This is a great idea to put our spending in perspective, but one thing this sorely lacks is any way to incorporate "tax expenditures," because otherwise this assumes everyone is homogeneous in terms of deductions, etc. For example, the subsidies given to oil companies and agriculture don't show up in the receipt because they're technically just deductions, but it would be wildly flawed to believe that they didn't exist.
So what I would recommend is:
1. start at the top with what you would have paid based on your total income, before your deductions
2. show how much taxes you save for each deduction (maybe group them)
3. show the net
4. in the "programs and services", have an additional section called "Tax Expenditures" that shows your proportion of all tax deductions; suppose $200b were "saved" annually due to mortgage interest deduction, then it would show something like $2000 for mortgage interest. Same with oil and agricultural subsidies.
Then we might get a better view of how our money's really being spent.
They should really send taxpayers a copy of this in the mail though.
I doubt many of the people who are raging about how we can balance the budget by cutting foreign aid and NPR are going to bother going to a website and rooting around for line items on their W2 and tax return.
I think your confusing multiple issues - the people wanting to cut foreign aid and NPR have a different vision of what government is for, and when it is ok to use force, e.g. they don't think it's ok for someone to threaten to kill them to pay for NPR.
I'm a fan of NPR and I don't think it should be funded by the government- the government pays less than 5% of NPR's budget, but adds tons conflict.
Yes, there are multiple issues: one of which is whether or not the government should be paying for NPR and foreign aid at all. But, what I think the original poster was responding to, and what the main purpose of the "receipt" is, is that most (or at at least very many) people don't know how government spending is apportioned.
Try not paying the portion of your taxes represented by NPR. You'll soon enough have your door kicked down, your property seized, and you'll find your way to prison.
EVERYTHING the state does is explicitly backed by the government's monopoly on violence.
This is somewhat less than accurate. My payroll taxes were moved to the general fund and spent immediately. Because the government chooses to spend my payroll taxes this way, the receipt should always contain the same output for any input that sums to $K.
This receipt also omits that revenue pays for less than 58% of spending. As such, I could make a receipt that says that all of my taxes this year were immediately spent on entitlement programs and it would be (strictly speaking) accurate.
On the first, SS is running a surplus right now. They need to invest that surplus. The safest investment on earth is US treasury bonds, so that's what they buy. It all made perfect sense until someone figured out you could spin it as "raiding the trust fund". The US has the same obligation on that debt to the SS trust fund as it does to anyone who buys a t-bill. The US has the same obligation on that debt to the SS trust fund as it does to anyone who buys a t-bill. See the "interest payments" section of the budget. They're not "IOUs" on a sticky pad or something.
On the second.. strictly speaking accurate and honestly speaking inaccurate. Debt isn't the point of this, everyone knows we have a deficit, the point is what % of spending goes where.
You are badly misinformed. For the SS surplus, the U.S. government "buys" special obligation bonds, not Treasurys. These bonds are not tradeable on any market and do not represent an actual financial asset, the way a Treasury bond does. They are literally pieces of paper in a cabinet in West Virginia. They are truly IOUs on a sticky pad. There are no assets behind them, and there isn't even a legal obligation for the government to repay them or anyone "contributing" to SS. (see http://en.wikipedia.org/wiki/Flemming_v._Nestor)
The interest payments in the budget are actual repayments to Treasury bond holders, but NOT interest payments on SS obligation bonds. The government makes the SS interest "payments" with additional IOUs to the trust fund, NOT actual tax dollars. This SS interest is an accounting tool only, and is not part of federal budget outlays.
No worries, because the special obligation bonds are administered by the Dept. of Treasury it is easy to confuse them with Treasury bills or bonds. But they are very different beasts!
The trust fund does not contain US treasury bonds. US treasury bonds can be transferred and as such they are counted as debt when calculating the total debt of the United States. The instruments held in the SS trust fund are non-transferrable and are not counted as debt. As soon as they are counted as debts and have nonzero secondary market value it will be reasonable to say that the trust fund itself has nonzero value.
This is mostly right. The trust fund "assets" are worthless, but the common national debt calculation does include the explicit obligation to repay the SS fund (but does not include the program's unfunded liabilities).
Of course, it's nonsense, because it doesn't include the "off budget" supplemental expenditures, nor the money contributed to the Social Security Trust Fund that is dumped on the Federal balance sheet. (in exchange for an IOU)
While this is a nice illustration, it is actually a bit misleading to talk about where tax dollars go within a monetarily sovereign government. Conceptually, tax dollars don't really go anywhere - they simply disappear (are destroyed). Conversely, when the government spends, the dollars do not really come from anywhere - they simply appear (are created). After all, those dollars are really just numbers in the accounts at the Fed, which can be increased and decreased arbitrarily (from a technical perspective).
There is an arcane mess of transactions that do happen related to government taxes and spending simply for purposes of controlling the interest rate. Since spending and taxation happen on different schedules, clustered tax payments on one day would drain so much of the banks' reserves from Fed accounts that it would force banks to borrow to maintain required reserves, thus creating a spike in the interest rate. Conversely, clustered spending would add reserves which would cause the interest rate to drop.
