This is an interesting question. Believe it or not, the White House actually tells you.
Since social security and medicare are collected separately and itemized on your W-2, these are the big ticket items. But they are obvious because they’re listed clearly on your tax forms. You can go back and look for exactly what you are paying into these.
Do you know where the rest of your money goes?
At least back through 2008, defense and healthcare have been the top two. They occasionally flip-flop for the top slot. But with the ACA being in full effect now, it probably is no surprise to anyone that healthcare is the biggest money grubber at a little over a quarter of all remaining funds collected. Nearly half of the money going into healthcare goes to Medicaid and CHiP.
As I mentioned, defense takes up the next biggest piece of thepie, at 24%. However, out of that total, less than 6% goes toward military pay and benefits. That is health care, insurance, and pay for members and their families. We are talking .015% of total budget. This is not a large amount. Equipment and supplies are the big ticket item here at nearly 10% of the defense budget. How much of that do you think are huge government contracts that senators push for projects in their respective states? I bet it’s an impressive number.
After that, most of your money goes toward federal pensions and public services. Which is not very surprising since congress can make back up to 80% of their pay for their retirement, and they get paid handsomely. You only have to serve five years—in contrast most companies and public service make people work 20—and senators are elected for six, so it is a done deal for them. They still have to wait for retirement age, but still.
The next thing your tax dollars pay for is interest on money that the government owes on bills they aren’t paying back or have not finished paying. Nice, right?
Rounding out the bottom are things like VA programs, the justice system, state parks and other natural resources, science and space programs, and natural disaster funds.
I know people who really like getting a large tax refund at the end of the year. I do not. Here’s why: If you get a lot of money back, you are giving the government an interest-free loan for whatever they want during the year. Then you or someone you hire has to navigate confusing tax code—all to get as much of your money back as you can. If your deductions were set up properly, the government could only take what it actually deserved. You would break even at tax time. Granted, it is not as fun anticipating a zero balance. But which would you rather have: that money in your accounts all year helping you pay bills or earn interest, or letting the government borrow it interest-free?
Think about it.