Thursday, February 22, 2007

Blood and Taxes

It's tax (revenue) and budget (expenditures) time, and I've been thinking (with a little help from my friends) about how much of my money is funding the American war machine. It's a lot. Exactly how much depends on how you slice the pie, and mostly, it's sliced to minimize how much of your money goes into defense. I've worked out a rough roadmap based on a few assumptions.

Let's work backward, moving from what the median American makes. (Medians are better than means because the more income inequality, the less "average" the mean. Medians measure the incomes exactly in the middle of the distribution--half are higher, half are lower.) For our puruposes, let's use $46,326--the median household income, which increased in 2005 (the most recent year of census data) for the first time since '99. It's impossible to find an "average" filer, but let's assume a family of paycheck-earners who is in the 25% tax bracket. That means this family will send $11,582 to fund items in the federal budget.

Very important note: paycheck-earners also pay a tax instantly to the government in the form of payroll taxes, which gets diverted to pay for Social Security and Medicare/Medicaid. So our median family actually pays over $15k in federal taxes, but only the income taxes go into discretionary spending--which is what Congress votes to approve every year. This is where the entire defense budget is funded, so I'm using just the income taxes for the following calculations.

Now, there are two ways to look at the budget, and the media generally reports the one the government offers, which minimizes military spending by including Social Security and Medicare/Medicaid. But these social programs are funded through the payroll tax that go into Al Gore's much maligned "lock box" (which wasn't locked very tight: Bush actually dipped into it to pay for his war). If you include them in the calculation, defense looks like a modest 21% of spending; remove them, and defense skyrockets to 51%.

Okay, so let's go back to the median family. Here's how their $11,582 is divvied up by the Feds:
  • $5,907 - All military spending
  • $3,706 - human resources (HHS, Education, Social Security admin, etc.)
  • $1,389 - general government (government agencies, interest on the debt)
  • $579 - physical resources
Military spending breaks down into the following categories:
  • $2,316 - past military obligations
  • $2,780 - current military spending (excluding wars)
  • $811 - wars in Iraq and Afghanistan
Nearly six grand. For the median family that's 47 days of income. A lotta money to fund the neocons experiment in bringing "peace" and "democracy" to the Middle East.
Disclaimer: Cavaeat Emptor. I believe all of this is accurate and current, but I'm more of a humanities guy than an accountant. So don't take up arms or anything based on these data.

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