Simply to prevent such fluctuations, the treasury and Fed operate accounts in private banks where tax money is accumulated, so that it does not cause a drain on banks' reserves.
This happens to support monetary policy. However, it would be misleading to think that these operations are required for fiscal policy. When it comes to fiscal policy, conceptually taxes do not pay for anything. Instead, they are the tool by which the government takes spending power away from the private sector so that it may spend itself without causing inflation.
There is an entire chapter on those monetary operations in Randall Wray's book "Understanding Modern Money".
why is this getting downvoted? taxes maintain aggregate demand for dollars, this is not controversial. spending hasn't been a function of taxation since before WW2.
As another commenter pointed out, this "receipt" doesn't show that a huge hunk of what you are getting you are not paying for -- you are buying on credit.
It also does not show that there remains a huge balance due both before and after this "tax transaction"
I can't imagine anybody walking into a shop and buying something without knowing exactly how much it cost (not only how much cash he paid for it) and what his balance was with the merchant before and after the sale. I think the idea of a tax receipt is a great metaphor, but if you're going to make a visual metaphor like this one, make it work like a real receipt does. Otherwise you are using the metaphor to deceive rather than enlighten.
"Otherwise you are using the metaphor to deceive rather than enlighten."
That's an exaggeration. The point is to show where your tax payment is spent, and that's what it does. Emphasizing borrowing does nothing to further clarify the question.
More importantly, there's no way to know what proportion of the debt is attributable to any individual. It's a political question, because it deals in the hypothetical of how much someone would have paid, if we lived in an alternate universe where we ran a balanced budget. Nobody knows what that universe looks like.
In other words: let's stick to the facts. If you want to talk about deceptive metaphors, well...I'm sure that certain politicians would love to have the ability to send every taxpayer a "receipt" that told them that some large percentage of their tax bill was borrowed and used to pay for social welfare programs or pensions or bombs. That would really clarify the debate.
What's the problem with dividing the credit proportionally by the amount paid? If you represent 1% of the tax base, you also represent 1% of the borrowing, regardless of who that money ended up being spent on.
I agree with the parent that it is deceptive to not include that figure.
EDIT: Then again, it doesn't give a very accurate picture to those who are being subsidized heavily, so there are some downsides to that. If one could track the amount spent on each person from federal programs, that would be very interesting - how much your fellow citizens are subsidizing you might be pretty motivating or depressing, depending on how you look at it.
@Ericd the most likely outcome--the one currently happening--is that most of this will be finances through inflation. So those who save the most will give up the most in lost buying power. And yes, closely behind that is the people who are taxes the most.
For the most part these two go together, but I think this will catch a lot of the middle class off guard as they watch their 401ks become worth less. That will be a bitter pill.
I can't imagine anybody walking into a shop and buying something without knowing exactly how much it cost (not only how much cash he paid for it) and what his balance was with the merchant before and after the sale.
There are huge segments of the economy where that happens! Trying to make the customer think about the immediate or per-month cash expenditures instead of the long-term total cost is a big point of things like layaway, automobile leases, subscription-instead-of-purchase models, etc.
And usually such transactions are heavily covered by law for the very reason that the paperwork can be deliberately obfuscated. If you buy a car, for instance, or you buy anything on credit, there are clear legal requirements for what has to appear on your receipt -- because it can be so misleading.
As a side note, I'm really sorry I used the word "deceive", which implies intent. Misleading is a much better word. I don't think there was any malevolent intent in that graphic at all.
There are a couple questions here: first, is the metaphor being used appropriately? I think not. I think it could be done a lot better. Second, does the metaphor of a receipt even work enough to be useful at all? I don't know, but if you want to try to use a metaphor for cognitive leverage on this particular problem, a receipt is probably the best thing you've got.
As computer guys, we have to deal with and talk about complex systems all the time. Using metaphors is part of that. It's probably the best tool we have. The reason I commented in the first place was to show that if you pick up a metaphor, you have to run with it as far as you can, then clearly point out where the metaphor no longer works. To do otherwise is to invite a lot of confusion, and, well, to be misleading.
I wish the process were the other way around. Tell me how much I owe, and let me choose exactly where it's allocated ... old-school Wheel of Fortune style. If all the good-stuff is paid for by the time you go to pay your tax bill, you can just dump it into the pot to cover the rest of things.
I know this will never happen ... not in any granular way, and that it creates all sorts of other problems ... but it might restore the link between what we pay and what it pays for, and at the same time provide a very visible prioritized list of where the public feels their tax dollars should be spent.
So what I would recommend is:
1. start at the top with what you would have paid based on your total income, before your deductions
2. show how much taxes you save for each deduction (maybe group them)
3. show the net
4. in the "programs and services", have an additional section called "Tax Expenditures" that shows your proportion of all tax deductions; suppose $200b were "saved" annually due to mortgage interest deduction, then it would show something like $2000 for mortgage interest. Same with oil and agricultural subsidies.
Then we might get a better view of how our money's really being spent.