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Where does your tax money go?

By Kay Bell ·
Tuesday, March 15, 2011
Posted: 10 am ET

Careful shoppers want to know what they're paying for. That's why a Washington, D.C., think tank and some members of Congress are proposing that Uncle Sam give all us taxpayers an itemized receipt when we file our taxes.

Most taxpayers, say staffers at the left-to-center Third Way group, don't know exactly where their dollars go. This contributes to mistaken beliefs about how best to close the national budget gap.

A recent University of Maryland poll, for example, found that Americans on average believe that one quarter of all federal spending goes to foreign aid. But an itemized receipt would show a typical middle-class family with an income of $50,000 and $6,883 in federal income taxes and payroll taxes that only $42.80, or 0.6 percent, of their taxes goes to foreign aid.

In an op-ed piece in the Washington Post, David B. Kendall, senior fellow for health and fiscal policy at Third Way, and Ethan Porter, contributing editor at the journal "Democracy," argued that breaking out individual tax contributions would help correct such spending misconceptions.

A receipt alone wouldn't suggest solutions. But it would provide hard numbers on government programs that most now view as abstract entities. That should then make it easier for taxpayers -- and legislators -- to discuss the budget cuts and tax expenditures necessary to realistically cut the federal deficit.

Third Way has created a calculator it says gives taxpayers an idea where their personal taxes go. It convinced a bipartisan group of lawmakers, Sen. Bill Nelson, D-Fla., Sen. Scott Brown, R-Mass., and Rep. Jim McDermott, D-Wash., to introduce legislation that would create a taxpayer receipt.

Here's how taxpayer receipt advocates say the process should work.

After you file your taxes, you would receive an itemized receipt, by e-mail for those who file electronically or by regular mail for those who sent in paper forms.

The one-page document would cover major items such as defense, Social Security and interest on the debt. It would also direct taxpayers to a website where they could find more information on all federal spending.

What about the cost of a taxpayer receipt program? Supporters say it would be a bargain.

It's estimated that the Internal Revenue Service would have to spend about $15 million to mail receipts; the cost of e-mailed receipts would be negligible. Website maintenance costs also would be relatively small.

But the payoff would be less confusion about the federal budget. That's a pretty good return on investment.

Would you like a receipt detailing how your taxes are spent? If it showed most of your money went to a federal program you supported, would the receipt help change your mind on cuts to that program?

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March 17, 2011 at 9:38 am

In the interests of transparency, I think this is a good idea.
While it wouldn't necessarily identify where the "waste" is, it would at least let people know what percentage & amount of their tax bill goes to major categories of the budget --- the biggest portion going to defense. But it keep in mind it would be an oversimplistic view of the budget. Remember the Iraq and Afganistan wars were (and still are?) off budget items.

March 17, 2011 at 9:02 am

I love this idea. Knowledge is always a good thing especially in this area. I witness people strongly supporting one position or another when it is clear that they do not understand the efficacy of their positions.

March 16, 2011 at 1:13 pm

I would be more interested in finding out how much of the tax money we pay in is wasted on entitlement programs for people to lazy to work.. I personally know a couple that gets $5k back every year for choosing to work a low paying job less than 40 hours a week and pop out kids instead. They call their food stamps check "her paycheck" since she doesn't work. Not to mention their in income based housing, food stamps, etc. and pay squat in for income taxes and get thousands back.

March 16, 2011 at 12:19 pm

I would like to see the budget with necessities only and cut out all extras (pork). I also want all members of congress to have all bills they pass also apply to them.

March 15, 2011 at 2:47 pm

I want to know how much of our tax money goes to useless projects that our goverment doesn't even tell us about...

March 15, 2011 at 12:39 pm

I would be most interested to know how much of my tax money is burned by the totally out of control defense budget and wasted for homeland "security".