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Thread: Why are federal taxes so high?

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    Senior Member Array airjaw's Avatar
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    Default Why are federal taxes so high?

    How Washington will spend your taxes in 2006
    by Brian M. Riedl

    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 (TANF), food stamps, housing subsidies, child-care subsidies, Supplemental Security Income (SSI) 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.

    Interest on the federal debt: $1,930. The federal government is $8.2 trillion in debt. It owes $4.9 trillion to public bond owners, and the rest to other federal agencies (mostly to repay the Social Security trust fund, which lawmakers raid annually). Despite rising debt, record-low interest rates have limited costs. As interest rates rise back to normal levels, these costs will spike.

    Federal employee retirement benefits: $870. This spending funds the retirement and disability benefits of federal employees, including the military.

    Education: $732. Education spending is primarily a state and local function; 9 percent of the total comes from Washington. Federal education spending has surged 137 percent since the 2001 enactment of the No Child Left Behind Act. Most federal dollars are spent on low-income school districts, special education and college student financial aid.

    Health research/regulation: $671. This spending is up 78 percent since 2001, and much of this growth is concentrated in the National Institute of Health. This category includes the Food and Drug Administration and dozens of grant programs for health providers.

    Veterans’ benefits: $618. The federal government provides income and health benefits to war veterans. Spending is up 56 percent since 2001.

    Community and regional development: $456. The $300 per household leap in this category since 2004 comes from the Federal Emergency Management Agency (FEMA), which is financing much of the Hurricane Katrina relief.

    Highways/mass transit: $402. Most highway and mass-transit spending is financed by the 18.4 cent per-gallon federal gas tax. Washington subtracts an administrative cost and sends this money back to the states with numerous strings attached. Some economists suggest it would be more efficient to let states collect this tax and decide how to spend the money themselves.

    Justice administration: $363. Justice spending includes federal attorneys and prisons, as well as law-enforcement grant programs. New homeland security costs have added $80 per household to justice spending.

    Unemployment benefits: $338. Unemployment costs fluctuate based on the number of unemployed Americans. This year, unemployment costs are decreasing as job growth continues.

    International affairs: $305. This includes foreign economic and military assistance, operation of American embassies abroad, and contributions to organizations such as the United Nations. International spending has doubled since 9/11.

    Natural resources/environment: $287. This includes national parks, federal lands, water projects and environmental clean-up.

    Agriculture: $235. Despite rhetoric about supporting small family farms, the vast majority of farm subsidies are distributed to large farms with average household incomes over $135,000.

    The programs listed above cover $23,362 per household. The remaining $398 is allocated to all other federal programs, including social services, space exploration, air transportation and energy.

    Taxpayers must decide for themselves if they’re getting their money’s worth.




    I've always felt that federal taxes were too high, especially considering they don't pay for police, or fire, or any of the local school systems that serve and protect us every day.

    10% is budgeted for interest on debt. Not the debt itself, god only knows whenthat will be paid.
    20% is budgeted for the military. I've read that our military budget is more than every other country in the world combined. I don't think its unreasonable to cut the budget in half and still be 99% as safe as we were before.

    What do the Dept of Education, Dept of Agriculture, Dept of Transportation, the Dept of Homeland Security, and the Dept of Defense do?

    I don't think its unreasonable to trim some of these gov't programs.
    Why is Dept of Defense spending almost 600 billion? Are we serious here? If we weren't starting wars overseas this could probably be 100-200 billion
    They could spend that money on roads, bridges, and laying down some rail track?

    What do you guys think? Where could the budget be trimmed? What agencies need to go or at least be downsized? What would the federal tax rate be if you were in charge?

    Oh, and when are they going to actually pay down the debt? What happens when the debt interest becomes half of our budget?

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    christ's grandfather Array ajblaise's Avatar
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    We have less taxes than most of the successful industrialized world. Maybe the question should be "why aren't they higher?"

    I agree about the huge DoD budget, but with education, transportation, agriculture, environment, veterans affairs....a lot of people think these departments are underfunded as it is.

    Cutting the insane defense budget would no doubt lower fed taxes a good bit.

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    Sign in Stranger Array nittanylion302's Avatar
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    Yes, this is why I feel it is necessary to vote for Obama in this cycle. 20% of my taxes are going to a military that does very little to make me feel safer.
    It is not down in any map; true places never are

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    Quote Originally Posted by nittanylion302 View Post
    Yes, this is why I feel it is necessary to vote for Obama in this cycle. 20% of my taxes are going to a military that does very little to make me feel safer.
    Read up on Obama's voting record in Illinois. He voted for spending programs. He would get a small amount passed and then raise the amount of money in later years. He will raise taxes, not lower them.

