Great idea: an itemized taxpayer receipt


Where do all those taxes go?

The centrist Washington think tank, The Third Way, argues that American taxpayers should be given a detailed Taxpayer Receipt — and that this information could lead to a better informed public debate about the federal budget.

In their Idea Brief they note: “A 2005 Washington Post/Kaiser Foundation poll found that by a margin of two to one, Americans believe the federal government spent more on foreign aid than on either Social Security or Medicare.” Not so:


hat tip: Andrew Sullivan

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Great idea: an itemized taxpayer receipt

  1. And teh Republicans have promised not to cut 6 of the top 7 expenses…I think this receipt is a great idea for putting government spending in perspective.

    • I want to see the FAT spending ! National puplic radio ! 1/4 billion ? Scuse me ? There are others !Not all is told here .I don't know about you but I would rather see that money spent on cancer research or other problems HERE in the U.S.A.I would like it broke down to houshold or person so we can take this off our taxes !

  2. I would love to see this at both the federal and provincial level. It is a great idea.

    • Completely agree – this is terrific and a very simple, insightful way to present complex information in a way that non-accountants can understand it.

  3. Love it.

  4. Seeing what the Fraser Institute has done with Tax Freedom Day shows how this kind of gimmick can be misleading instead of enlightening, however.

    • There's always that risk — that said, done properly, this would be very valuable — regardless of whether you believe we should be spending more money or less money or in different proportions.

    • Except that this kind of thing is much less ideological than "tax freedom day." "Tax freedom day" takes information like this and presents it in such a way as to make a political and ideological point; which if fine, but people should recognize that.

      This is closer to just presenting citizens with information about how their taxes are spent. Of course, how the categories are broken down and labeled could still be called, political, or ideological, or have an agenda, but you are never going to get away from that entirely. For example, how and why, were the iraq/Afghan combat ops. separated from Military Personel? And what proportion of the Social Security line is actual funds transferred to people versus costs of administering the program? And so on…

      But still, I think this kind of chart helps make it clearer to people what they are paying for.

    • The receipt shown above actually (sort of) puts the boots to Tax Freedom Day……

      – taxes paid = $5400
      – income = $34,140
      – taxes / income ~= 0.15 of a year, or about 57 days
      – so tax freedom day falls on about February 27, not June something or other, which I believe is the "touted" date.

      Yes, I know that Tax Freedom Day includes every conceivable tax….that why I included (sort of).

  5. It's a good idea, but;

    1) It isn't in the best interests of the Conservatives or the Liberals, so it wont happen anytime soon
    2) It would quickly be used for partisan purposes… spending on non-populous initiatives would be hidden under multiple categories, other special interest spending would be lumped into more popular program spending, etc., etc.

    The guidelines for such a report would need to be so clearly defined that neither party would ever agree to them.

    • Some of these concerns could be mitigated if it was placed under the mandate of the PBO.

      • I have a hard time seeing it happen at all as it isn't in the interests of either potential ruling party. Putting it under the PBO could placate some concerns, but getting something like this under the the PBO jurisdiction would be an uphill battle to begin with.

  6. This is something I've wanted for a while now. Since I spend more on government than I do on my freaking mortgage, this is the least the government can do. Also, it allows us to identify the true lefty believers (like Mike T), who will inevitably call this "misleading" and a "gimmick".

    If people had a faint idea of where the thousands of dollars they pay in taxes go to, they would freak out and demand lower taxes and smaller government. That's what scares the lefties.

    • Roads! National parks! Healthcare research! Combat operations and veterans' benefits! I'm freaking out! I'm demanding lower taxes and smaller government THIS INSTANT! Be scared, you lefties.

      • exactly. if that's what would end up on the receipt, everybody would be in agreement. if you think all that would be on the receipt is roads, national parks and healthcare, you're in for a shock.

        • Did you read the receipt that's posted here? It's healthcare and defence. What do you think it would be for the Canadian government?

