Your Tax Dollars at Work
The federal budget for the 2020 fiscal year (that us, Oct. 1, 2019, to Sept. 30, 2020) is about $4.6 trillion, according to the Congressional Budget Office — which requires quite a bit of borrowing, considering tax revenue for the year is projected to be only $3.7 trillion. Almost exactly half of that comes from federal income taxes; around one-third comes from payroll taxes; 7% comes from corporate taxes; 4% from excise taxes (such as the gas tax); 2% as a result of earnings from Federal Reserves holdings; and estate taxes and other miscellaneous taxes make up the remaining 2%. It’s a hefty chunk of change.
To help put those numbers in perspective, we wanted to find out: If someone paid a total $1,000 in taxes this year (including Social Security and Medicare taxes), where would it all go? For those wondering how federal tax dollars are spent, here's a breakdown. You might notice that the final tally equals $1,060. That’s because the Congressional Budget Office includes $274 billion (about $60 out of $1,000) in "offsetting receipts," which is revenue the government earns from other government agencies.