Friday, August 14, 2015

'Where your tax dollars go', word image critique

The above image has been floating around Facebook, often coming from Bernie Sanders supporters, as an attempt to persuade people that very little of their tax dollars go to welfare and the vast majority goes to corporate subsidies. Before I get too into my back of the napkin level analysis, I want to state that I am critical of corporate subsidies and feel they are a real and growing problem. Having said that I think it's also important to point out what looks to be deceitful propaganda and this word image certainly appears to be just that.

The amount "you pay" in taxes making $50,000 comes to $4597.98 in the above breakdown. Of course what you actually pay is not just based on how much you make but on marital status, number of dependents and a slew of deductions, but regardless, the number is close to what you'd expect your federal withholding would be if you made $50,000 a year. This does not include the amount you'd pay in social security withholding and medicare withholding which will be relevant in the calculation below.

The word image implies that the breakdown it provides is your portion of federal expenditures. If true, it would mean that 87% of all federal spending went to corporations in the form of subsidies. This of course is absolutely absurd.

A quick google search took me to the Center on Budget and Policy Priorities where I found information on federal spending. For 2014, the federal government spent $3.5 trillion dollars. The breakdown of those dollars is $840 billion (24%) social security, $840 billion (24%) medicare/medicaid/CHIP/market subsidies, $630 billion (18%) defense/international security, $385 billion (11%) safety net programs, $245 billion (7%) interest on debt, $560 billion (16%) on everything else including benefits for federal workers, transportation infrastructure, education, science and medical research, etc.

I couldn't find info on how much was actually spent in corporate subsidies in 2014 but did find a 2012 CATO report that estimated it at about $100 billion a year.

So, just for the fun of it, lets see if we can do a rework of the word image using the information above. We are trying to just look at how your federal withholding is allocated which makes this a bit difficult. As social security is mostly paid from social security tax, we will eliminate that from the federal spending breakdown. The medicare/medicaid/CHIP/market subsides are harder to figure as part of it is paid by your medicare withholding and part from federal withholding. It looks like about $200 billion in federal receipts came from medicare withholding in 2014 so well eliminate that amount from the medicare/medicaid/CHIP/market subsidies category in the federal spending breakdown.

After making these adjustments, here are the final results:

If you make $50,000 per year, you pay:

$1177.08 a year for defense
$1195.47 a year for medicare/medicaid/CHIP/market subsidies
$721.88 a year for safety net programs
$459.80 a year for interest on federal debt
$859.82 a year for infrastructure, education, research, etc.
183.68 a year in corporate subsidies


  1. The CATO institute? Yeah, like they don't have a vested interest...

    1. koko, the CATO institute having a "vested interest" doesn't mean that their research is inaccurate.

      Regardless, I only used it to breakup the $560 billion labeled as all other spending (the remaining 16% after accounting for everything else) which is data from the Center on Budget and Policy Priorities. As the $560 billion also includes benefits for federal workers, transportation infrastructure, education, science and medical research, etc, it seems very reasonable to say that $100 billion of it is for corporate subsidies.

      Also, I'd like to point out that the Center on Budget and Policy Priorities, the organization that I used for the bulk of this post, is a progressive think tank.