Imagining a World Without Taxes
Happy Tax Day, America. If you thought that usually happened in April, you’re correct. But this year, as with everything under the sun, Tax Day is different. Due to the coronavirus, Americans were given a few extra months to get their paperwork in order.
The effect? As Wrigley might say, “Double the taxes, double the fun.” Entrepreneurs who pay quarterly taxes have three things due today: any due balance from their 2019 taxes plus their quarterly estimates for TWO quarters. That’s a lot of taxes.
The tax trifecta likely has many Americans asking a similar question: “Where does all of this money go?!” Good news: we have the answers.
Americans are so confused by our own taxes that a simple YouTube search delivers thousands of results, including taxes explained using beer, cereal, and emojis. Oh, heck. Let’s try the cereal:
So what exactly does Uncle Sam spend all of your money on? It turns out Uncle Sam is pretty good at tracking his receipts. Today, we’re taking a look at his purchases and your contribution to each.
Where do those taxes go?
2019 was a spendy year for Uncle Sam. He spent $4.4 trillion, to be exact. Most of that budget comes from families just like yours (the other portion was borrowed--for now). According to the Motley Fool, the average American household contributes $10,489 to that each year. $8,367 of that is federal taxes, $2,046 represents state and local taxes, and $75 in miscellaneous taxes.
So where does that money go? Applying percentages published by the CBPP to the average family’s federal tax bill reveals some truly interesting numbers. Here’s what the average American household contributes to specific national projects, starting with the top three:
$2175.42 to Medicare, Medicaid, CHIP, and marketplace subsidies
$2008.08 for Social Security
$1225.05 on defense
Surprised so far? When many of us think of taxes, we think “roads, bridges, and schools.” While those are certainly funded by taxes, they aren’t the biggest spending categories by any means. Let’s skip down the list a bit…
$251.01 for education
$167.34 for science & medical research
$167.34 for transportation and infrastructure
If your kids are in public schools, that $251.01 is quite the deal. On the other hand, if you don’t qualify for Medicaid or CHIP, the $2175.42 you spend on the services might feel pricey. Feel like you’re throwing money out the window? Consider what your day would look like without taxes.
What if we just did without this tax idea?
We posed the same question in an entire episode of Biz Kid$ called A World Without Taxes. Check it out and share it with your kids. Teaching a class? We created a free lesson plan just for you.
A World Without Taxes
