Tax Dollar Breakdown

As one can imagine there are many different places and funds that the American tax dollars could go to in today’s world. As it stands, the government has divided these dozens and dozens of things into three main categories: Mandatory Spending, Discretionary Spending, and Interest. Mandatory Spending includes all the things that the government must give money to as they support the American people such as Social Security, Medicaid, Medicare, etc. Discretionary spending is, as it sounds, all things that the the government decides to give money too (though many might consider these things mandatory to some extent). This includes defense, highway construction, agricultural subsidies, etc. that could in today’s world be considered necessary (but whether they are or not is another issue entirely). Finally, the interest category includes basically everything else. Over the past few years the the amount of money that has gone to each of these different categories has fluctuated and varied. One might expect that the most money would go to the mandatory category, next the discretionary, then interest last. As of the mid 1990’s this has been true, but from about 1962 until the 1980’s, the most money was going to the discretionary category, followed by the mandatory category, and then lastly the interest category. To many people, this breakdown of spending might appeal more, but that is an argument to be taken up with the federal government.

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2 thoughts on “Tax Dollar Breakdown

  1. I like the link to the tax policy site. Could you please give some examples of the “everything else” benefitting from the interest category. And, also,please clarify where this interest is coming from: is it the interest earned on the taxes collected?

    • The interest category is the actual interest that the government has to pay on the national debt. We have borrowed money to pay for many things that we as a country have voted to do and get (like unemployment, housing subsidies, etc.), and as a result we are indebted to countries like China. On these debts, the government is required to pay interest in paying them back and that’s where the money goes from that category.

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