Policy debates over the role of government and the kind of society that a government should stimulate and advocate abound. What isn't in question is that a government should promote the general welfare of its people. It does so through the provision of services that are funded, in part, by taxes that are imposed by national, state, city and combined area taxes, as well as individual and corporate income taxes.
What do our taxes pay for? Without the revenue stream made possible by taxes, the trajectory of the United States, from its origin to the 21st century, would be greatly different than it is today. Taxes pay for the overhaul of the country's healthcare system, fund climate initiatives, such as clean energy and climate resilience, and finance the education of a country's citizens. Taxes also finance immigration reform efforts, Medicaid services and more.
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Subsidize the Cost of Health Care
The Tax Policy Center reports that, in the fiscal year 2019, the federal government spent about $1.2 trillion to subsidize the cost of health care. Of this amount, Medicare was allotted approximately $644 billion, Medicaid and the Children's Health Insurance Program (CHIP) received about $427 billion and about $80 billion funded veteran health plans.
Read More: Types of Government Expenditures
The Center for American Progress, or CAP, reports that for the fiscal year 2021, the Pentagon budget was $740 billion. The defense budget is composed of two parts: a $671 billion base budget and an Overseas Contingency Operations (OCO), or war-fighting, budget of $69 billion.
Education for all of America's children, whether in kindergarten or the 12th grade, is provided free of charge due to its funding by taxes on property owners and the general taxes the government collects. The federal government contributes a large portion of public school funding – as much as 80 percent – with states relying on sales and income tax to fund the remaining 20 percent.
Fund the Climate Change and Clean Energy Effort
The federal government spends billions of dollars to fund efforts to address issues related to climate change, such as funding clean-energy efforts. For instance, tax breaks support the installation of solar panels and other methods that improve the energy efficiency of buildings and vehicles, which companies and consumers implement. Other tax-supported efforts include financing the manufacture of wind turbines and other clean-energy equipment domestically.
Cash for the Nation's Infrastructure
Taxpayers provide money for the nation's infrastructure. Taxes pay for the improvement of the nation's transportation networks, its power and water systems as well as the provision of internet connections. Funds are also allocated to the country's rail and public transit systems. For instance, the bipartisan $1.2 trillion law signed in 2021 allots hundreds of billions of dollars to projects, such as roads and bridges.
Elder Care Plan
Seniors face many difficulties as they age. Taxes fund the investments that the country has made to help aging Americans in their retirement years, particularly those who can't care for themselves.
For instance, federal taxpayers pay for in-home and community-based services under Medicaid; the funding for state in-home and community-based services; housing assistance of low-income Americans; improvements in public housing; the provision of housing vouchers for the low-income tenants and expanding the stock of affordable housing for low-income families.
Read More: Types of Government Assistance
Housing Plan Budget
Federal funding provides housing assistance for lower-income Americans. Tax dollars pay for the construction and renovation of public housing and the housing vouchers that allow low-income tenants to afford rent, which reduces homelessness. This funding also finances the expansion of the existing stock of affordable housing.
Multiple immigration policies are funded by federal taxes. For instance, taxes pay for the legalization program for undocumented immigrants and the proposed Border Security, Economic Opportunity, and Immigration Modernization Act, or S. 744.
Taxpayers fund the Department of Homeland Security, the functions of which include district operations, service center operations, asylum, refugee and international operations and records operations. For 2022, the DHS budget is $5,190,924.
As of January 25, 2022, the Peter G. Peterson Foundation reported that the national debt equaled over $29 trillion. According to the foundation, the government spends more than $900 million for the interest on that debt.
- The Washington Post: What's in the National Debt Right Now?
- Tax Policy Center: How Much Does the Federal Government Spend on Health Care?
- The Center for American Progress: The Pentagon’s Fiscal Year 2021 Budget More Than Meets U.S. National Security Needs
- The White House: FACT SHEET: Biden-Harris Administration Hits the Ground Running 60 Days into Infrastructure Implementation
- National Conference of State Legislatures: The Role of Property Tax in Public Education Funding
- Center for American Progress: A Progressive Carbon Tax Will Fight Climate Change and Stimulate the Economy
- Local Housing Solutions: Federal Programs for Affordable Housing
- USCIS.gov: Fiscal Year 2022 Budget Overview