taxes

Where Does Our Federal Spending Go?

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I’m pretty well done with sifting through Federal Spending, Tax Revenue, and all that fun stuff, but I do have one more thing I’d like to share. Trust me, it will be fun (it’s full of numbers) and I’m trying to delve into how the Federal Government spends money. This seems particularly relevant when we’ve heard so much talk of how we need to cut Federal Spending (and where it should be cut) ever since Elon Musk and his team of grifters at DOGE got involved. Even as the net result of the 2025 Congressional Budget Bill is to increase Federal Spending while cutting down on Federal Revenue. It’s like Ronald Reagan and Alan Greenspan never left us, or they’re still with us in Spirit.

Personally, I think that means we need an Exorcism post haste.

This additional deep dive into Federal Revenue and Spending came about, partially in response to someone on Threads who insisted (despite all evidence to the contrary) that Donor States were still a drain on the Economy because many of them received more in Federal Funds than less populated States that couldn’t hope to contribute as much.

He clearly didn’t comprehend that words have agreed-upon meanings. No matter how much he wished it, he couldn’t arbitrarily change those definitions (not without some sort of consensus involved). It’s disingenuous at best to accuse Donor States of being a drain, when they are contributing more than they are taking. It really doesn’t matter that these states might be receiving more than others (that take more than they contribute). I continued that discussion far longer than I should have, when I simply needed to point out that he was wrong from the beginning, and wasn’t getting any less wrong the more he tried to argue his point.

That’s the problem with the way many people look at things today. They think that their sense of what is correct holds the same value as the reality of the thing, whatever that thing might be. Just because something doesn’t feel right, because it doesn’t correspond with one’s worldview, is not the same as something not being right or accurate. Some people (mostly men, it seems) think everything is up for debate and interpretation, but that simply isn’t how reality works. We don’t get to negotiate with reality the way we do with one another. One’s level of confidence in their being correct does not influence whether they are (even if it makes them seem like they must be), but there’s no convincing some people of that.

This is why, not so long ago, when more than a thousand people were polled, 12% of Men responded that they believed they could score a single point on Serena Williams in Tennis. Of course: 17% of Men also believed they could beat a Chimpanzee in a fight, 8% were confident they could defeat a Gorilla, and 6% suggested they could successfully fight a Bear. Keep in mind that these men are unarmed and the animals are neither infants nor infirm. So, there’s clearly no accounting for human stupidity, or the confidence that goes with it.

But, back to the topic at hand.

In 2023, the Donor States (those that paid out more in Federal Revenue than they received back) produced a combined surplus of $619 Billion. That was such a great surplus in Total Revenue that it offset the total amount consumed by states that received more than they paid out, with more than $105.1 Billion left to spare.

Fully 88% of that Federal Revenue came from Income and Individual Taxes (this includes Social Security and Medicare), with the remaining 10% coming from Business Taxes, Estate Taxes, and so on.

The Federal Government spent a grand total of just below $6.2 Trillion that year (which is more than the total Federal Revenue), which means Donor States provided roughly 10% of the total amount of Federal Spending in just the surplus between what they paid out vs. what they received back from that $6.2 Trillion.

It’s worth referring back to my earlier discussion of Sanctuary States to point out that 11 of the states classified as Sanctuary States, when broken down by Per Capita Revenue, generated more than they received that year. When looking solely at total amount of outgoing versus incoming Revenue at the State Level, it was seven Sanctuary States operating in the black. When we adjust our focus, in terms of total population, we’re looking at 11 Sanctuary States that paid in more than they cost the Federal Government per person. I keep bringing that up because it’s imperative to hammer in the point that people should stop trying to use Sanctuary States as a budgetary talking point as if they’re a drain on the economy. After all, the reality is quite the opposite.

It’s a simple thing to ignore context and simply accept that the Federal Government distributed a grand total of $4.56 Billion back to the various states and their residents. That’s still less than was obtained in Federal Revenue, by a little over $100 Billion. This isn’t entirely painting an accurate portrait, suggesting that the money actually went to the states. Defense Spending is included in this, which was disproportionately redistributed to wherever the largest military bases, contractors, and manufacturing facilities were located. Strangely enough, unlike the U.S. Postal Service, no one seems to expect the U.S. Armed Forces to turn over a profit, even though the U.S. Postal Service doesn’t receive direct Taxpayer funding.

So, to really dig into where Federal Spending is directed, we’re going to have to spend a little more time breaking things down. It doesn’t sound like much fun, but at least I’ll save you the time and effort of doing the math.

