

This Receipt Tells You Where Your Tax Dollars Go - rmah
http://www.npr.org/blogs/money/2011/04/15/135438878/this-receipt-tells-you-where-your-tax-dollars-go

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orijing
This is a great idea to put our spending in perspective, but one thing this
sorely lacks is any way to incorporate "tax expenditures," because otherwise
this assumes everyone is homogeneous in terms of deductions, etc. For example,
the subsidies given to oil companies and agriculture don't show up in the
receipt because they're technically just deductions, but it would be wildly
flawed to believe that they didn't exist.

So what I would recommend is:

1\. start at the top with what you would have paid based on your total income,
before your deductions

2\. show how much taxes you save for each deduction (maybe group them)

3\. show the net

4\. in the "programs and services", have an additional section called "Tax
Expenditures" that shows your proportion of all tax deductions; suppose $200b
were "saved" annually due to mortgage interest deduction, then it would show
something like $2000 for mortgage interest. Same with oil and agricultural
subsidies.

Then we might get a better view of how our money's really being spent.

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jsdalton
Direct link to the White House's receipt calculator:
<http://www.whitehouse.gov/taxreceipt>

They should really send taxpayers a copy of this in the mail though.

I doubt many of the people who are raging about how we can balance the budget
by cutting foreign aid and NPR are going to bother going to a website and
rooting around for line items on their W2 and tax return.

~~~
dantheman
I think your confusing multiple issues - the people wanting to cut foreign aid
and NPR have a different vision of what government is for, and when it is ok
to use force, e.g. they don't think it's ok for someone to threaten to kill
them to pay for NPR.

I'm a fan of NPR and I don't think it should be funded by the government- the
government pays less than 5% of NPR's budget, but adds tons conflict.

~~~
Ratufa
Yes, there are multiple issues: one of which is whether or not the government
should be paying for NPR and foreign aid at all. But, what I think the
original poster was responding to, and what the main purpose of the "receipt"
is, is that most (or at at least very many) people don't know how government
spending is apportioned.

~~~
dantheman
I'll agree with that, people don't realize how much stuff costs. Like NASA
(17.6 Billion[1]) vs Department of Education (71 Billion[2])

[1] <http://en.wikipedia.org/wiki/NASA> [2]
[http://en.wikipedia.org/wiki/United_States_Department_of_Edu...](http://en.wikipedia.org/wiki/United_States_Department_of_Education)

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anonymoushn
This is somewhat less than accurate. My payroll taxes were moved to the
general fund and spent immediately. Because the government chooses to spend my
payroll taxes this way, the receipt should always contain the same output for
any input that sums to $K.

This receipt also omits that revenue pays for less than 58% of spending. As
such, I could make a receipt that says that all of my taxes this year were
immediately spent on entitlement programs and it would be (strictly speaking)
accurate.

~~~
jbooth
On the first, SS is running a surplus right now. They need to invest that
surplus. The safest investment on earth is US treasury bonds, so that's what
they buy. It all made perfect sense until someone figured out you could spin
it as "raiding the trust fund". The US has the same obligation on that debt to
the SS trust fund as it does to anyone who buys a t-bill. The US has the same
obligation on that debt to the SS trust fund as it does to anyone who buys a
t-bill. See the "interest payments" section of the budget. They're not "IOUs"
on a sticky pad or something.

On the second.. strictly speaking accurate and honestly speaking inaccurate.
Debt isn't the point of this, everyone knows we have a deficit, the point is
what % of spending goes where.

~~~
OstiaAntica
You are badly misinformed. For the SS surplus, the U.S. government "buys"
special obligation bonds, not Treasurys. These bonds are not tradeable on any
market and do not represent an actual financial asset, the way a Treasury bond
does. They are literally pieces of paper in a cabinet in West Virginia. They
are truly IOUs on a sticky pad. There are no assets behind them, and there
isn't even a legal obligation for the government to repay them or anyone
"contributing" to SS. (see <http://en.wikipedia.org/wiki/Flemming_v._Nestor>)

The interest payments in the budget are actual repayments to Treasury bond
holders, but NOT interest payments on SS obligation bonds. The government
makes the SS interest "payments" with additional IOUs to the trust fund, NOT
actual tax dollars. This SS interest is an accounting tool only, and is not
part of federal budget outlays.

~~~
jbooth
You're right, my bad.

~~~
OstiaAntica
No worries, because the special obligation bonds are administered by the Dept.
of Treasury it is easy to confuse them with Treasury bills or bonds. But they
are very different beasts!

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Duff
Of course, it's nonsense, because it doesn't include the "off budget"
supplemental expenditures, nor the money contributed to the Social Security
Trust Fund that is dumped on the Federal balance sheet. (in exchange for an
IOU)

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trevelyan
Veterans benefits should be accounted for as part of national defense.

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nhaehnle
While this is a nice illustration, it is actually a bit misleading to talk
about where tax dollars go within a monetarily sovereign government.
Conceptually, tax dollars don't really go anywhere - they simply disappear
(are destroyed). Conversely, when the government spends, the dollars do not
really come from anywhere - they simply appear (are created). After all, those
dollars are really just numbers in the accounts at the Fed, which can be
increased and decreased arbitrarily (from a technical perspective).

There is an arcane mess of transactions that do happen related to government
taxes and spending simply for purposes of controlling the interest rate. Since
spending and taxation happen on different schedules, clustered tax payments on
one day would drain so much of the banks' reserves from Fed accounts that it
would force banks to borrow to maintain required reserves, thus creating a
spike in the interest rate. Conversely, clustered spending would add reserves
which would cause the interest rate to drop.

Simply to prevent such fluctuations, the treasury and Fed operate accounts in
private banks where tax money is accumulated, so that it does not cause a
drain on banks' reserves.

This happens to support monetary policy. However, it would be misleading to
think that these operations are required for fiscal policy. When it comes to
fiscal policy, conceptually taxes do not pay for anything. Instead, they are
the tool by which the government takes spending power away from the private
sector so that it may spend itself without causing inflation.

There is an entire chapter on those monetary operations in Randall Wray's book
"Understanding Modern Money".

