Note: Because Friday is a National Holiday – Emancipation Day – the last day to file taxes this year is April 18th NOT April 15th as it usually is.
Well, you’ve done your duty and paid your taxes (hopefully you’re not waiting until the last minute to file and you’ve already done so and rid yourself of all your tax worries). Now, if you’re like me, you might wonder where on earth all those tax funds really go. After all, about 4.2 trillion dollars will be collected this year. That’s a lot of zeros and one would think that it should be enough to pay our bills. But, it’s not. So, where indeed does all that money go?
Here’s a chart that will give you a good idea:
1. Health: Medicare, Medicaid and other healthcare is our largest expense. This includes four health insurance programs — Medicare, Medicaid, the Children’s Health Insurance Program (CHIP), and Affordable Care Act (ACA) marketplace subsidies — together these accounted for 25 percent of the budget in 2015, or $938 billion. Nearly two-thirds of this amount, or $546 billion, went to Medicare, which provides health coverage to around 55 million people who are over age 65 or have disabilities. The rest of this category funds Medicaid, CHIP, and ACA subsidy and exchange costs. In a typical month, Medicaid and CHIP provide health care or long-term care to about 72 million low-income children, parents, elderly people, and people with disabilities. (Both Medicaid and CHIP require matching payments from the states.) In 2015, 8 million of the 11 million people enrolled in health insurance exchanges received ACA subsidies, at an estimated cost of about $28 billion.
2. Social Security: Last year, 24 percent of the budget, or $888 billion, paid for Social Security, which provided monthly retirement benefits averaging $1,342 to 40 million retired workers in December 2015. Social Security also provided benefits to 2.3 million spouses and children of retired workers, 6.1 million surviving children and spouses of deceased workers, and 10.8 million disabled workers and their eligible dependents in December 2015.
3. Defense and International Security Assistance: Another 16 percent of the budget, or $602 billion, paid for defense and security-related international activities. The bulk of the spending in this category reflects the underlying costs of the Defense Department. The total also includes the cost of supporting operations in Afghanistan and other related activities, described as Overseas Contingency Operations in the budget, funding for which totaled $74 billion in 2015.
4. Safety Net Programs: About 10 percent of the federal budget in 2015, or $362 billion, supported programs that provide aid (other than health insurance or Social Security benefits) to individuals and families facing hardship. This includes supplemental Security Income for the elderly or disabled poor and unemployment insurance; various forms of in-kind assistance for low-income people, including SNAP (food stamps), school meals, low-income housing assistance, child care assistance, and help meeting home energy bills; and various other programs such as those that aid abused and neglected children.
5. Interest on the National Debt: The federal government must make regular interest payments on the money it borrowed to finance past deficits — that is, on the national debt held by the public, which reached $13 trillion by the end of fiscal year 2015. In 2015, these interest payments claimed $223 billion, or about 6 percent of the budget.
These 5 sectors are where the majority of our tax dollars end up. Other divisions such as, Food & Agriculture, Education, Transportation, Energy & Environment, International Affairs, Science & Medical research, housing & Community are, “so to say” at the bottom of the totem pole. With that being said we should all know where our hard-earned tax paying dollars are going and why. Without diving into the world of politics, President Obama’s 2016 Fiscal Year Budget is prioritizing the tax dollars to provide the Medicare & Health sectors with more monies. There are a lot of changes soon to come which could, in fact, effect the way that we all must prioritize our own monies.
As always, I’m here if you ever feel the need we need to readdress your current plan, situation or financial needs.