piz

Tax Revenue Breakdown

12 posts in this topic

Does anyone know where I can find out what percentage of all tax dollars collected (at all levels) goes toward paying for legitimate government functions? I recall hearing (from an Objectivist source, IIRC) that it's something like 10%, but I'd like to find some hard data.

Share this post


Link to post
Share on other sites
Does anyone know where I can find out what percentage of all tax dollars collected (at all levels) goes toward paying for legitimate government functions? I recall hearing (from an Objectivist source, IIRC) that it's something like 10%, but I'd like to find some hard data.

I do not know of a summary source, but you might want to wade through the Office of Management and Budget.

Share this post


Link to post
Share on other sites
Does anyone know where I can find out what percentage of all tax dollars collected (at all levels) goes toward paying for legitimate government functions? I recall hearing (from an Objectivist source, IIRC) that it's something like 10%, but I'd like to find some hard data.

The problem is, even the legitimate functions of gov (police, courts, military) are VERY involved with ILLEGITIMATE actions. Police: enforcing laws like: drugs, gambling, prositution, anti-trust, insider-trading, and countless others. Courts: much of the same, PLUS all the frivolous lawsuits. Military: Overspending and overinvolvment in various ways.

So, even if the 10% were true, it would be less than that.

I think Ayn Rand had it right when she said that government could probably be financed solely with a small voluntary tax on all credit transactions.(Transactions where a period of time lapses between delivery of goods and services and payment received.) If people wanted the debts to be upholdable in court, they would pay the tax.

I think she was paraphrasing someone else's idea, however.

Given that the total of all transactions in the US done by check, check card, or credit is HUGE, this seems a simple way to me.

But, to answer your question, I don't know. BUT, whatever you find, WON'T be the whole answer - because government has an even trickier way of paying for its actions (PRINTING MORE MONEY). This isn't exactly taxation, but the resulting inflation amounts to the same thing.

Share this post


Link to post
Share on other sites
The problem is, even the legitimate functions of gov (police, courts, military) are VERY involved with ILLEGITIMATE actions. Police: enforcing laws like: drugs, gambling, prositution, anti-trust, insider-trading, and countless others. Courts: much of the same, PLUS all the frivolous lawsuits.  Military: Overspending and overinvolvment in various ways.

So, even if the 10% were true, it would be less than that...

But, to answer your question, I don't know.  BUT, whatever you find, WON'T be the whole answer

Well, I don't want to turn this into a discussion about hidden illegitimate costs, or about how to properly finance government, or anything like that.

I just want a ballpark figure, so the next time some altruistic prick upbraids me for not giving to some charity I can say, "Hey, bud, X thousand dollars of my money went to charity last year, so shut the hell up." (Where X is the percentage I'm looking for times what I paid in taxes.)

Yeah, I know it's not entirely accurate (equivocating on "went to" and all) and it's sort of granting his premises (implying that I donated rather than had the money extorted from me), but there's almost no chance he'll have given anything near the number I throw at him, so it might make him feel bad :D. I don't want to educate people like that by explaining why I'm perfectly justified in not giving anything, it's just that sometimes all I want to do is shut the bastards up because I'm tired of being called cold and unfeeling because I don't drop a few pennies in some bell-ringer's bucket. Besides, it's a more interesting (for me) and confusing (for them) comeback than "Eat me." :D

Share this post


Link to post
Share on other sites

Rob Tracinski went over all federal spending in one TIA daily, and and he said that spending on legitimate functions makes up 1/4 of the budget, or $600B. It can't be only 10% because our budget is at $2.4T and military spending alone is $430B (18%). Here's the breakdown:

$430B for the military

$86B for legitimate agencies like Justice, State, and Homeland Security (Dr. Lewis would debate the last :D)

$67B for Veterans Affairs

$15B for the administrative costs of the above

Total = just under $600B.

The other 3/4 goes to regulatory agencies ($50B), entitlements programs SS/Medicare ($850B total) and welfare ($400B), and subsidies ($240B, incl. both to private organizations like farm subsidies and to govt institutions that should be private, like education and NASA).

Share this post


Link to post
Share on other sites

I'm sorry I didn't realize you wanted it at all levels. The above only applies to the federal government.

Share this post


Link to post
Share on other sites
Rob Tracinski went over all federal spending in one TIA daily, and and he said that spending on legitimate functions makes up 1/4 of the budget, or $600B. It can't be only 10% because our budget is at $2.4T and military spending alone is $430B (18%). Here's the breakdown:

$430B for the military [...]

Was Robert Tracinski assuming that military costs couldn't be cut? Wouldn't a more ruthlessly selfish foreign policy, backed by a ruthless military, enable the U. S. to cut its military costs over the long-term? Besides, wouldn't a fully objective military make money from necessary wars -- for example, by seizing and eventually selling off all assets "owned" by the enemy statist regimes? This might not be enough to cover all the costs of the war but it would reduce the costs overall.

Share this post


Link to post
Share on other sites
Was Robert Tracinski assuming that military costs couldn't be cut? Wouldn't a more ruthlessly selfish foreign policy, backed by a ruthless military, enable the U. S. to cut its military costs over the long-term? Besides, wouldn't a fully objective military make money from necessary wars -- for example, by seizing and eventually selling off all assets "owned" by the enemy statist regimes? This might not be enough to cover all the costs of the war but it would reduce the costs overall.

