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Where do my income tax dollars go?

You worked hard for that money you just sent off to the IRS. So like many tax filers, including Mark in Colorado, you're probably asking yourself: just where, exactly, does my money go when the government gets its hands on it? Let's see  who gets what.

You worked hard for that money you just sent off to the IRS. So like many tax filers, including Mark in Colorado, you're probably asking yourself: Just where, exactly, does my money go when the government gets its hands on it? Let's see who gets what.

Don't forget, you have two extra days this year to send in your check — one because April 15th falls on a Sunday and another day because of two holidays that aren't on most people's calendars. Which got Lloyd in Louisiana wondering: what's up with these late deadlines?

What does all our income tax money go to pay for?
Mark, Greeley, Colo.

If you have trouble balancing your checkbook, imagine trying to keep track of where $2.7 trillion goes every year. Even with armies of government accountants and auditors, it’s hard to know with certainty exactly where your income taxes end up. But you can get some idea from the government’s accounting of where it went last year. 

For the complete, gory details, you can check the latest estimates from the official budget on the Government Printing Office Website, where you’ll find the government’s finances sliced and diced — by agency, department, function and source — with historical data back to the 1940s and beyond.

What you’ll also find is a lot of big numbers. So to give you some sense of proportion, here’s — roughly — how the federal budget compares to your budget and mine.

Let’s assume you make $52,000 a year — or $1,000 a week — which is about the median household income in the U.S. The real number was $46,326 in 2005, but give us a break with the math, okay? Remember, that $1,000 a week is tax free. (Hey, you’re the government.)

Here's where it went (we used 2006 figures from Table 3.2, "Outlays by Function and Subfunction"):

Last year, the three biggest federal budget items were Social Security, health care and defense spending — each of which ate up about $200 of your $1,000 weekly paycheck.

Even though you may not have health insurance, about $219.40 of every $1,000 of your taxes went to pay for health care last year. On an annual salary of $52,000, that works out to $11,408.80 a year. The biggest chunk of that ($124.20 per thousand) went to pay for Medicare, which provides health coverage for people over 65. The rest ($95.20) went for Medicaid, which covers low-income families and individual, and state administered health coverage for children.

While most households are having a hard time setting aside a few bucks a month for their IRAs, your government is busy stashing away retirement cash for a rainy day; some $206.60 of the weekly paycheck went to the Social Security fund — most of which is officially “off budget.” (But let’s not get started on that whole lock-box thing.)

Next up is military spending. This includes a variety of defense costs, including salaries for the troops ($48.00); operating and maintenance costs ($76.70); “procurement” — which means stuff you bought ($33.80) — and research, development, test and evaluation of all those things you bought ($25.80). Throw in $12 or so for things like “atomic energy defense activities” and housing the troops, and you paid $196.50 to keep the world safe. (Or $10,218 for the year.)

Unfortunately, Uncle Sam — like many Americans — has been living beyond his means and spending more than he takes in. To make up the difference, the Treasury steps up by selling more debt — roughly the same as you or me using our credit cards. And like most credit card users, Uncle Sam isn’t paying back that debt, he’s just making the minimum monthly payment. So interest on the Treasury’s credit card eats up $122.20 of Uncle Sam’s $1,000 paycheck. That bill is cut by $36.80, thanks to the interest that the government pays itself for Treasury debt that it keeps “off-budget.” (Again, let’s not go there.)  Your net interest payment amounts to $85.30.

There’s also a line in Uncle Sam’s budget for $132.70 for “income security” which includes things like unemployment insurance ($12.70); food and nutrition programs ($20.30), and housing assistance ($14.40). Also tucked into this line item is the cost of retirement for federal workers ($37.00).

After that the bills start to look pretty manageable — but then you’ve only got about $160 left. You’ve got to keep up in a fast-changing, competitive global world, so Uncle Sam spends $44.60 per thousand on education, including $19.00 on colleges and universities and $15.00 on elementary and secondary schools. Workers training programs cost $2.70 and social services related to education and training cost another $6.20. 

You may have also heard your elected representatives talk about their commitment to keeping American in the forefront of science and technology. Last year, they’ve devoted $3.40 to general science and basic research. Another $5.50 went to pay for the space program.

Like anyone else, Uncle Sam has to get around. Transportation costs ate up $26.50 per thousand in federal spending, including $17.00 for ground transportation; $6.80 for air travel and $2.50 for water transport. Imagine spending just $17 bucks a week on your car and $2.50 for a boat.

The government also spent a few of your tax dollars on agriculture ($9.80) and the environment ($12.40). So call it $22.20 for landscaping and gardening.

While our military is working to keep the peace overseas, keeping the peace at home was a relative bargain. Total spending for the administration of justice came to $15.40, including federal law enforcement ($7.50), and maintaining the federal courts ($3.80) and federal prisons ($2.30).

Despite all the headlines about billions spent for helping victims of natural calamities like hurricane Katrina, federal disaster relief and insurance spending amounted to just $17.40 per thousand last year. Another $3.20 went to community and regional development.

And while some readers complain about seeing their tax dollars going to fund aid to other countries, it’s not a big number. Last year, $6.30 went to pay for international development and humanitarian assistance. Housing ambassadors around the world and other expenses related to conducting international affairs set you back $3.20.  Another $2.90 went to help beef up security outside our borders.

Finally, spending all this money and managing all these activities also cost money. So figure $6.90 for general government costs.

So there you have it. Not all of that money came from your incomes taxes, by the way. This year individuals will pay about $1.2 trillion of the $2.7 trillion federal spending, while corporations will pay $342 billion. The rest comes form Social Security taxes ($873 billion); excises taxes ($57 billion) and other taxes and fees ($98 billion.)

For everything else, there’s U.S. Treasury debt.

What is the reason for having a extra day to file federal income taxes?
-- Lloyd F., Monroe, La.

In fact, this year we all get a two-day extension. The first extra day was simple enough: because April 15 falls on a Sunday – not a business day – you would otherwise get until midnight Monday, the 16th to file your return.

The reason for the second extra day is a little more complicated. At first, the extra day only applied to taxpayers who live six Northeast states and the District of Columbia, whose returns are processed the IRS’s Andover, Mass. office. That’s because people in the great Commonwealth of Massachusetts – including the federal workers at the IRS - celebrate Monday as Patriots’ Day, a legal holiday. 

So far so good. It wasn’t after the IRS printed up its forms – giving an extra two days just to those folks whose returns go to Andover – that someone noticed that April 16 is also holiday in the District of Columbia. Though not a federal holiday, Monday is Emancipation Day, a legal holiday for people who live in our nation’s capitol - including federal workers at the IRS.

Originally celebrated every year from 1866 to 1901, Emancipation Day marks Abraham Lincoln's 1862 signing of the act that ended slavery in the District. This year, thousands of people are expected to march to Congress to press for legislation giving D.C. a seat in the U.S. House of Representatives.

Meanwhile, up in Massachusetts, they’ll still be celebrating Patriots’ Day. For those of you who don’t remember, the holiday commemorates the Revolutionary War battle of Lexington and Concord, which was fought on April 19, 1775. (In the 1960s, the date was changed to the third Monday in April.)

On Monday, they’ll hold a re-enactment of the battle, a Red Sox game at Fenway Park (this year, against the LA Angels) and the annual running of the Boston Marathon.

At this writing, the forecast was for rain and temperatures in the 30s. So don’t forget to bring your slicker.