Only $2.4 Trillion of the total $6.2 Trillion in Federal Spending returned to the States for purposes of Medicaid, SNAP (Food Stamps), Social Security, Veterans Benefits, Transportation, and Education. That leaves $3.8 Trillion in spending left unaddressed. It’s worth noting that a large portion of the money spent through Medicaid, as well as some of what was spent on Veterans Benefits, went directly to Insurance Companies. In fact, according to the Congressional Budget Office, Federal Subsidies for Insurance Companies in 2023 totaled an estimated $1.8 Trillion (which included Medicaid, Medicare, CHIP, Affordable Care Act Marketplace Subsidies, and more). Referring to that as money that went to residents of the states in question seems disingenuous to me, but we’ll let it stand.

$658.8 Billion went toward payment of Interest on the National Debt (which totaled $34.7 Trillion as of last June), which is 17% of the previously unaccounted for $3.8 Trillion…leaving us with roughly $3.2 Trillion to track down.

Excluding Active Duty Military salaries, the Federal Government spent roughly $336 Billion on payroll for Federal Workers, which translates into approximately 10.5% of the remaining $3.2 Trillion, leaving $2.9 Trillion that we’ve not accounted for.

Foreign Aid seems to be a sticking point for several people lately, as they complain about how the money could (or should) be spent here at home. The reality is that Foreign Aid is a drop in the bucket. In 2023, Foreign Aid added up to a total of $71.9 Billion (which is less than the $74 Billion spent in 2022). I should note that this amount does not factor in sales of arms or transfers of military equipment; mostly because we typically sell materials and equipment without taking a loss. Even this exceptionally small number, compared to our total Federal Spending, turns out to be a grand total of 1.2% of that amount. Data from the United Nations indicates the U.S. still contributes 40% of all International Humanitarian Aid. That’s something we should be proud of. $14.4 Billion of that went to Ukraine in the form of direct monetary support, which (as I’m sure you notice) is not much at all when compared to total Federal Spending. It’s even appreciably less than the $15.6 Billion that went toward Foreign Disaster Relief and other Humanitarian purposes. Even though the current war in Gaza didn’t begin until October 7th of that year, we spent $3.3 Billion on Foreign Aid to Israel.

But, we still have essentially $2.9 Trillion to account for, so let’s keep going.

Defense Spending totaled $820.3 Billion that year. This amount shouldn’t be surprising, since we spent more than twice as much as the other 30 NATO Nations combined between 2014 and 2022. More than a quarter of that Spending went to the Air Force, and only slightly less went towards the Navy. Army and Marine Corps Spending combined to make up roughly another quarter of that total. This is where Active Duty Military salaries factor into the spending.

We now have just a little bit less than $2.1 Trillion to account for.

The $52 Billion we spent on Small Business Loans hardly makes a dent.

Of the $970 Billion in Discretionary Spending that wasn’t Defense-Related, only a portion of it hasn’t already been accounted for in the previous Spending that went back to the individual States. $83 Billion of that was spent on International Affairs, $74 Billion went toward Administration of Justice, $48 Billion to Natural Resources and Environmental Spending, while $40 Billion was dedicated to Science, Space, and Technology. Adding those totals to what was spent on Small Business Loans, we’re only looking at $1.9 Trillion left to go.

Only $31 Billion went toward Pell Grants for the roughly 6.5 Million college students who received them that year, so that hardly registers.

And unfortunately, it only gets more challenging to trace the money at that point.

Tax Refunds for Earned Income Credits, the Federal portion of Unemployment Compensation, and other dispersals factor into the same Mandatory Spending category as SNAP funding, which totals $448 Billion. But some of that has already been accounted for in the money we discussed being distributed to the States. Unfortunately, it’s exceedingly difficult to sift through itemized spending to discern just how much we’ve already considered in our breakdown of Federal Spending.

There’s also $502 Billion that was distributed between Federal Civilian and Military Retirement Benefits, some additional Veterans’ Benefits, and offsetting costs for other previously discussed areas of Mandatory Spending such as Social Security and Medicaid. But, again, a significant portion of that Spending has already been mentioned.

Even if that was all above and beyond what had been previously accounted for, we would still have more than $900 Billion to account for, which is no small amount. And, if I’m being entirely honest, I don’t know how much more we’ve ticked away at the $1.9 Trillion we were looking at before those areas of Mandatory Spending entered the discussion. For the sake of moving this forward, we’ll go ahead and operate under the assumption that we’re looking at $900 Billion to account for.

Some of that was further distributed to States via Nonprofit Programs and Organizations that received grants. Of course, most of the funding for U.S. Nonprofits comes from sources other than the Federal Government. They received more than $550 Billion in Charitable Giving, with $101 Billion of that coming from Charitable Foundations and an estimated $412 Billion or so coming from Individual Donations or Estates. The rest more than likely came from Businesses and Corporations. Naturally, there are tax breaks involved for those entities.

