Here’s Exactly How Federal Tax Dollars Are Used To Improve Your Well-Being
As a freelance writer earning much less money who pays much, much more each year, stowing away a full 25 percent of each paycheck for the tax man, my second reaction to this news—after an initial thought that is not fit to print—is: "If Donald Trump, the 'billionaire' President of the United States, doesn't pay his taxes, why should I pay mine?"
"While Donald Trump paid just $750 in U.S. federal income taxes during the first year of his presidency, he paid over $317,000 in taxes to India, Panama, and the Philippines," said Sen. Bernie Sanders. "How's that for American first?"
- Christina Taylor, MBA, Christina Taylor is head of operations for Credit Karma Tax®. She has more than a dozen years of experience in tax, accounting and business operations.
Indeed, this sentiment made the rounds on social media last night, and I think it's a fair reaction. When minimum-wage workers are paying more in taxes (both as a percentage and a total sum), the nation has a problem that should rightly be protested—especially since he's far from alone in tax evasion among the wealthy.
And yet, there is a reason I've anxiously, but not begrudgingly, paid my taxes each year since I got my first job at the age of 16: Tax dollars improve our quality of life in ways both visible and unseen.
To begin with, the bulk of our tax dollars help to take care of the most vulnerable members of our society, including people who are sick or elderly, people with disabilities, people who are homeless, and children, among others. They do this through Social Security and Medicare programs, funding social services and benefits for veterans, unemployment insurance, food stamps, school meals, and more. Whether or not tax revenue could be doing a better job of taking care of people is another question for another day, but the simple fact is that millions of Americans rely on those of us who are capable of earning for support. And if you aren't—or haven't been yet—you could be among them at some point in your life.
Federal taxes also fund programs designed through the Affordable Care Act, which has enabled health insurance coverage for millions of people formerly without it. "[Taxes] account for marketplace health insurance subsidies the government provides," says Christina Taylor, head of operations for Credit Karma Tax. "These come into play when a taxpayer’s income is low and qualifies them for a health insurance premium subsidy, where they pay less than the full amount to receive healthcare through the federal government marketplace."
Taxes additionally fund scientific and medical research, which is critical for keeping vast populations safe; in fact, the government has spent billions this year working towards a COVID-19 vaccine that could save an untold number of lives throughout the world. Taxes fund the Centers for Disease Control (CDC) and, up until recently, helped to fund the World Health Organization (WHO), as well as the Food and Drug Administration (FDA), which regulates the safety of the things we ingest. "If you take any medication, which many people do, you want to be sure the medicines you’re taking are safe and not counterfeit, and the FDA helps regulate that," says Taylor.
Your taxes further fund education, including college grants and loans. They finance infrastructure and transportation, including roads, bridges, air traffic control, and more, as well as parks and other green spaces which are critical not just to our individual health but to the health of the planet. And speaking of the planet, they also fund the Environmental Protection Agency (EPA), which works to keep our air breathable and our water potable. Taxes fund space technological advancement and space exploration, too.
Federal taxes also go to fund the military, and while you may or may not take issue with just how much funding the military receives, and/or have opinions about where and how our troops are deployed, a nation without any military at all is vulnerable not just to physical harm but also to exploitation in many realms. Sadly, we do not yet live in a Utopian world devoid of need for the threat of armed protection.
Finally, yout taxes go to pay interest on our country's debt, which may not seem fair—we didn't necessarily choose all of the various ways in which we've gone into the red personally—this money can't otherwise be repaid by magic. And the government needs all the help it can get, as interest for this next fiscal year is $378 billion. Nonpayment, or the threat of nonpayment, has real consequences, too. It raises interest rates, affects the value of the dollar, and eventually gives the U.S. less money to spend on other things, like those aforementioned social programs. And if the U.S. government were to default on its debt, global markets would likely plummet, lowering quality of life not just in America but globally.
While you can certainly take issue with some of the ways the money is being spent, ultimately, the bigger picture shows that without it, we wouldn't be the United States so much as a group of individuals merely trying to survive. If you couldn't work, you'd be out of luck economically and left to struggle for food, shelter, and medical treatment. Streets would have to be built or repaired by the collective efforts and paychecks of organized, affected individuals. It would at worst be chaos and at best significantly increase the American disparity in quality of life between the wealthy and the poor.
While it's tempting to counter your tax bill with a link to the NYT's reporting—and failing to pay taxes would line your pockets to a significant degree—paying them ultimately makes your community, and therefore you, healthier. If you want to protest President Trump's nonpayment, focus on candidates' stance on the tax code up and down the ballot. And vote.
Originally published September 28, 2020; updated September 29, 2020.
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