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....continued....
Read it at the Wall Street Journal
Graphic courtesy of the Wall Street Journal
