Taxes are an important part of how a country is run. Paying taxes today has become more a duty than a burden for most people. Yet, people are always on the lookout for opportunities to save themselves a tax bill and make sure they keep their money from the state.
As the month of April dawns, the start of groans grumbles and complains ring out from the tax payers. Most of the people despite being aware of their duty to pay taxes aren’t the best pleased about it. Despite their annoyance, the fact of the matter remains that the paying of taxes is an important part of a country’s smooth running and needs to be followed each year.
The question in the minds of most people who file their taxes each year though is the same. All of them want to know what are taxes used for? When people give away their money, whether it’s shopping, charity or something else, their most important consideration is what they get in return for their efforts.
Before we move on and look at what are taxes used for, it’s best that we get a lowdown on what are these taxes that we have to pay, etc.
What is Tax?
Despite the general word tax, the operating word that most people should use is Federal Income Tax since that is the bone of contention for most tax payers. A tax is basically a portion of your income that the state charges from you at the end of the year based on how much you have earned over the course of that year. Taxes are typically yearly and will be levied on you at a rate that is fit to you’re your wage/earning bracket. The concept of a tax is based on the duty that a national of a country owes to their motherland.
Tax is deemed a contribution that each and every individual of a country is supposed to make to the IRS as a means of appreciating what the country has done for them and to ensure that the3 country continues to provide services to people who need it. Yet, despite understanding why people pay taxes, the big question that is on everyone’s mind is whether their taxes make a difference and most importantly, what are taxes used for.
A Website to Answer Your Question
The question of what are taxes used for has been popping up quite regularly ever since taxes have been imposed. Finally the government in the past few years has moved to answer this question and have established a website that gives details on the expenditures of the government against the tax revenue generated. The website, known as the Federal Taxpayer Receipt, to use the website the user will need to log onto the website enter their tax details i.e. their social security number, medicare taxes and income. Once you have entered all the details the website will give you a low down on where exactly have your tax dollars been spent.
Two Kinds of Spending
What are taxes used for? The answer to the question lies in two categories. These are the two categories in which the state’s spending of your tax dollars is divided in. These two categories are discretionary and mandatory.
Here is a low down on each one.
The category of mandatory spending contains a number of entitlement programs that are guarded by rules of eligibility and rules of payment. Most of these entitlement programs in particular and programs in general are authorized by the use of permanent laws. In essence the Congress at the Federal level will create a program after that it lays down the eligibility criteria or who qualifies for the program as well as the amount that person declared eligible should receive as a result of their eligibility. The spending then on will be determined by an estimate of how many people these programs will look to cater.
Mandatory spending is an important part of the usage of tax revenue since it makes up nearly two thirds of the total federal budget. Some of the leading programs that come under this category and cater a wide range of the general population are the food stamps program, the Medicare program, interest on the national debt and the Social Security program as well as the veterans’ benefits.
Having looked at the first category of answer to the question what are taxes used for, the second category of spending as the name suggests is spending that is determined on the amount that is available as well as the will of the congress. This makes up a portion of the budget that is approved by the Congress to be able to put into working. This is typically done by way of an annual appropriations process. By way of this process, the Congress sets limit of the programs that may increase or decrease spending on any of the programs that have been given in the year.
Some of the spending areas that are part of the discretionary category include activities such as education, the FBI and the Coast Guard, defense, space exploration, foreign aid, high way construction, foreign aid, agriculture, border patrol, emergency disaster relief, immigration, housing, etc. As already mentioned above, two thirds of the total annual budget is mandatory spending and the rest of the one third which is left is part of the discretionary budget spending.
What are taxes used for?
This section will answer the question on what are taxes used for. The government of the US is one of the most important in the world. There are a number of different tasks that are carried out by this government which are unimaginable for some other countries of the world such as Foreign aid etc. Having said that, there are other issues to take into account when deciding on the answer to the question of what are taxes used for.
Like most governments in the world a large chunk of the spending is aimed towards the benefit of the general population in the country. This is done by continuing to spend on programs of public benefit and starting new programs and creating infrastructure to make the life of the public easier. Here is a low down of the top 10 areas of governmental spending to answer the question of what are taxes used for. However it must be noted that the list is exhaustive and there may be a number of different, newer additions to the list.
· Spending on Military
The US is a super power and despite having a large number of allies, there are many enemies that harm then security, safety and sovereignty of this country. As a result of this, the largest part of our income goes towards military spending. Military spending can make up nearly 43% of your income tax bill each year. More than half of that percentage goes towards funding the ongoing war fronts and military expenditures for that such as buying ammunition, transportation and living costs and current army salaries etc.
The rest of the amount spent on military is typically divided in between interest payment of the debts past and present by the military and the benefits and salaries of the Veterans. Despite not sharing borders with a hostile country with a stated hatred of the US, the US needs to be on its toes as far as military capabilities are concerned, especially since it has long been heading the front to counter terrorism in the world.
