Every year, the government takes in loads of money in income tax in order to pay for an array of federally funded programs. In 2008, the federal government spent $3 trillion. Income taxes pay for programs such as low-income housing assistance and defense.
- The government spends around $625 billion for defense and security-related activities such as veterans' programs.
- About $617 billion goes to Social Security and 35 million retirees. The amount averages to $1,041 per retiree.
- Three health insurance programs, Medicare, Medicaid, and the Children's Health Insurance Program (CHIP), accounted for 20 percent or $599 billion of your tax dollars. Medicare provides health coverage to people older than 65 or those who have disabilities. Medicaid and CHIP provide health or long-term care to low-income children, parents, the elderly and people with disabilities.
- The government uses 19 percent of income taxes to support programs such as education, science and environment-related activities. Tax dollars are also spent on career training and transportation.
- The government must make interest payments on the money it has borrowed to pay for the deficit. Taxes pay the interest on these loans.
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