If you just cut a check to Uncle Sam or calculated your tax rate for the year, you may be wondering where do all those hard-earned dollars go?
Unfortunately, you can’t earmark your tax dollars to departments or programs you support. Your taxes go into the bigger pool contributed by everyone else and are allocated based on need and policy direction.
Even so, it’s smart to understand how the government uses your tax dollars, so you can be an engaged and informed citizen. It may also help you as you evaluate the 2020 presidential candidates and the policies they propose.
Let’s take a look under the hood of the federal government.
For 2018, the federal government received $3.33 trillion in taxes from individuals and corporations, according to the Office of Management and Budget. The total is broken down like this:
- $1.68 trillion from individual income taxes
- $1.17 trillion from payroll taxes
- $204.7 billion from corporate income taxes
- $95.0 billion from excise taxes
- $175.9 billion from other
The “other” category includes $23 billion from estate and gift taxes, $41.3 billion from customs duties and fees, $70.8 billion from Federal Reserve deposits and $40.9 billion from other.
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Total spending by the federal government in 2018 was $4.22 trillion. But some programs actually raised money, such as leases for the Outer Continental Shelf, which lowered the total 2018 outlay to $4.11 trillion.
The majority of tax dollars helps to fund defense, Social Security, Medicare, health programs and social safety net programs such as food stamps and disability payments, along with paying off interest on the national debt.
Here’s how it breaks down.
- Social Security: $987.8 billion or 23.4% of total federal spending
- National defense: $631.2 billion or 15% of total spending
- Medicare: $588.7 billion or 14% of total spending
- Health: $551.2 billion or 13.1% of total spending
- Social safety net programs: $495.3 billion or 11.8% of total spending
- Interest on debt: $325 billion or 7.7% of total spending
The health programs include Medicaid, the Children’s Health Insurance Program (CHIP) and subsidies for the Affordable Care Act. The social safety net programs funds the Supplemental Nutrition Assistance Program (SNAP) for low-income Americans, Supplemental Security Income for disabled and older Americans, and Earned Income Tax Credit and Child Tax Credit, among other programs.
Here’s how the remaining tax dollars were spent in 2018:
- Veterans benefits and services: $178.9 billion or 4.2% of total spending
- Education, training, employment and social services: $95.5 billion or 2.3% of total spending
- Transportation: $92.8 billion or 2.2% of total spending
- International affairs: $49 billion or 1.2% of total spending
- Administration of justice: $60.4 billion or 1.4% of total spending
- Community and regional development: $42.2 billion or 1% of total spending
- Natural resources and environment: $39.1 billion or 0.9% of total spending
- General science, space and technology: $31.5 billion or 0.8% of total spending
- General government: $23.9 billion or 0.6% of total spending
- Agriculture: $21.8 billion or 0.5% of total spending
- Energy: $2.2 billion or 0.05% of total spending
This article originally appeared on USA TODAY: You just cut a check to the IRS. So what do your taxes pay for?