Where America’s Tax Dollars Go

Curious to know how the U.S. government spends hard-earned tax dollars? According to the Heritage Foundation, the government collects an average of $18,248 per household—but it spends an average of $22,039 per household (the difference gets tagged onto the government debt). So where does the money go?

The largest chunk of American taxes goes to Social Security and Medicare. These two major entitlement programs soak up $7,245 per household. This, however, will not be enough to sustain the programs much longer. The Baby Boomer generation is expected to retire in the next few years, adding great strain to the funds.

The second-largest amount of tax dollars, $4,451, goes to defense spending, which has increased dramatically since the 9/11 attacks. This money goes to military salaries and operation, military research, and development of new technology.

The third-largest piece of the pie goes to low-income programs. About $3,559 per household is spent on health services, food stamps and other government subsidies. Medicaid, whose costs are rising 9 percent every year, also falls under this umbrella.

About $1,582 is spent on debt payments. The rest of the tax dollars are divvied up between other federal programs and benefits such as transportation, international affairs, education and veterans’ benefits. The costs of many of these programs steadily grow, adding further burden on the taxpayer.

For more analysis on the U.S. economy, see our May 2005 article “Speeding to Economic Armageddon.”