I’d love to imagine our Federal Government shelling out $550 Billion or so toward Nonprofit Organizations and matching those numbers, but that’s a fantasy. The most liberal estimates indicate the Federal Government, in some capacity, spends an average of roughly $303 Billion on U.S. Nonprofits annually. But it’s difficult to find a breakdown of that Spending specifically for 2023. It probably varies significantly by year, so we’ll focus on the $303 Billion as a total, and assume none of it was already tallied in earlier categories.

This leaves us with (we’ll say) $600 Billion that I simply don’t have the Resources or the Time to track down. The best I can do from here is offer some speculation, and suggest aspects of the Federal Budget that weren’t entirely accounted for previously.

I’m sure that some of it falls through the cracks as Black Budget Items and Surveillance or Espionage Spending that doesn’t get mixed in with the usual Defense Spending, to keep it off the books. But I don’t imagine those Budgetary elements come anywhere close to $600 Billion, when the on-the-books Defense Spending is already more than $800 Billion.

We could assume some of it is Government Contract Spending that isn’t accounted for in the Defense Spending totals, Small Business Grants, and the other Funding already considered. Elon Musk’s various companies were recipients of $3 Billion of that Contract Spending, split between several different Federal Agencies, but most of that has already been accounted for.

Government Contracts devoured $759 Billion in Government Spending for 2023. $470 Billion of that was through the Department of Defense. Assuming the rest (which is surely not accurate) has not been part of the earlier Spending we’ve discussed, that would leave $289 Billion.

We would still be looking at more than $300 Billion left at the Table, which is clearly not the case, because our Deficit wouldn’t be as high as it is. The reality is that there’s definitely upwards of $300 Billion that I haven’t accounted for in my research, and that’s certainly no small amount.

Even with that ultimate failure in my capacity to dig through every Bill and piece of Legislation that slipped through Congress in 2023 (or before, because some of them include spending allotments for years to come, which is why we had the recent Recision Bill that took back funds that had previously been approved by Congress), I hope this has helped to explain where Federal Spending is directed. Sadly, I doubt the people who most need to get a firm grasp on what we’re spending (and where) are the least likely to take the time necessary to read this.

Sanctuary States Do NOT Cost Taxpayers Money. That’s Always Been a Lie

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In an entirely predictable return to form, President Trump is again threatening to withhold Federal Funds from Sanctuary Cities and Sanctuary States, as well as cities that have not eradicated Diversity, Equity, and Inclusion policies. He attempted to do the same thing during his first term, until a Federal Appeals Court ruled in 2018 that the President does not have the authority to do so. Of course, Congress had previously decided the same thing all the way back in 1974, with the passage of the Impoundment Control Act, in response to President Richard Nixon.

It’s not wholly unusual for a President to withhold Federal Grant money as a bargaining tactic, but the Trump Administration has a habit of taking this to extremes. This includes threats to withhold emergency funds from states based on policy disputes. It’s particularly egregious concerning the wildfires in California and windstorms in Washington State. Those are two of the states that receive less in Federal Funding than they contribute to Federal Revenue.

The numbers for 2024 won’t be available until next year, but we do have the final numbers for 2023. Only three states contributed at least $70 Billion more to the Federal Government than they received from it: New Jersey, California, and New York. Texas wasn’t far behind with $67 Billion more paid in Federal Taxes than the state received in all Federal Funding. Washington (where I live) trails behind that, with $55 Billion more contributed to Federal Revenue than received. In 2023, only 19 states gave more than they received.

At the other end of that spectrum, there was only one state that took in more than $70 Billion more than was contributed. That was Virginia, with $79 Billion more Federal dollars going into the state than Federal Taxes collected. The next worst state was Alabama, at $41 Billion.

Four states were less than a billion dollars away from breaking even: Pennsylvania, New Hampshire, North Dakota, and Wyoming. Pennsylvania was $965 Million shy of what it contributed to Federal Revenue, and Wyoming was just $339 Million away. South Dakota (where I spent most of my life) and Arkansas weren’t far off, at a $1 Billion Federal Deficit each.

The five states with the greatest positive balance contributed enough in their combined positive difference to almost offset the deficit of the ten states at the opposite end of the spectrum. They were only about $2 Billion shy of erasing Michigan’s debt of $21 Billion.

One of the things I find funniest about the anti-immigration discourse is all the talk of Sanctuary States being a drain on our Tax Dollars, when the three states that carried the highest positive balance are all Sanctuary States: New Jersey, California, and New York.

