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IPFS News Link • TAXES: Federal

Where Does One US Tax Dollar Go?


To answer that question, Visual Capitalist's Marcus Lu visualized U.S. federal government spending by function, referencing expenditure to a single federal tax dollar.

Major Areas of U.S. Government Spending

Social security is the government's single largest expense and where 22% of tax dollars go. Signed into law in 1935, the program was to insure against the "hazards and vicissitudes of life." In practice, it meant the creation of a work-related contributory system in which workers secure their own retirement by taxes paid while employed.

However, an aging population threatens its sustainability because as more people retire and draw benefits, there are fewer active workers contributing to the system.

Health and Medicare together amount to 28% of government spending. The largest health expense is grants to states for Medicaid, which helps cover medical costs for people with lower incomes. Medicare, on the other hand, is federal health insurance for people 65 and older, as well as younger people with disabilities.

National Defense accounts for 13% of government spending. This includes paying military personnel, operating and maintenance costs like fuel, buying aircraft and ships, and research and development. While fourth in terms of percentage spending, this still contributes to the largest military budget in the world—by quite a margin.

Meanwhile, Income Security (also at 13%) covers programs like unemployment compensation, nutrition assistance, and housing assistance. It also has additional retirement and disability benefits not covered by social security.

Just behind—and still well-ahead of all other government spending—is Interest Payments on government debt, coming in at about 11% of tax supported expenditure.

1 Comments in Response to

Comment by Anonymous
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Percentages without figures to arrive at the breakdown is incomplete information. Are we using the military budget before add-ons and wartime extra exspenditures? How were the trillions spent on the "war on Terror" in Iraq, Afghanistan etc... figured?