It is safe to say that this first aspect of a long list of spending areas to answer what are taxes used for question.
· Health Care
Health and well being of a population is one of the most important aspects of a country. If you wanted to know what are taxes used for, health care is the second and one of the leading areas for governmental spending. On an average it can said that nearly 22.5% of the income tax bill that you pay to the IRS each year goes to find the different heath care programs started by the state.
Among them, the two biggest avenues for spending are the Medicare and the Medicaid. These are important aspects to take into account. Since both are designed to provide relief to the general public and specifically families that have a lower earnings ratio. In addition to these, the amount that is left from funding the two health care programs is invested in aspects such as disease control, food safety and health research. It is important to note that these taxes and spending don’t take into account the amount that is withheld from the salaries of individuals for Medicare.
· Income Security
Despite the poverty level of the US being among the lower ones in the world. The fact that the country has a large population means that a large number of people are still in need of financial assistance. In line of that, the government of the US, spends nearly 17% of the total revenue from the taxes collected each year on income security schemes. These are various programs that provide benefits and money to those in need, nutritional and food assistance, retirement benefits for federal employees and programs that provide security income to families.
The child tax credit that most people often claim as well as Earned Income tax credit is funded through this channel. It can be said that the answer to the question what are taxes used for will include tax relief provided under the income security headline.
· National Debt
There are only handfuls of countries in the world that are not paying back debt as part of their annual budgetary spending from the tax income earned throughout the year. The US is no different and it has for most part of its history been under debt. This is known as national debt. Nearly 10% of the total tax income of the state goes towards paying off the national debt. Most of the payment made is then interest amount of the loan.
Hence most people who ask question what are taxes used for can feel aggrieved that nearly 10% of their taxes go to an activity that is not product or beneficial for them in any way.
· Veteran’s Benefits
What are taxes used for? Apparently to help veterans of the wars that the US has fought and to make sure that the heroes of those wars are able to get a return for the service that they did to the Federation. Around 4.5% of the amount that from the tax collected goes to pay for a number of different benefits that are given to the veterans. The largest number of spending under this area is done on health care expenditures while less than half the amount is spent on housing support and income.
· Job Training and Education
A nice portion of the income tax revenue is typically spent on the job training and education of the people. The percentage spent is often quantified as 3.3%. Most of the money spent by the government is directed towards high schools. Other than that, a considerable part of this spending is used to find college financial aid requests, employment training for those that have disabilities and employment services to make use of for the general public of the US.
One of the most satisfactory aspects for most people asking the “what are taxes used for” question is that some of their money is being spent for the betterment of the future generations.
· Immigration and Law Enforcement
The US is a land of equality and opportunity and people from all over the world head to the US in search of better standards of living, a more safer and peaceful life and a generally better living experience. Most of these come via immigration to the US, i.e. looking for permanent citizenship of the US. 2% of the Income tax revenue of collected by the state is used for law enforcement and immigration.
Part of the standout features of the US is its greater levels of internal security and hence among the many aspects that make up the what are taxes used for question. One is expenditures on court system, law enforcement agencies and federal service of the US that is responsible for implementing the US immigration policies.
· Energy, environment and Natural resources
Next time you ask the question what are taxes used for, make sure you take a hard look at the state of the natural resources of the country, its environment and the energy requirements. These are all aspects that are funded for through the use of our tax generated income. 2% of the tax revenue is spent on ensuring environmental protection, protection of the energy assets and conservation efforts for the natural resources of the country.
· International Affairs
Most people believe that in response to the what are taxes used for question, the answer will be one that highlights a large chunk of the tax income being spent internationally. However, this isn’t really the case. Then money that goes towards the international efforts of the US makes up around 1.7% of the income tax revenue each year. Most of this amount is spent on the economic and humanitarian assistance of countries and allies. The rest of the money is spent on maintenance of embassies, security assistance and diplomatic missions.
The US is a major global player, also known as the Super Power of the world. This means that its moves on the world stage dictate a number of other countries and for that; there is need for financial assistance to back the US foreign policy up.
· Space, Technology and Science
What are taxes used for? To make the country proud and standout in the world through its advancement in technology, space and science is the answer to that question. A little over 1% of the income tax revenue generated each year is spent on this area. More than half the amount is fed into NASA to continue with its space expenditures and technology development. The remaining amount is distributed between national laboratories, research facilities and the National Science Foundation.
The fact that technology has taken up and immense importance in the world today, means it is no brainer to see that the US is making sure that it continues to stay ahead of the pact in the technology, space and science fields.
The question of what are taxes used for is an innocent question and one that almost every tax payer in the US should and does ask. When you pay for something you have every right to know what your tax is being used for. If the people are able to find out that their money is being used to ensure their safety, health, security and education of their children. it is likely that people will have a greater motivation to pay their taxes as contribution to the development of their country.
So what are taxes used for? To make your life better, safer and securer.