Half of the revenue the federal government collects comes from individual income taxes, according to figures from the Office of Management and Budget. That means it relies heavily on individual taxpayers to keep it up and running. However, taxpayers might not always agree with the ways the government spends their money.
To find out to what extent Americans agree or disagree with how their tax dollars are being spent, GOBankingRates surveyed 1,000 adults across the U.S. Respondents were asked whether they believe their tax dollars are being spent effectively and how they would like to see that money spent. They also were asked whether they’re paying a fair share in taxes.
Not surprisingly, the results show that there isn’t a consensus about whether tax dollars are being spent the right way. “There is some disagreement on the amount of emphasis that should be given to particular programs, but that is to be expected in a country as large and as diverse as the U.S.,” said Mark Mazur, the Robert C. Pozen director of the Urban-Brookings Tax Policy Center. But he said the bottom line is that Americans tend to realize that the government does a lot of valuable things with the taxes that are paid.
- Key Findings
- Majority Don’t Think Tax Dollars Are Being Spent Effectively
- One-Third Don’t Want Tax Dollars Paying for War
- How Your Tax Dollars Are Being Spent
- More than half of Americans don’t believe their tax dollars are being spent effectively compared with nearly 18% who do think their tax dollars are being spent the right way. However, nearly 27% said they don’t know how their tax dollars are being spent.
- About 51% of Americans think they’re paying too much in taxes versus 46% who believe they are paying a fair share. Only about 3% said they pay too little in taxes.
- A majority of Americans would choose to spend their tax dollars on social insurance such as Social Security and Medicare. About 53% of respondents said this area would be of top importance if they could choose how tax dollars are spent.
Mazur said that it’s not surprising that nearly 56% of respondents don’t think their tax dollars are being used the right way. “There have been decades of politicians telling the public that their tax dollars are being wasted in various ways,” he said. “Obviously, this critique has permeated the majority of respondents.”
Americans tend to feel this way if they aren’t seeing the benefits personally of government spending. “Unless they see funding toward something that directly affects them or is in line with their political views, they tend to believe the money is being wasted,” said Sebastian Leguizamon, assistant professor and director of the Center for Applied Economics at Western Kentucky University.
Only about 18% of respondents believe their tax dollars are being spent well. Nearly 27% said they didn’t know how their tax dollars were being spent.
The survey also found that older adults are more likely to think their tax dollars are being wasted. About 63% of adults 65 and older and nearly 64% of adults ages 55 to 64 said they didn’t believe their tax dollars were being spent effectively. However, less than half of adults ages 18 to 24 think their tax dollars are being wasted.
“The difference in age I think is probably due to growing skepticism as one gets older,” Leguizamon said. “Younger people are a bit more idealistic, believing in some of their representatives. Older folk tend to grow skeptical of the ‘same old’ politicians.”
Men are slightly more likely than women to believe their tax dollars aren’t being spent effectively — 58% versus 53%. And Republicans are more likely than Democrats to think their tax dollars aren’t being used in the right way — 60% versus 55%.
When asked if they could choose how their tax dollars were spent, 53% of respondents said spending on social insurance such as Social Security and Medicare would be of top importance. This was the most popular choice, followed by education and infrastructure. Respondents were least likely to say that the national debt should be a top priority.
“People are more likely to want their tax dollars to go to Social Security and Medicare because it’s money coming back to them,” said Tom Wheelwright, a certified public accountant and author of “Tax-Free Wealth.” Workers pay into these programs through payroll taxes on their wages. In fact, payroll taxes account for 35% of the revenue collected by the federal government, according to the Tax Policy Center.
Not surprisingly, the survey found that older adults were much more likely than younger adults to say that social insurance would be of top importance if they could choose how their tax dollars are spent. That’s likely because adults 65 and older benefit from programs such as Social Security and Medicare. Young adults ages 18 to 24, on the other hand, said overwhelmingly — 71% — that education would be a priority if they could choose how their tax dollars were spent.
|If You Could Choose How Your Tax Dollars Were Spent, Which of These Areas Would Be of Top Importance?|
|How Tax Dollars Should Be Spent||Demographic|
|Ages 18-24||Ages 25-34||Ages 35-44||Ages 45-54||Ages 55-64||65 and Older|
|Defense and international security||17.83%||19.81%||25.90%||34.38%||31.90%||31.70%|
|Public assistance programs||31.01%||26.42%||30.94%||23.96%||20.95%||18.30%|
|Environmental protections and research||44.96%||36.79%||33.81%||21.35%||22.38%||24.55%|
|Note: Respondents could select multiple answers.|
Polls have found that an overwhelming majority of Americans believe it is their civic duty to pay taxes. However, the GOBankingRates survey found that Americans are divided over whether they’re paying their fair share.
