Where do your tax dollars go? What are the most popular deductions? And how long must people work each year to pay Uncle Sam his due?
Those issues may be on the minds of many taxpayers as they make their contributions to the common purse.
The answers, provided by three nonprofit, nonpartisan groups based in Washington, underscore how much the government relies on the income tax on individuals, which supplies nearly half of total federal revenue.
The corporate income tax, by contrast, contributes about 10%, while excise taxes such as customs duties and cigarette taxes raise just 3%.
• Where does your money go?
Check out the "tax receipt" accompanying this column. It was prepared by Loren Adler, research director at the Committee for a Responsible Federal Budget, and it shows how $100 of revenue was allocated among spending programs in fiscal year 2013.
"People are often surprised by how much of the federal budget comes down to Social Security, Medicare and defense," Mr. Adler says. "When I ask what they want to cut, usually the first item is foreign aid—but it's very small."
He adds that interest on the debt accounted for 6% of the federal budget last year because interest rates were low. That figure could rise to 12% in 10 years, however, if interest rates rise to about 5%.
Last year's figures also don't include the cost of changes under the Affordable Care Act, which Mr. Adler estimates will come to about 6% of spending when they are fully phased in.
• What's behind Form 1040?
The Tax Policy Center has posted a fascinating interactive tax form online atdatatools.taxpolicycenter.org/1040.
The link brings up both pages of the 1040 form as well as Schedule A, which is where taxpayers can claim itemized deductions for write-offs such as charitable donations and mortgage interest.
Click on any line of the form, and information about it pops up. What is the purpose of the line item? How many people are affected by it, and how much do they earn? How much revenue is raised or lost as a result?
The result is a treasure trove of information. Click on the line for Alternative Minimum Tax, for example, and you learn that more than four million taxpayers owe it and over half of those have income between $200,000 and $500,000.
On Schedule A, you can see that nearly 36 million taxpayers deducted a total of $358 billion of mortgage interest and related payments, while only about 141,000 taxpayers deducted casualty and theft losses of $3.2 billion.
Some lines have more information than others because more data are available. For example, there is little information about how many people deducted the cost of safe-deposit boxes, but there is a lot about how many people took state and local tax deductions.
Roberton Williams, the expert at the Tax Policy Center who developed the online tool, says the organization plans to add more material and updates.
"The tax code is so complicated that nearly two-thirds of taxpayers hire someone else to prepare their returns," he says. "But it's important for people to know what's going on."
• How long does it take to pay Uncle Sam?
For decades the Tax Foundation has publicized Tax Freedom Day, a date that reflects the group's estimate of how long it takes the nation collectively to pay its tax bill for the year. The group arrives at the figure by dividing the combined amount of federal, state and local taxes paid by total income.
This year's Tax Freedom Day is April 21, which is three days later than last year. According to Kyle Pomerleau, the author of this year's report, the date is later mainly because the recovering economy is boosting revenue collected by individual, corporate and payroll taxes.
This estimate doesn't include the effect of federal borrowing. Including it pushes the date to May 6, which is two days earlier than last year, because of a smaller federal deficit.
Mr. Pomerleau cautions that the estimates don't indicate how long any one individual must work to pay off Uncle Sam, because the federal income levy taxes higher earners at higher rates, and state taxes vary considerably.
The Tax Foundation also has estimated Tax Freedom Days for various states. The date is May 9 in Connecticut and New Jersey, and March 30 in Louisiana. For more information, see Taxfoundation.org/taxfreedomday.
What was the latest Tax Freedom Day ever, for the country as a whole? According to Mr. Pomerleau, it was May 21, 1945—including the cost of federal borrowing—because of the expense of World War II.
Read it at the Wall Street Journal
Graphic courtesy of the Wall Street Journal