          • CBC…. $15
            Outreach to multicultural transgendered community… $1
            Though Control (human rights commissions)…. $2
            Quebec vote buying (unsuccessful)………………….$50
            Armed Forces…………..$0.10

            spending taxpayer $ like it grows on trees……………priceless

    • I think most "lefties" would support this, as long as it's done in a fair manner. If it's fair, I don't really see this as a partisan issue.

      Put it under the mandate of the PBO.

    • I can handle less government if it means a less authoritarian government. Is that what you mean?

      • it's part of what i mean. mostly though, i dont want the government to try to fix every conceivable problem in society because:
        a) it wont work
        b) it'll waste $
        c) it's an opportunity for cronyism and corruption
        d) it's not the government's job

        • i dont want the government to try to fix every conceivable problem in society


          You will be pleased, then, to learn government does not do this.

          • that's until the NDP-Liberal coalition gets its dirty hands on power

        • I'm not sure which issues you're referring to exactly, but I think the government definitely has place intervening in areas that the private sector can't or won't handle. Social spending is a good example. Sadly, no person is an island and with many of these issues it's pay now or pay later.

          And it's not just lefties who think so. For example, the Vancouver Board of Trade (a well-known bastion of pinko socialist thinking) released a report just a few weeks ago linking strong investments in early childhood education and interventions, particularly for poor families, to a decrease in crime, lower teen pregnancy and youth incarceration rates, and a better educated labour force overall, in turn resulting in better productivity and a higher GDP. The BC Chamber of Commerce (pretty much out and out commmies) also recommended child care investments to help new parents stay in the job market and ameliorate our skilled labour shortage.

          One way or another, some problems eventually touch all of us. I think most people who have ever lived in or visited a country where they have little or no government intervention in social issues can agree that everyone benefits from such spending in the long term.

  7. These breakdowns are quite common. The City of Toronto provides just such a breakdown with your property tax bill. The Province of Ontario has an entire website dedicated to taxation and tax use. The Federal Finance Dept. used to do the same, though the most recent version I can find online (a multimedia presentation) is from 2008. I'd post the links, but my comment disappears when I do. Easy to find using Google, though, "how are your tax dollars spent" + name of jurisdiction.

  8. If people want to know what the government spends money on they should read the damn budget.

    This is just money and effort put to compensate for peoples lazy ignorance.

  9. You can click on an Internet link and get a breakdown of government spending in a nice coloured pie graph. If people aren't going to do that, what makes anyone think they'd carefully examine an itemized list of numbers that's included with their tax return? It's not like this information isn't available. If they are too lazy to look it up, they're probably too lazy to read it even if you put it right in front of their nose.

    • Can you post the link to the pie chart? I think the appeal of the receipt is that it brings this down to understandable numbers. You take the average family income, their expected tax bill and apportion it with the pie chart. It'd be useful if the government threw this in with tax returns, but doing the calculation doesn't require Ottawa's super-computers.

      • I've tried to post links to several examples from Toronto, Ontario and the Fed … but my posts containing URL links don't appear. Just Google "How your tax dollars" and the name of the jurisdiction.

        For the Toronto example, search for the "How your tax dollars work for you" link on the City's tax page. For Ontario, "How are my tax dollars spent by the Ontario government?" can be found on the Ontario Ministry of Revenue's tax information page. For the Federal Gov't (2008), search for "Where your Tax Dollar goes 2007-08" at the Ministry of FInance. There's a link to a multimedia presentation at the top of that page. On the multimedia page itself, there's a downloadable print version.

        These breakdowns of how tax dollars are spent are always produced as part of the budget process and are often complemented by newspaper's own breakdowns.

  10. It is a great idea, but why does the government have to do it? Why can't the media work this out and publish it as part of their coverage of the release of the public accounts? Come to think of it, why can't they do some coverage of overall gov't spending when the public accounts are published?

  11. i thought it was obvious that i was joking about the numbers.

