Where Do Our State and Federal Tax Dollars Go?

The Center on Budget and Policy Priorities (CBPP), a non-partisan think-tank working at the federal and state levels on fiscal policy and public programs that affect low- and moderate-income families and individuals, recently published two reports explaining how our tax dollars are put to use by state and federal governments.

In 2013, the federal government spent $3.5 trillion (21 percent of the US GDP),  $2.8 trillion of which was financed by federal revenues, and the remaining $680 billion by borrowing.  According to the CBPP report, three categories account for the bulk of federal spending: defense (19 percent of the budget), Social Security (24 percent), and Medicare, Medicaid, and the Children’s Health Insurance Program (CHIP) (22 percent).  Only one percent of the federal budget was spent on education.

While state spending varies from state to state, data from the National Association of State Budget Officers (NASBO) suggest that most state dollars go toward education (K-12 and higher education) and healthcare.  On average, these areas make up over 50 percent of state budgets.  The remaining half is spent on various programs, such as transportation, corrections, and cash assistance to the poor.

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Frederique Laubepin

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