Where exactly do your tax dollars go?
(MoneyWatch) What does the government buy with all your tax dollars? President Barack Obama hopes an online tool will help answer that question.
The White House on Wednesday rolled out an updated version of a calculator that allows you to compute your "taxpayer receipt." You plug in your income tax, Social Security tax, and Medicare tax, and it spits out a detailed breakdown of how that money is spent.
"It's a terrific way to get people information about where their tax dollars are actually going," Obama told CBS MoneyWatch at a small gathering of financial journalists Wednesday. "We think that the more people know, the better they'll be able to judge the debates that are taking place in Washington with respect to how do we pay down the deficit, how do we reform the tax system, and so forth."
Over the next 10 days, Americans will write billions of dollars worth of checks to the U.S. Treasury. And many people don't have a good sense of how that money is spent. In a University of Maryland survey, for instance, when people were asked what percentage of the budget goes to foreign aid, the median answer was 25 percent. In fact it's about 1 percent.
The calculator breaks it down for you. A couple with a household income of $50,000 and one child would pay about $995 in federal income tax (plus $2,100 in Social Security and $725 in Medicare tax). The calculator shows that $247.75 goes to national defense, $235.81 to health care, $44.77 to veterans benefits, and $73.63 to interest, mostly on the national debt. In all it lists a dozen categories that can then broken down into subcategories -- for instance, $7.96 of that healthcare money goes to disease control and public health services.
While the tool is mostly a straightforward explanation of where the cash goes, the administration can't resist making a political point. At the bottom of the page a banner notes that in 2009, 1,470 people who made more than $1 million paid $0 in income tax. Viewers are then invited to see an explanation of the "Buffett rule," a proposed change in the tax code that would set minimum tax levels for those in the seven-digit income club.
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