Pop quiz: Do you know how your income taxes are spent by the U.S. government?
If you can confidently answer "yes" to that question, you're in the minority.
A February 2014 poll by GOBankingRates asked participants to rate how strongly they agreed with the following statement: "I know how my income tax dollars are used."
Just 8.5 percent of poll participants responded that they "strongly agree," followed by "agree" (12.4 percent), "neutral" (29.7 percent), "disagree" (23.7 percent) and "strongly disagree" (25.7 percent).
Why So Few Taxpayers Know Where Their Money Goes
Vincenzo Villamena, managing partner of Online Taxman, a boutique CPA firm specializing in tax preparation for U.S. expatriates, said the complexity of our tax system causes Americans to disregard where their money is going and take an apathetic approach.
"I see thousands of tax returns from countries around the world," Villamena said. "The complexity and opaqueness of our tax system compared to these developed countries (Hong Kong, Singapore, Australia, UK) is remarkable and leaves people disenfranchised with our country."
Villamena added, "I have clients living around the world and running their online businesses from wherever they want while I am stuck interpreting tax code that has not been updated since the 1950s."
However, while the U.S. tax system is complex and sometimes confusing, education is a two-way street.
Bob Wheeler, CEO of RWWCPA.com and author of The Money Nerve: Navigating the Emotions of Money, explained, "Many people choose to be afraid of taxes and the IRS. They unconsciously choose to play a victim role in regards to their tax situations."
In fact, Wheeler sees this type of attitude pop up in many aspects of personal finances. "If they don't understand it, they don't have to be responsible," he said. "Many people will say that they are not good with numbers or that the tax code has gotten too complicated. Most people don't like dealing with the reality of the numbers and so it's better to not get informed and have to make different choices."
In other words, there needs to be accountability on the individual level for seeking this information out, too -- information that is readily available.
How Income Taxes Are Spent: A Receipt
So, if you'd like to be a more informed taxpayer, find out below how the thousands of dollars you hand over to the IRS every year are being spent.
Using information released by the White House and the per capita personal income of $42,693 (according to Bureau of Business and Economic Research), GOBankingRates calculated how the average American's 2013 federal income tax bill breaks down.
See the graphic here.
$1,263.18 - National Defense (24.64%): At just under a quarter of your federal income tax bill, national defense is the largest spending category. It includes salaries and benefits for military personnel, equipment and supplies, research, weapons and construction.
$1,202.30 - Health Care (22.45%): The next largest area of federal income tax spending is health care, which includes Medicaid and Medicare, the CHIP program, COBRA tax credit, research and disease control.
$968.94 - Job and Family Security (17.26%): Services like unemployment insurance, food stamps and other nutrition assistance, as well as housing assistance, fall into this section.
$400.77 - Additional Government Programs (11.38%): A catch-all for the rest of the government programs that receive federal income tax dollars, this category includes transportation and governmental administration.
$410.91 - Net Interest (8.01%): This income tax category goes to paying interest on Treasury debt securities, as well as other interest.
$228.29 - Veterans Benefits (4.53%): Most of the taxes allocated to veterans benefits pay for income and housing support. This category also includes health care, education and training for veterans.
$182.63 - Education and Job Training (3.30%): At just over 3 percent of the average federal income tax bill, the majority of taxes in this category pay for elementary, secondary and vocational education. Additionally, financial aid and job training services fall under this section.
$101.46 - Natural Resources, Energy and Environment (2.05%): Programs such as water and land management, energy supply and conservation, and environmental protection get about 2 percent of federal income taxes.
$101.46 - Immigration, Law Enforcement and Administration of Justice (2.05%): Things like border security and immigration enforcement fall into this category, as well as various activities related to administration of justice.
$81.17 - International Affairs (1.72%): At less than 2 percent of the average tax bill, international affairs Includes humanitarian assistance, security assistance and foreign affairs.
$50.73 - Science, Space and Technology Programs (1.06%): The bulk of these tax dollars is allocated to NASA and the Natural Science Foundation.
$35.51 - Agriculture (0.65%): Less than 1 percent of federal income tax dollars are spent on research, crop insurance and agricultural subsidies.
$25.37 - Community, Area and Regional Development (0.48%): Just under half a percent of your tax bill goes toward spending to strengthen communities.
$20.29 - Response to Natural Disasters (0.43%): Finally, the last half percent or so is allocated toward natural disaster response and insurance, like Small Business Administration disaster loans and FEMA grants.
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