There is something about shelling out money to the federal government that makes you wax philosophical about where that money is going. Well, here are some answers.
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It’s tax season, and nobody is happy about that fact. The briefest history lesson on taxes will show that in the ancient past, people hated to pay taxes. Then, in the less ancient past, they hated to pay taxes, too. And now, in the present, we hate it some more. I’m sure that in the future we will multi-task hating taxes while driving around in hover cars. But although we hate it so much, taxes actually provide a critical service in the maintenance of any humane civilization. Here’s a look at what the federal government uses our tax dollars for (at least, theoretically!)


$3.5 trillion in tax revenues


$3.5 trillion. That is the amount the federal government is projected to rake in from tax revenue in 2018, according to Congressional Budget Office calculations. Turns out, as large a sum as $3.5 trillion dollars sounds, it still isn’t enough to cover the feds’ costs. They need $4.09 trillion dollars, which means that even after taxes, they will be in the hole (have a deficit) for $560 billion. It’s like the dad that buys their son a Lamborghini but he wanted two Lamborghinis. Maybe not a perfect metaphor though because it’s not a Lamborghini. It is more often valuable services that many of us need to survive.


Social Security needs


While it’s tough to see it as a young person, Social Security taxes are a great comfort for many. That’s why we pay upward of 24 percent for the privilege (in fact, many European countries spend far more). Taking care of the elderly and the disabled will run us, as a nation, $988 billion in 2018. But it’s good karma!


Social Security is funded through a 6.2 percent payroll tax for workers and another 6.2 percent tax that employers pay (because apparently 6.2 is the federal government’s lucky number). Self-employed folks must pay the full 12.4 percent. By the way, the number of people 65 and older is projected to increase dramatically by the year 2035. According to the Social Security Administration, this acute spike will render the current tax revenue only 75 percent effective. Yikes!




Medicare will be holding strong at the price of $711 billion this year, and will make up 17 percent of the total federal budget. Medicare provides health insurance coverage for the 65 and up population in America. It is funded by a 2.9 percent payroll tax for employees and employers (1.45 percent each, deducted from their income). It is also funded by general revenue as well as premiums paid by Medicare recipients.




A program for low-income families and individuals, Medicaid accounts for approximately 10 percent of the federal budget. Medicaid is a joint state and federal health insurance program, and $410 billion in tax revenues will go to its maintenance in 2018. President Donald Trump’s budget proposal for 2019, however, will propose some cuts to this program.


Children’s Health Insurance Program (CHIP) + Health insurance premiums


CHIP looks after children from low-income families, and a second federal service funds health insurance premium subsidies for the Affordable Care Act. Combined, the two services require $74 billion from us taxpayers. This equals 1.8 percent of the federal budget.


Income security programs


Unemployment compensation, earned income tax credits, child nutrition programs and the supplemental nutrition assistance program (SNAP). These are what is known as income security programs, and they account for $292 billion worth of our 2018 tax dollars. According to the Congressional Budget Office, this is actually a decrease from 2017.




As we all know, tons of dough goes to the military, and that hasn’t changed in 2018. $634 billion has been allotted to our troops and their machinery this year. This accounts for 15 percent of the federal budget. Trump’s proposed budget for 2019 calls for an increase of the federal allowance for the military. He wants to increase the budget from $634 billion to $686 billion. This would account for 15.5 percent of his proposed $4.40 trillion budget.


Federal civilian and military retirement


Funding for retirement benefits for federal civilian workers and military members makes up almost 4 percent of the budget. The Congressional Budget Office projects that the federal government will spend $160 billion on these retirement benefits.


Veterans programs


Veteran programs only make up 2 percent of the federal government’s 2018 budget. When it comes to compensation, pensions and life insurance for veterans, we will actually spend comparatively little, at $101 billion.


Agriculture and other programs

Last but not least, 1.7 percent of the federal budget — $84 billion — will be spent on agriculture programs, Fannie Mae, Freddie Mac and other services. Fannie Mae and Freddie Mac help provide financing for mortgage lenders.




Tax season may be rough, but at least your hard-earned bucks are going to some very good causes. And one day, some of these government assistance programs may help you out, too. There’s always a silver lining! You don’t have to love tax day. In fact, you’re justified in hating it for sure. But at least you can rest easy knowing that, ideologically at least, tax day is a pretty good thing.


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Posted 04.16.2018 - 12:00 pm EST