I don't think he was trying to estimate the cost of a rational government, since one would have to take into consideration complex things like those you mentioned. It may cost less than $600B, since we would more effectively and decisively deal with crime and international threats, but it's really hard for me to judge so in my mind I stick with the 600 number (probably a very conservative estimate).

"Charging the bad guys" is a fine way to get money (make criminals pay for apprehension/trial, make enemy govts pay for war against them), but I don't see how that will lower the actual cost of govt; rather, it would lower the portion that American citizens would have to pay.

Share this post


Link to post
Share on other sites

I don't think he was trying to estimate the cost of a rational government, since one would have to take into consideration complex things like those you mentioned. It may cost less than $600B, since we would more effectively and decisively deal with crime and international threats, but it's really hard for me to judge so in my mind I stick with the 600 number (probably a very conservative estimate).

"Charging the bad guys" is a fine way to get money (make criminals pay for apprehension/trial, make enemy govts pay for war against them), but I don't see how that will lower the actual cost of govt; rather, it would lower the portion that American citizens would have to pay.

A good measure of the cost of a "proper" government is the average federal spending of the US government over the entire 19th century, for during that time, it had absolutely no welfare, no commercial regulatory agency, very few subsidies (just to a few corrupt railroad businessmen); the courts pretty much stuck to their proper roles, etc.

Federal government spending fell in the range of 2% to 4% of GDP over the course of the 19th century, averaging about 3% for the entire 100 years, except during wartime.

If your figures for current government spending for "proper" functions are correct, then it is around 5% of GDP--not far off from the average of 3% of GDP in the 19th century. I think that if many of the illegitimate functions of the courts, police, military and legislatures are eliminated, that 5% could be reduced to around 2% or 3%--right in line with the historical average when the United States was largely a laissez-faire capitalist country.

Share this post


Link to post
Share on other sites

In 2005, the Federal government will spend $2,479, 404,000,000. (That is 2.479 trillion dollars. Source: Office of Management and Budget website) In addition, in 2005 the 50 state governments are expected to spend $1,735,196,370,000. (That is 1.735 trillion dollars. Source: Rockefeller Institute of Government’s Fiscal Studies Center) So, total government spending for 2005 is $4,214,600,370,000.

Gross Domestic Product for 2005 is estimated to be $12,220,000,000,000. (12.22 trillion dollars). Thus, at present total government spending is consuming 34.5% of GDP, a horrendous burden made possible only by coercive taxation.

Here are the 2005 spending estimates for what I consider the valid government functions. (Source is the same as the totals.)

2005 Federal Spending on Valid Functions

National Defense: $465.871 billion

(All branches of the military plus CIA, NSA, etc.)

Veterans Benefits: $67.649 billion

(Pensions and health care for retired military)

Justice Department: $40.657 billion

(Includes the FBI, Federal courts, Federal Judges, etc)

General Government: $19.117 billion

(Costs of the national Legislative, Executive and Judicial Branches, etc)

Sub-Total: $593.294 billion

2005 State Spending on Valid Functions

Law Enforcement: $54.687 billion

(State patrol, local/city police, county sheriffs, etc)

Courts & Corrections: $64.492 billion

Total Valid Spending: $712.473 billion

% of GDP: 5.83%

I agree with Burgess and others that this is likely to be a worst-case analysis. There is a great deal of waste and improper spending at present even in these “valid” functions. For instance, under a proper government we would not spend the billions of dollars we’ve wasted keeping our troops in Bosnia for the last decade, we probably would not spend billions a year to keep armored divisions in Germany and we sure as heck would not spend billions a year enforcing drug laws. So the total cost of a proper government is undoubtedly even smaller than the numbers above.

So, to answer the original question, only about 16.9% (712.430/4,214.6) of your tax dollars are going toward the legitimate functions of government.

Share this post


Link to post
Share on other sites

Interesting numbers, though I agree that they're bound to be way too high. It's a bad joke that the U.S. pays for a lot of NATO, South Korea's defenses, etc.

Also your analysis overlooks what's bound to be a large expenditure itself: local government spending, especially big cities such as New York, Los Angeles, Chicago, etc. Even smaller places can have gigantic expenditures though. Take Carmel, Indiana, an upscale suburb of Indianapolis. Carmel has under 50,000 people. From one site, describing their high school (http://www.findarticles.com/p/articles/mi_..._37/ai_94509037):

Area: 205,000 sq. ft.

Total cost: $28.7 million

Seeking to create an educational environment where students can become the "best version of themselves," this master plan calls for an academic village that provides for individual learning programs and establishes a community for learning. Designed to house 400 to 500 students ...

----------

If a *private* school can pay a small fortune for a relatively modest high school, that's their business - but that $29 million came from local tax dollars. Just one small example of countless others, to be added to the federal/state figures.

Share this post


Link to post
Share on other sites

According to the Rockefeller Institute of Government’s Fiscal Studies Center, the data on the 50 state governments includes local spending.

You can view the data HERE.

Share this post


Link to post
Share on other sites