We have reached the procrastination deadline for filing 2014 federal income taxes. If you’re like a lot of Americans you should be getting a check back for about $3,000. Woo-hoo! You didn’t have to pay any taxes!
Yes you did.
Check line 63 of your 1040 form. See that number? That number is the amount of tax you owe for the year. If you are Joe Average that number is probably in the $3,000 to $4,000 range. That $3,000 refund check coming to you in the mail is the amount you overpaid in 2014. In other words, you gave the feds an interest free loan. If you’re getting money back you need to get your butt down to the personnel office tomorrow and change your withholding. Quit giving the government free money.
But that tax on line 63 isn’t the only income tax you paid to the government last year. Look at your paystub. There is a number on it labeled “FICA” (which stands for Federal Insurance Contributions Act). The dollar amount listed there is your share of the payment towards Social Security and Medicare. If you’re an employee the amount should come to 7.5% of your pay. Those of us who are self-employed know that the real amount is 15%. Your employer pays the other 7.5% on “your behalf”. It’s the government’s sneaky way of making you pay 15% without realizing it. FICA is a tax on your income, thus it is another income tax. If you are Joe Average and your household makes about $40,000 a year, FICA comes to $6,000. (There is NOT a Social Security trust fund in Washington with your name on it. When you pay that $6,000 for FICA that money is gone forever).
That means in total you paid $9,000 to $10,000 in federal income taxes during the year, or about 20% of the median household income of $50,000. I don’t know about you, but 10 grand sounds like an awful lot to me. We should be getting a lot of great stuff for that pile of cash. So what are you getting?
I consulted USGovernmentSpending.com to get a breakdown of all the wonderful things the feds do with the truckloads of money we send them. If you paid $10,000 in taxes last year this is what they did with your money:
Let’s start with the cool stuff:
– Recreation & Sports, which is mainly National Parks = $10
– NASA and scientific research = $50
Total for cool stuff = $60
That means you paid $9,940 for uncool stuff. Not everyone thinks this stuff is uncool. The people taking your money think it’s very cool.
Special interest spending:
– Water Supply (mainly for Southern California where they farm in the desert) = $20
– Community Development (no clue what this is) = $60
– Ecology Crap (think EPA, Army Corps of Engineers, etc.) = $50
– Farm Subsidies = $60
– Other Agriculture Department = $30
– Education (the feds don’t run any schools, what the hell are they doing?) = $300
Total for special interests = $520
The government calls the next category “security”. I call it “big brother will squash you like a bug – STOP RESISTING!”:
– Federal police force = $70
– Federal prisons = $20
Total for forcing you to submit = $90
Miscellaneous Government stuff:
– General government = $130
– Transportation and infrastructure (who will build the roads?) = $260
Total miscellaneous = $390
Taking care of poor people – now we’re starting to talk about big money:
– Medicaid = $1,100
– Welfare = $800
– Unemployment payments = $130
– Public housing and rent subsidies = $140
Total for the “less fortunate” = $2,170
So far with all this stuff we’ve only spent $3,230 of your $10,000. So where is the other $6,770 going? Just a handful of places. Like strippers at a titty bar, these are the things that really suck the money out of your wallet.
Defense – the US hasn’t had to defend itself from a foreign country since 1945, so this should really be labeled “empire building”:
– The war machine = $1,650 (only $400 actually goes to paying soldiers)
– Veteran care = $400
– Foreign aid & foreign military aid = $130
Total for empire building = $2,180
Note that the government spends more money on killing people than on taking care of poor people.
Old people. The wealthiest segment of the population is the 65 and over crowd. The average over-65 household is 25 times richer than the average under-35 household. So, using government logic, it only makes sense to take money from the poor and give it to the wealthy, because old people vote!
– Social Security payments = $2,600
– Medicare = $1,500
Total money taken from you and given to Grandma and Grandpa = $4,100
The last item is by far the stupidest. It only exists because Congress is populated with teenage girls using Daddy’s credit card. It’s the interest we pay on the national debt. Right now the interest rate on the debt is unusually low at 1.3%, but when it goes back up to the historic average (5% – 6%) the interest will quadruple. The feds will need to drastically cut spending in other areas (HA HA HA HA HA HA! Like that will ever happen) or raise your taxes. You don’t mind sending another $2,000 to Washington, do you?
– Interest on the $17.794 trillion debt = $650
Because of rounding errors our figures ran over $10,000 by $160, but that’s OK because compared to the geniuses in Congress we are almost spot-on. They only overspent by $485 billion. If you were required to cover 2014’s deficit your share would be $1,380.
So now you know what you’re getting for your money. What a great deal!
Wayne Middlesteadt is the author of “Five Ways to Beat the Market” and “The Golden Age of Distance Running”. Both books are available on Amazon.com.