    The military does more than just fight in Iraq. The Navy helps keep the oceans safe from pirates and rogue governments so that trade can be done safely. Most of the products you buy come on a ship.

    20% for the military is not so bad. It's the other 80% that is questionable. Where are all the social programs listed in the Constitution? Why does a program get funded and then keep getting funded even if it doesn't work? I will have to look it up , but I recall reading that about 60% of the Federal budget is mandated by law. I think Congress should have to review the majority of the spending programs every few years and vote on them, rather than just passing a law saying this program must always be funded. With more accountablility in Congress (doesn't matter which party is in the majority) I think there are lots of areas to save money or at least spend it more effectively.

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    malarkey Array oxyjen's Avatar
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    For kicks and giggles (because it laughably oversimplifies the whole matter, which is almost inevitable when talking about something as gargantuan as the federal budget), you can try your hand at balancing it yourself. Play the Budget Hero game! Thanks, NPR!

    I bottomed out in 2060.

    oh--and I agree with nittanylion.

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    malarkey Array oxyjen's Avatar
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    Quote Originally Posted by bclark619g View Post
    I think Congress should have to review the majority of the spending programs every few years and vote on them, rather than just passing a law saying this program must always be funded.
    So rather than the money going to the program, we just send the money to DC staffers to read up on all the programs to prep our officials when it is time for the review and vote. No thanks.
    Last edited by outmywindow; 7 Aug 2008 at 06:25 PM. Reason: fixed quote tags

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    Senior Member Array Spring's Avatar
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    Health care and Military.

    I can understand why we spend so much on the military. We have to protect corporate interests that are located in foreign lands and at the same time, provide what amounts to welfare to those same corporations via defense contracts. And hey, I'm sure the fact that the corporately owned media spends so much time trying to scare us does not mean they are manipulatively pushing us to increase our defense spending. Okay...maybe just a little.

    Health care seems like a complete mess, with so many people needlessly dieing and suffering because they can't get good care or afford their medications and people who can afford insurance losing their homes when they do get sick or hurt, but there is hope. As long as the insurance and pharmaceutical companies continue rolling in record profits, then everything will be just fine.
    "I became insane, with long intervals of horrible sanity."

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    Quote Originally Posted by oxyjen View Post
    So rather than the money going to the program, we just send the money to DC staffers to read up on all the programs to prep our officials when it is time for the review and vote. No thanks.
    So the Congress is infallible? Every program passed is worthy of being funded for eternity?

    If this thread where in purgatory I would say you were a dumb----.
    Last edited by Rhu; 7 Aug 2008 at 09:31 PM. Reason: fixed quote.

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    malarkey Array oxyjen's Avatar
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    Quote Originally Posted by bclark619g View Post
    Quote Originally Posted by oxyjen View Post
    So rather than the money going to the program, we just send the money to DC staffers to read up on all the programs to prep our officials when it is time for the review and vote. No thanks.
    So the Congress is infallible? Every program passed is worthy of being funded for eternity?

    If this thread where in purgatory I would say you were a dumb----.
    I'm not saying Congress is infallible--rather the opposite. I think if you want to cut out waste or unsuccessful programs, that voting on their budget more often is not going to be the answer. I have little faith that congresspeople know a whole lot about the programs that are at the bottom of some of the funding chains.

    Having government bid out contracts to competitive industries, employing regular audits of entities receiving federal funds, running stats (or employing some sort of "evidence-based practice standard"),etc., now those measures I could see being more effective.

    I wish I had more time to write more in depth, but I am at work at the moment.
    Last edited by Rhu; 7 Aug 2008 at 09:31 PM. Reason: Fixed quoted quote.

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    Over-rated royalty Array djm's Avatar
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    I wish my country had such 'high' taxes! I pay 40% plus national insurance, plus VAT at 18% on pratically anything I purchase, plus car tax, fuel tax (approx 90% of fuel cost is tax here), plus Capital Gains tax at 18% etc etc.
    There is a calculation made each year here on when you stop working for the government and start earning money for yourself, its in about June at the moment I believe.

    The tax take in the US is very low compared to most modern post industrial nations. I am apalled how much of the budget proportionately goes on the military in the figures shown though (but not surprised).
    There's no tyrant like a brain - Louis-Ferdinand Celine

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