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Do you remember the very first job you ever had?
Maybe it was bussing tables, bagging groceries,
or working as a lifeguard.
You put in your hours, keeping track of how
much you expected to make, and when that first
paycheck arrived, you opened it up and - surprise!
Some of that money had already been spent
for you.
If you’ve ever looked closely at your paystub,
you probably noticed that Uncle Sam’s portion
is broken into two main categories: The Federal
Insurance Contribution ACT (aka FICA) and
Federal Income tax.
The first one is essentially a federal insurance
program for the elderly, and helps pay for
retirement and medical programs for older
Americans.
Income tax rates have varied wildly throughout
history.
Before 1913, they were actually forbidden
by the U.S. Constitution.
Thanks, 16th Amendment!
As recently as 1981, the top tax rate was
70% for singles earning over $108,300.
And the highest rate on record was in 1945,
with a top rate of 94% for the ultra-wealthy!
These days, tax rates aren’t quite so high.
But no matter how much the Federal Government
takes from your paycheck, you should know
what it’s being spent on.
Have you ever stopped to figure out exactly
WHAT is being bought with all that money you
send to Washington each year?
I think it’s time to…
RUN THE NUMBERS!
This is Tabitha.
She works in H.R. and made $40,000 in 2017.
After exemptions and deductions, her taxable
income is $29,600, placing her in the 15%
marginal tax bracket.
Tabitha lives in a state with no state income
tax, so at the end of the year, she ended
up paying $7,038​ in Federal Taxes.
Nearly half goes toward Social Security and
Medicare.
These taxes, known as payroll taxes, are spent
on health insurance and income for the disabled
and people in retirement, like Tabitha’s
Grandparents.
Gram-Gram and Paw-paw paid their FICA taxes
when they were Tabitha’s age, and now they’re
enjoying the benefits, just like Tabitha will
someday.
That leaves $3,978 of Tabitha’s Federal
Income Tax left to be spent:
The largest chunk of your Federal Income Tax
goes to medical programs that help low-income
families, like Medicaid and CHIP.
That means that, including FICA, almost 60% of Tabitha’s federal taxes are basically going towards
insurance programs.
$930 of Tabitha’s salary supports men and
women enlisted in the armed forces, plus it
pays for fighter jets, submarines, and Pentagon
staff.
Tabitha may not realize it, but she’s on
the hook for America’s loans.
$525 of her income taxes goes to pay back
the debt the government borrows to say afloat.
Plus interest.
$298 goes to Unemployment and Labor programs…
$238 to Veteran’s Benefits, like VA Hospitals
and veteran job training programs.
$179 goes to Food & Agriculture…
And $167 of Tabitha’s salary helps keep
the government running, funding agencies like
the FBI, Border Patrol, Federal Prisons,
and even the salaries of her Senators.
Tabitha spends $127 on Transportation agencies
like the FAA and TSA, and $111 on Education,
including Pell Grants and the National Endowment
for the Arts.
She gives $83 a year to Housing & Community
programs, $63 a year to Energy and the
Environment…
$51 a year for International Affairs like the
State Department and the Peace Corps...and
$39 a year to fund America’s science
programs, which includes all federal scientific
research and space exploration.
Although it might seem like those dollars
just vanish from your paycheck, the money
you pay to the Federal Government affects
real people, and changes our world every day.
It would be hard to find even one of these
expenses that doesn’t touch your life or
the life of someone you love.
And guess what?
These numbers aren’t set in stone.
You can contact your local representative,
national lobby groups, and educate yourself.
The money our government collects in taxes
doesn’t belong to any one person or agency,
it belongs to all of us, ​collectively
​and we should all get a say in how it’s spent.
And that’s our two cents.
We'd like to think Audible for supporting PBS.
Audible selection of audio books includes Audible Originals: Audio titles created by storytellers from
around the literary world.
For example, PONZI SUPERNOVA, which uncovers how the greatest financial fraud in history...imploded.
Members own their books and can access them anytime.
To learn more visit audible.com/twocents.
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Members own their books and can access them anytime.
To learn more visit audible.com/twocents.
Or text "twocents" to 500 500.