    • If you say so. It seems strange that people would be upset to find out their taxes go overwhelmingly to health care and national defence though.

  12. A question about that $5,400 bill breakdown: How does the itemization handle the astronomical US federal government spending that is financed by the future, rather than this taxpayer's contribution?

    • Easy. That goes under the heading: Stuff you won't have to pay for, but your grandkids will.

      • Yeah, but that curiously does not appear on the above breakdown, now, does it?

        • Uhh, because if your grandkids is pay'n for it, it follows that you are not, no? Why would a break down of what you are paying for include an item of what you are not paying for?

          • While I see your point, it should be somehow included as well. It should either be included in each category and then minused from the total as "stuff you are not paying for", or be indicated separately.

            Also, if there is a surplus, indicate how much it is and what's being done with it.

            I that, if we are going to do something like this, it's important that people see the difference between what they are paying for right now and what they are using that will have to be paid by others.

          • Hey, I am all about the seeing not just one balance sheet, but many.

          • So tell me, then. What was left out of the "receipt" above? My guess is nothing, and the itemization was a breakdown based on percentage of overall expenditures, even though they were not fully funded. So the way to make that receipt honest is to start either from the bottom or the top, and write out IN RED INK those expenditures that are NOT being handled by government revenues in the given fiscal year.

            And "Social Security" is itself a bit rich. As long as American Social Security is in a net surplus state, guess where they have been squirreling away the funds. Go ahead, guess. Government bonds. Anyone see the problem with that? No? Let me help: The US Government is splurging on OTHER spending with the surplus, so the Social Security vault is to the rafters with (what will end up being worthless) IOUs when it comes time to cash in the Social Security piggy bank.

            But none of that shows up in the *cough* transparent *cough* receipt above.

          • Damn it, you're supposed to let me guess, and then skewer me.

            Otherwise, I'm with you on most of your points, save that I feel you do not go far enough in your analysis.

          • Well, feel free to grab the baton and run further…

        • Actually, the reckoning with government debt might well occur sooner rather than later, so it may well be us who pays for it. The grand kids will to mind you, but we won't be exempt.

    • Two columns instead of just one column: first column shows how "your" $5400 contribution was divvied up, and the second column shows how much money was actually spent in each category on your behalf.

      • That might be a bit complicated.

        For example: There is a transit expansion in my area. Will the "usage" be the same for me whether I take the bus to work or drive? (Which can be argued, as better transit diminishes congestion) Or would you make a distinction, in which case you would need to know if I drive to work or not?

        Or, for example, a new bridge is built that will relieve traffic on the route that I take to work. Will that be counted as being spent on my behalf, even if I never take that bridge, but am benefiting from the fact that half the people who took my route now have an alternative?

        Someone builds a new hospital in the east end of town. I never go to it, but the hospital I go to downtown is now less crowded. Should that be counted as an expenditure by me?

        I could go on.

        • Indeed….deriving the numbers in the second column (or even the first column for that matter) could become an extremely elaborate exercise… I just meant that if total government revenue in a given year (all sources) was 200 billion and total expenditures were 250 billion that the second column would contain a set of numbers that were 25% higher than the numbers in the first column.

          I believe that the idea of the receipt is to give taxpayers a strong hint about where money is spent in any given year, not an exact to the penny breakdown.

          • Sorry, I misunderstood what you were saying.

            I thought you meant it would show expenditures at an individual level (i.e.: How many times did I go to the doctor that year.), not in general terms.

            I agree with having a "real expenditures" column, since that would demonstrate surpluses or deficits.

          • No worries……it seemed so obvious when I typed it, but less obvious when I reread it a moment ago. ;-)

          • I'll meet you in the middle and say that it is more obvious now that I re-read it as well. :-)

    • I imagine that would fall under the category of 'interest on national debt' which will get progressively larger the longer Americans wait to deal with the problem.

