Gen Z or Boomers: Who’s Happier With How Their Tax Dollars Are Being Spent?
It’s no secret that the majority of Americans dread tax season, and getting their financial affairs in order is an annoying burden many would rather not deal with. However, for those who feel their tax dollars are being spent wisely, the hassle of filing might not weigh quite so heavily.
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According to a recent survey conducted by GOBankingRates, nearly 70% of Gen Zers believe their tax dollars are being spent effectively whereas a mere 32% of baby boomers and those on the Gen X cusp say the same.
Boomers are clearly less satisfied with how their tax dollars are being spent — but why do they feel this way? Here’s a closer look at the survey data as well as insight from financial experts who know a thing or two about this generational divide.
More Than Two-Thirds of Gen Z Is Happy With Where Their Taxes Go
It’s clear that younger generations are more satisfied with how their tax dollars are being spent. A staggering 69% of Gen Z respondents aged 18-24 said they believe their tax dollars are being spent effectively. Those on the baby boomer-Gen X cusp, on the other hand, are less ecstatic with just 32% of those aged 55-64 saying the same. Respondents over 65 share this view, though to a lesser degree, with about 46% saying their tax dollars are spent effectively.
In the same survey, GOBankingRates also asked asked respondents whether they believe they are paying a fair amount in taxes. Gen Z kept a similar attitude, with the majority (57%) saying they are paying a fair share in taxes. That number begins to drop when looking at the 55-64 age range; as only 39% share the belief that they are paying a fair share. Further, a mere 36% of Americans over 65 believe they are paying a fair share in taxes.
By and large, it’s clear older generations believe they are paying too much in taxes — and this isn’t an uncommon opinion to have. But some Americans may not even be aware of where their taxes are going. Here’s a quick breakdown of federal tax dollars and where they’re allocated.
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Where Do Our Taxes Go?
U.S. federal tax dollars go to a vast number of government-funded programs and services.
“The lion’s share of our tax dollars is spent on defense, Social Security, healthcare, education, infrastructure, social welfare and research and development,” said Andrew Latham, certified financial planner and managing editor at SuperMoney.
Breaking it down further, the largest portion of our tax dollars go to national defense and fund military spending and the Department of Homeland Security.
“Another large portion of the federal budget is allocated to Social Security, which provides retirement benefits to millions of Americans,” Latham said. “A significant amount of money is also spent on healthcare, including funding for Medicare, Medicaid and the Affordable Care Act.”
In addition to funding these programs, our taxes go to education programs such as grants for college students and K-12 schooling. The government also maintains infrastructure with tax dollars including building and maintaining roads, bridges, airports and public transportation. Finally, the government uses tax money to fund social welfare programs and research and development organizations such as the National Institute of Health.
With this in mind, here’s what experts say about why baby boomers aren’t so pleased with the direction of their tax dollars.
Baby Boomers Have Different Priorities
One reason why Gen Z and boomers disagree on tax effectiveness is that the two generations have different needs. As Latham points out, boomers are more focused on things like retirement benefits. Conversely, Gen Z may be more interested in education funding and programs that align with social causes they care about.
“Older generations have different priorities than younger generations regarding government spending,” said Latham. “For example, they may focus more on funding programs like Social Security, Medicare and other entitlement programs. Some may be concerned that spending or wastefulness in other programs puts the programs they rely on at risk.”
Disillusionment With Tax Spending
Baby boomers and older generations grew up in a very different environment compared to Gen Z, which probably informs their trust — or lack thereof — in government tax spending.
“Older generations may have experienced more political and economic upheaval than younger generations, which may have eroded their trust in government institutions,” Latham said. “This could lead to a general disillusionment with how tax dollars are spent.”
Further, because baby boomers have been paying taxes for longer and many are in higher tax brackets than younger Americans, they might be more likely to view the government’s spending as inefficient and wasteful.
Younger Generations Are More Trusting
Younger generations tend to be more optimistic and trusting than older generations, and this trust may be due to their use of social media and technology.
“For example, a study published in the Journal of Computer-Mediated Communication found that social media use was associated with higher levels of political efficacy and trust in government among younger people,” Latham said.
With such a wide gap in lived experiences, it’s natural that baby boomers and Generation Z take different views on taxes, and that these opinions may grow and shift as time passes and even younger generations join the ranks of American taxpayers.
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Methodology: GOBankingRates surveyed 1,002 Americans aged 18 and older from across the country on between January 30 and February 1, 2023, asking fourteen different questions: (1) How do you plan on filing your taxes for this year?; (2) When do you expect to file your taxes this year?; (3) How much do you expect to receive in a tax refund?; (4) What do you plan to do with your refund?; (5) Do you feel confident you are receiving all the deductions you feel qualified for?; (6) Do you believe your tax dollars are being spent effectively?; (7) Do you believe you are paying too much, too little, or a fair share in taxes?; (8) Have you ever been audited before?; (9) Who will/would use your tax dollars the best?; (10) How much is the standard deduction for a single filer (and married filers) in 2023?; (11) What concerns you the most about Tax Day?; (12) Do you expect your tax refund this year to be more or less than last year?; (13) What do you understand the least about your taxes?; and (14) What would you rather be doing than your taxes? (Select all that apply). GOBankingRates used PureSpectrum’s survey platform to conduct the poll.
