 2010

I'm married and own a house with a mortgage. I do not pay anywhere near in tax what this suggests. And I'm not cheating. I use TurboTax to calculate and I'm not taking anything fancy or creative in deductions. Just saying.

No problem, spicynuts. I should note that Reagan presided over the longest pause until that time. There was a ten year pause in increase of the minimum wage from the last four years of the Clinton administration (although a four year pause in itself isn't that unusual) through the first six years of the Bush Jr. administration.

And in my example, it would have been $600 loss in 2010 dollars but $343 in 1989 dollars.

I'm married and own a house with a mortgage. I do not pay anywhere near in tax what this suggests. And I'm not cheating. I use TurboTax to calculate and I'm not taking anything fancy or creative in deductions. Just saying.

Well, yes, these are the nominal tax rates, not the average real tax rates. But it's easier to compare nominal tax rates because the average real tax rate keeps shifting around. People have more or fewer children, mortgage interest rates fluctuate, etc. And frankly, just how much research do you expect USA Today to put into an infographic?

posted by jedicus at 8:26 AM on February 3, 2010

Just kidding, let's get some blow and turn an old factory into luxury condos!

Sounds like you are getting how this trickle down thing works! You're putting construction workers and drug dealers to work!

I'm married and own a house with a mortgage. I do not pay anywhere near in tax what this suggests.

It assumes you're single, and being married (especially being married to someone not working in the market, or where one spouse earns dramatically more than the other) makes a huge difference.

Also, are you adding in your SS and Medicare? (Arguably they should add in your employer's share of SS as foregone income)

Reagan certainly did screw you, especially if you were born after he took office, since he robbed you to pay for the crap he bought back in the leg-warmer era.

But in somewhat fairness, *some* of the reductions in high-income tax rates were offset (in the 86 tax cuts) by pretty sweeping reductions in the deductions and exemptions you could take. Rich folks in 196X and 197X weren't actually paying 60% of their income as federal taxes.

In all honesty, please help me understand this.

No problem.

It took almost two hundred and fifty years to get to $1 trillion.

It took twelve years to get to $4 trillion.

Know when those years were? 1980-1992.

Know who the president(s) were? Ronald Reagan and George H. W. Bush.

How did our debt get so high so quickly?

Enter anything into the calculator. Now, what shape does that "take-home" gray line look like? If you said "Why, it looks just like the National Debt graph," you're right! As tax revenue from the upper wealth brackets has decreased, the amount of money we have to fund entitlement programs (programs guaranteed by law) has similarly decreased. So how do we continue to pay for those programs, then? Well, either you get Congress to cut the programs (hard unless your party controls Congress), or you just keep the programs and go ever-deeper into debt.

A progressive tax rate is generally considered a good thing

Well, I agree with that, but I don't think it's anywhere near a universal sentiment. Maybe a majority of people agree, but many do not (republicans seem to no longer agree with this, and if you go by voting thats still a huge amount of the population. teabaggers _certainly_ don't agree with this, many of them are flat-taxers).

posted by wildcrdj at 6:33 PM on February 3, 2010

I'm married and own a house with a mortgage. I do not pay anywhere near in tax what this suggests. And I'm not cheating. I use TurboTax to calculate and I'm not taking anything fancy or creative in deductions. Just saying.

I agree. This chart does a few things to paint a skewed picture I think.

First, it should use constant dollars so that you can actually see the tax rate fluctuate. Humans are really bad at geometric progressions to begin with, and most can't see how a relationship between two works. This is the first way it is manipulated to show 'taxes just keep going up'.

The second is that even if it is "hard" to show deductions that people take, that doesn't make this a valid picture. I'd guess that a sizable number of folks at an income above say $50,000 for a household take significantly more than the 'standard' deduction. This chart ignores the home mortgage deduction, which is huge! The net effect is that it shows effective taxes much higher on upper-middle income families than they often are. I'm pretty sure the IRS publishes data on this, and wish it were in the chart.

Now I'm wishing someone would re-do this chart with normalized dollars and actual rates paid by income range instead of the nominal rates they used.

posted by meinvt at 9:21 PM on February 3, 2010

My tax dollars go to helping Blagojevich get some awesome shoe polish hair. Goody.

Source: www.metafilter.com

Category: Taxes

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