While 46% of respondents said they think they are paying their fair share, 51% said they are paying too much. “We all want some level of public goods and services, but we do not want to pay for them — or, at least, we want to pay the least amount possible,” Leguizamon said. “When we couple this with the fact that most are unsatisfied with the way that government spends their tax money, then we start believing that we are paying too much for what we are getting.”
Republicans are more likely than Democrats to believe that they are paying too much in taxes — 56% versus 43%. And women are more likely than men to think that they’re paying too much in taxes. Generation Xers ages 45 to 54 were the most likely of any age group — 60% — to say they are paying too much in taxes.
Need To Know: When Will You Get Your Tax Refund?
When asked what they weren’t OK with their tax dollars paying for, respondents’ top response was war — with one-third choosing this option. War also was the top thing that respondents in all age groups and men and women said they didn’t want their tax dollars paying for.
However, war was not the top response among Republicans. GOP respondents were most likely to say they didn’t want their tax dollars going to public assistance programs. “Public assistance programs may have a negative connotation among the respondents because they may not have benefited from these programs recently or at all,” Mazur said.
The survey found that, overall, Americans are split over whether the government spends the right amount of their tax dollars on public assistance programs. However, the divide is much more prominent between Democrat and Republican respondents.
The government spent 11.8% of the federal budget on public assistance programs in 2018. About 27% of all respondents said this was the right amount. Nearly 35% said this was too much. And about 39% of respondents said the government didn’t spend enough on public assistance programs.
“What this suggests is that there is only about 20% of people in the middle,” Leguizamon said. “As we see in politics, there seems to be a reduction in what we call the ‘median voter.’ A greater amount of people are identifying with one of the two major parties, which then translates into preferences for public assistance. Democrats tend to favor these programs, while Republicans think they are very inefficient.”
The survey results support that. About 65% of Democrat respondents said they didn’t think the government spent enough on public assistance programs. However, 52% of Republicans said the government spent too much on public assistance.
|Do You Believe the Government Spends the Right Amount of Your Tax Dollars on Public Assistance Programs?|
|No, they don’t spend enough on these programs||64.58%||20.60%|
|No, they spend too much on these programs||10.94%||52.43%|
The experts agree that it’s not surprising a majority of Americans aren’t happy with the way tax dollars are being spent and that about half think they’re paying more than their fair share. “There seems to be a correlation here,” Wheelwright said. “People probably feel they’re paying too much in taxes because they don’t think it’s being used effectively.”
However, it’s important to note that the survey highlights that a significant percentage of taxpayers — 27% — don’t even know where their tax dollars are going. This lack of knowledge about how their money is being used might be contributing to a sense that it’s being used ineffectively.
More than 60% of government spending goes toward funding mandatory entitlement programs such as Social Security, Medicare, Medicaid, veterans benefits and income security, according to a Tax Policy Center analysis of Congressional Budget Office data. About one-third goes toward what is called discretionary spending — programs with spending levels that are voted on by Congress. About half of discretionary spending goes toward national defense, and the rest is divided among transportation, education, employment training, healthcare, veterans benefits and income security programs that aren’t included in mandatory spending. And about 7% of government spending goes toward paying down the national debt.
It’s understandable that you might not agree with all of the ways the government spends your tax dollars. But it is important to recognize that you will benefit from some of the ways your tax dollars are spent, while others might benefit from different types of government spending. “The bottom line is that Americans generally realize that government does a lot of valuable things with the taxes we all pay,” Mazur said.
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Methodology: GOBankingRates surveyed 1,000 Americans age 18 and older between Jan. 20 and Jan. 21, 2020, asking six different questions: (1) Do you believe your tax dollars are being spent effectively?; (2) If you could choose how your tax dollars were spent, which of these areas would be of top importance?; (3) Do you believe you are paying too much, too little or a fair share in taxes?; (4) Which of the following are you NOT OK with your tax dollars going toward?; (5) Do you believe the government spends the right amount of your tax dollars on public assistance programs, such as low-income housing and disability payments? For context, the U.S. government spent 11.8% ($495.3 billion) on these programs in 2018; and (6) Which political party do you identify with? All respondents had to have answered “Yes” to the following screener question to participate in the survey: “Will you file personal income taxes in 2020 for 2019?” GOBankingRates used Survata’s survey platform to conduct the poll.