~~~
nazgulnarsil
why is this getting downvoted? taxes maintain aggregate demand for dollars,
this is not controversial. spending hasn't been a function of taxation since
before WW2.

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adam_albrecht
This was my entry in the Data Viz Challenge that they mention at the bottom:

<http://canigetareceiptwiththat.com/>

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DanielBMarkham
As another commenter pointed out, this "receipt" doesn't show that a huge hunk
of what you are getting you are not paying for -- you are buying on credit.

It also does not show that there remains a huge balance due both before and
after this "tax transaction"

I can't imagine anybody walking into a shop and buying something without
knowing exactly how much it cost (not only how much cash he paid for it) and
what his balance was with the merchant before and after the sale. I think the
idea of a tax receipt is a great metaphor, but if you're going to make a
visual metaphor like this one, make it work like a real receipt does.
Otherwise you are using the metaphor to deceive rather than enlighten.

~~~
timr
_"Otherwise you are using the metaphor to deceive rather than enlighten."_

That's an exaggeration. The point is to show where your tax payment is spent,
and that's what it does. Emphasizing borrowing does nothing to further clarify
the question.

More importantly, there's no way to know what proportion of the debt is
attributable to any individual. It's a political question, because it deals in
the _hypothetical_ of how much someone _would_ have paid, if we lived in an
alternate universe where we ran a balanced budget. Nobody knows what that
universe looks like.

In other words: let's stick to the facts. If you want to talk about deceptive
metaphors, well...I'm sure that certain politicians would _love_ to have the
ability to send every taxpayer a "receipt" that told them that some large
percentage of their tax bill was borrowed and used to pay for social welfare
programs or pensions or bombs. That would really clarify the debate.

~~~
ericd
What's the problem with dividing the credit proportionally by the amount paid?
If you represent 1% of the tax base, you also represent 1% of the borrowing,
regardless of who that money ended up being spent on.

I agree with the parent that it is deceptive to not include that figure.

EDIT: Then again, it doesn't give a very accurate picture to those who are
being subsidized heavily, so there are some downsides to that. If one could
track the amount spent on each person from federal programs, that would be
very interesting - how much your fellow citizens are subsidizing you might be
pretty motivating or depressing, depending on how you look at it.

~~~
kevin_morrill
Kudos to @DanielBMarkham for a very good point.

@Ericd the most likely outcome--the one currently happening--is that most of
this will be finances through inflation. So those who save the most will give
up the most in lost buying power. And yes, closely behind that is the people
who are taxes the most.

For the most part these two go together, but I think this will catch a lot of
the middle class off guard as they watch their 401ks become worth less. That
will be a bitter pill.

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invisible
We spent 3.552 trillion in 2010. Here is how that should get split up:
[http://upload.wikimedia.org/wikipedia/en/c/ce/Fy2010_spendin...](http://upload.wikimedia.org/wikipedia/en/c/ce/Fy2010_spending_by_category.jpg)

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uptown
I wish the process were the other way around. Tell me how much I owe, and let
me choose exactly where it's allocated ... old-school Wheel of Fortune style.
If all the good-stuff is paid for by the time you go to pay your tax bill, you
can just dump it into the pot to cover the rest of things.

I know this will never happen ... not in any granular way, and that it creates
all sorts of other problems ... but it might restore the link between what we
pay and what it pays for, and at the same time provide a very visible
prioritized list of where the public feels their tax dollars should be spent.

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nazgulnarsil
I'm not seeing a line item for pork barrels.

~~~
lutorm
One man's pork barrel, another's essential government function...

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Tichy
What is "Job and Family Security"?

~~~
yummyfajitas
If you clicked the dropdown, you'd see it was a mix of unemployment, welfare,
and railroad retirement benefits.

~~~
Tichy
Thanks - didn't realize there was a dropdown, as I had only looked at the
article, not the actual calculator (not living in the US).

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drstrangevibes
so they paid interest on the national debt but who is paying the principal?

~~~
anonymoushn
Nobody plans on paying the principal. Not even Clinton did this.

~~~
OstiaAntica
Actually Clinton and the GOP Congress did pay down principal on the public
debt for a couple of years in the mid/late 1990s. See:
<http://en.wikipedia.org/wiki/File:USDebt.png>

However, they still raided Social Security during this period.

~~~
anonymoushn
Adjusting for inflation or calculating debt as a percentage of GDP allows you
to say it has decreased, yes.

In either case, the number of dollars owed has not decreased under Clinton.
<http://www.brillig.com/debt_clock/history.gif>

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tomjen3
Straight into the hands of people who learned early that you can earn more by
having Washington stealing it for you than by trading it honestly.

The 20% or so left after that is used to do a number of good things, such as
helping the poor, ineffectively.

Too bad really, the US could have been an awesome country, once we get rid of
most of the politicians.

