March 20 2012

Wouldn’t You Like to Know Where Your Money Goes?

Carrie L. Lukas

Rather than moving to embrace the U.K.’s system of government-controlled medicine, complete with the harshest forms of rationing, I wish the U.S.  would follow the Brit’s lead in providing taxpayers with a little transparency.  The Daily Mail reports that UK officials plan to give every taxpayer a personal statement annually detailing how their taxes are spent: 

In some cases, the results are likely to prove startling.

A higher-rate taxpayer earning £50,000 this year would be told they paid £14,183 in tax and National Insurance – of which around a third, £4,727.67, is spent on welfare.

At the same time, £2,469.68 is spent on health, £1,848.73 on education, £818.52 on defence and £705.62 on public order and safety. A further £141.12 is given to foreign aid and £70.56 is handed to the EU.

A Treasury source said: ‘It’s quite right that people know how much tax they pay and what it’s spent on.’

Indeed, taxpayers do have a right to know.  And those who are working hard to provide for their families may not be so happy to learn that so much of their money is transferred to those who on the dole.

Just as the Brits may be in for a wake up call, Americans would likely be surprised by how big a chunk of their taxes goes for transfer payments—Social Security and Medicare, which have a dedicated tax stream being the biggest budget items, but also for Medicaid, unemployment and for support for other state-based aid programs. 

They'd also learn that one of the few programs that Americans often say they wish to cut—foreign aid—is already a pretty small part of the budget.  While defense spending is still considerable (about a fifth of all spending), many Americans may expect that the world’s super power dedicates more than that to the military.

Americans already receive regular reports from the Social Security Administration on how much they pay in and what they can expect out in benefits (with a small asterisk, for those of us set to retire after the Trust Fund goes bust in the 2030s, explaining that only about three-quarters of these promised benefits are actually paid for under current law and revenue projections). 

The federal government owes taxpayers a little more information about where the rest of their money goes…or is there something that they want to hide?  

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