      Remember in the Mulroney days (before Chrétien/Martin fixed the probelm) all those charts that used to show a loonie representing federal expenditures and show that 40% of it was going to service the national debt?

      • But even THAT is inadequate, if the government is in a deficit position in a year. Because, depending on whether you choose some items (or a proportion of all items) as deficit-financed, one could argue that no one paid a penny towards "interest on the debt" if the debt itself grew by at least that amount.

        • Interest on debt is the right measure. Countries don't really repay debt, they aim to keep their growth in debt equal to or less than growth in GDP over time – they're more like corporations than like individuals in that regard (and even more like countries).

          • Interest on debt is the right measure Of course it is the right measure. I never said it wasn't; only that it is inadequate. If the overall fiscal year is in deficit, it cannot give a sense of the growing debt load.

            Countries don't really repay debt That will come as a surprise to at least one country I can think of that WAS re-paying its debt. If memory serves, that country was pretty close to home…

            Oh, and have a look at your last sentence. I am having trouble following. It seems like you are saying that Countries are more like… countries.

          • Yeah, the last sentence is supposed to say that countries are most like countries, because I find these debt conversations get really difficult because people tend to think of national debt as following the same rules as household or personal debt. It doesn't really. The incremental growth in debt in a specific year should be caught by the interest on debt – the debt goes up, the interest goes up. And yes, countries do repay some debt sometimes, but they never target repaying all of it. They target matching the growth in debt to the growth in GDP over time. When debt has grown more quickly than GDP for a period (and/or is expected to, as for Canada and other baby boom countries), it needs to grow more slowly (and a country might chose to have negative debt growth) to return to a sustainable path. The point is that the deficit and the debt do not need to be repaid by your grandchildren. You can keep it forever.

          • Or we can, you know, FREE our grandchildren of those interest payments by actually retiring a goodly sum of that debt. I know, I know, crazy talk…

          • As a share of wealth, they'll be the same interest payments. Would you rather your taxes went to government services or to our creditors?

  13. I support this idea, and I would expand it so that:
    – the receipt will be returned with your tax return from the following year
    – the receipt includes an additional cloumn, which would be blank when you receive it
    – after calculating your tax burden you get to allocate that total as you see fit, using the blank column.

    • That would be a fun experiment. Except it's not feasible. And goes against our system of government.

      • It would be fun, wouldn't it.

        In proposing the idea I am being 67% serious and 33% joking, so I recognize that the idea would need some work. But I'm not convinced that the idea is completely infeasible; what makes you say that it is infeasible?

        And I don't at all follow how the idea goes against our system of government; can you please elaborate?

        • At least Federally, the principle of a parliamentary democracy is that "the Crown holds the strings of the Public Purse", and only the government can table budgets and/or bills that spend money.

          A private member's bill that creates an expenditure, for example, would require a Royal Recommendation. So letting the common citizen decide how the money is spent goes against that system.

          Now, at the municipal level, an alternative to that would the the participative budget system:

  14. i like the idea but Third Way is definitely not "centrist". just read their front page articles.

  15. This is a good idea but subject to manipulation. For example, I note that if you grouped all the military categories together, you would have the third largest expenditure category. Splitting it out the way they do makes it look less than it is.

    Also, only about 60% of the expenditures are listed here.

  16. It's all well and good to say we can "look it up" but our Federal government hasn't updated that information since 2005/06. Here's what they've got at the time rated per tax dollar:

    Provincial Transfers: $0.19
    Interest on debt: $0.15
    Old age security: $0.13
    Employment Insurance: $0.065
    Child tax benefit: $0.04
    Grants and contributions: $0.12
    (First Nations; farmers; foreign aid ; R&D, infrastructure, regional development and businesses)

    Program expenses total: $0.25
    > National Defense: $0.07 / Public Safety: $0.03 / Canada Revenue Agency: $0.02 / Other operations: $0.11 / Crown corporations: $0.03

    Debt repayment: $0.06