After leaving Navigant in February, my pondering of ‘what’s next’ was interrupted by the reality of income taxes due weeks later. By midnight tonight, 240 million Americans will have filed, 53% will have paid something to Uncle Sam and all of us will be puzzled by where it goes and how it’s used.
Our federal individual taxes provide 47% of the federal government’s revenues, or $1.48 trillion for FY15. Payroll taxes paid jointly by workers and employers make up another 34%, or $1.07 trillion and corporate taxes 11%, or $342 billion.
The federal government will spend more than it receives: for FY2015 just ended, federal receipts from all sources were $3.25 trillion and expenditures were $3.68 trillion billion. And 25% of that went to Medicare and the federal its portion of the CHIP and Medicaid programs.
Healthcare makes up the biggest chunk of Treasury spending followed by Social Security (24%), Defense (16%), and a bucket of expenditures called Discretionary Spending (16%) over which Congress exercises its influence most directly. And when Defense spending for healthcare is added ($51 billion annually), the state portions of Medicaid and CHIP payments are added, and health coverage for federal employees are added, more than 30% of the federal spending goes to healthcare. So one might reason that if individual income taxes are 47% of total federal receipts, income taxes paid for more than $500 billion of the healthcare tab. But that’s not widely known or understood by taxpayers nor is it a complete picture.