As a small business owner, you understand that taxes are simply a part of life. The Federal Government through the IRS applies many rules and regulations that dictate what must be paid by whom. For many Americans, there is a great deal of confusion regarding what happens with the tax money we pay. Most of us realize that it is applied to the operation of our government as well as the programs and protections they provide. However, there are many misconceptions. Though knowing exactly where each penny is spent under current legislation is challenging, there are some general areas that our businesses contribute to. Have you ever thought where your tax money goes? The chances are good that you have. This is a brief look at some of the primary areas which our tax money funds.
Where Does Our Tax Money Go?
There are five primary areas that the Federal Government collects taxes from small business owners in order to finance. Whatever your personal feelings are about the decisions made with our money, the Federal Government has chosen these as the most important investments for the money we provide them. The current Federal Budget includes:
- Social Security
This portion is primarily dedicated to the livelihood of retired employees. Approximately 24% of the taxes collected are sent to the Social Security Administration, who provides benefits in the form of monthly payments for retirement benefits, assistance to the disabled, and families of deceased workers.
- Medicare Subsidies
As you know, healthcare in our country is a very hot button item. Though changes will inevitably be coming, currently the government applies approximately 24% of our tax payments and allocate resources for healthcare. Specifically, to those individuals who are not able to afford Medicare, Medicaid, or other health care insurance options. Programs such as the Children’s Health Insurance Program (CHIP), as well as additional marketplace subsidies, help the public to obtain health care at a very minimal cost. The Federal Government funds the difference to meet the necessities of those who need assistance.
As a world superpower, and one of the most stable and successful countries in the world, defense is a necessary component. The brave men and women who give their all to serve us deserve the payment and programs our taxes provide them. More importantly, they deserve our great respect and gratefulness. Defense spending also includes many other things including research and development, international security, overseas contingency operations, and other similar necessities. Defense accounts for approximately 18% of our tax spending.
- National Debt
As you likely know, our country currently holds a massive amount of existing debt. As our political leaders continue to work towards a successful budget, interest must be paid on the debts that we as a country have accrued. The Federal Government has the responsibility of paying the interest on national debt incurred for the operation of government, as well as the services and protections provided to the public. Currently, those interest payments use approximately 23% of collected taxes.
- Safety Net Programs
Spending on numerous programs designed as a safety net for Americans who face poverty and other economic hardships falls under this category. The Federal Government provides a multitude of programs to help support those individuals in need. About 11% of our tax dollars go towards these programs. Included in the safety net programs are tax credits, welfare and food provision programs, unemployment insurance, and many others. These government provisions are meant to be used for expenses such as school meals, child care, lodging, energy expenses, and many others.
As a taxpayer, it is important that we join together and make the effort to understand what our taxes are being used for, and also to work towards electing officials with our overall best interest in mind. While this overview may help to understand where your tax money goes, there are so many more detailed and critical issues regarding the filing of them that can be confusing. That is why an experienced tax professional can be an excellent investment to answer your questions and ensure your taxes are handled correctly.
Landwehr Financial Solutions Can Help
The financial specialists at Landwehr Financial Solutions offer tax services to all our clients, ensuring the highest professional standards and quality services available. We offer a broad range of services to assist you with any financial concerns or questions. At Landwehr Financial Solutions, the particular needs of every client are met through our holistic approach. Contact us today for more information on the many services we offer our clients in St. Cloud MN area.