In fact, of the States that have either declared themselves to be Sanctuary States–or have been designated as such by ICE–seven states (beyond the three I just mentioned) maintained a positive balance in Federal Funding for 2023: Rhode Island, Connecticut, Utah, Colorado, Illinois, Minnesota, and Massachusetts. Rhode Island was the least lucrative of these States, with only $3 Billion more paid in than it received.

The Sanctuary States that received more in Federal Funding than they paid into the Federal Government were Maryland, Oregon (where I work), Hawaii, Vermont, Nevada, and Pennsylvania. Maryland was the most costly to the Federal Government, sitting at a $35 Billion deficit, and Pennsylvania was the least so, at only $965 Million more going into the State than coming out.

And, as one might guess, just the three Sanctuary States with the largest ratio of Federal Revenue going out vs. coming in provided more than enough to offset the six Sanctuary States that received more than they paid in, with $165.04 Billion still to spare. That means the Sanctuary States of California, New Jersey, and New York not only covered every penny they received from the Federal Government, but also contributed an additional 3.8% to the overall Federal Revenue

So, it should be obvious that the talk of Sanctuary States costing taxpayers money is 100% Fiction. In fact, when we take all of the Sanctuary States and calculate the incoming Federal Spending vs. outgoing Federal Revenue, Sanctuary States were sitting at a positive balance of $367.04 Billion in 2023, more than 8% of the $4.4 Trillion in total Federal Revenue for the year.

So, maybe people should stop worrying so much about how much of a burden Sanctuary States are. They clearly aren’t the problem. And for a “successful businessman” like President Trump, it should be plainly obvious that the denial of Emergency Relief Funds to states like California and Washington is Bad for Business.

There’s one final thing that merits mentioning, while on the topic of Emergency Relief Funds. There was an uproar over an entirely imaginary scenario (and one repeated by Donald Trump) wherein President Joe Biden refused to supply funds for North Carolina in response to the devastating floods from Hurricane Helene, which he did not do. However, President Donald Trump cut partial Funding for a program President Biden had in place to cover the costs of debris removal, along with other protective measures. He also canceled a program designed to protect water, sewer, and other infrastructure services that had been devastated by the flooding, and was subsequently sued by the state’s Attorney General. Of course, there was nowhere near the kind of uproar compared to when it was only happening in the imaginations of people who wanted to demonize Joe Biden for something only Donald Trump would choose to do.

Immigrants Aren’t Stealing Your Social Security…But You Are Stealing From Them

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It’s disturbing that, in the context of discussions regarding Immigration in the U.S., there’s clearly no point in trying to appeal to the humanity, empathy, and compassion of the people who are buying “Alligator Alcatraz” merchandise or cheering on ICE Agents who are breaking the car windows of fathers dropping their children off for school because they refuse to comply with an order to turn themselves in (I mention that because it specifically happened in Portland just a short while ago). It’s a bit of a stretch, but I can hope that breaking everything down to a purely financial consideration will resonate with a small number of those people, though I’m not sure it paints a flattering portrait of them that money speaks louder than morality.

It just so happens that I have an admittedly numbers-heavy argument in opposition to our increasingly draconian Immigration Policy. It happens to correspond with another topic that’s important to me, the failure of our Social Security Program. It dovetails nicely with the conversation surrounding Undocumented Immigrants. I’d like to say this is the last of my long, mind-numbingly tedious, math-intensive arguments, but I would be lying. All I can hope for is that people are learning something from the information I’m taking the time to share.

According to the Bipartisan Policy Center, as of last November, 77% of all Immigrants in America have Documented (Legal) Status of some kind. Naturally, that means only 23% of the Immigrants here would be what people commonly refer to as being “Illegal.”

A 2023 Congressional Report detailed that a total of 365,714 Noncitizens received Social Security in 2021. This constituted only 4.8% of the total recipients of SSI Payments. More than 76% of the Noncitizen recipients were 65 or older, and more than 60% of them were female.

Historically, the largest number of noncitizen recipients of SSI Payments was in 1995, the year before the Personal Responsibility and Work Opportunity Reconciliation Act was passed. That number was 785,000 people, just slightly more than twice as many as were receiving SSI Payments in 2021.

Exhaustive studies performed by the Social Security Administration have displayed that increased Immigration leads to a decrease in the Social Security Fund Deficit. The inverse, of course, is also true, that decreased Immigration further increases that Deficit. This means that more Immigrants coming to America means there is more money going into the Social Security Fund.

As Ron Popeil would say, “But wait, there’s more!”

According to an Institute on Taxation and Economic Policy analysis, Undocumented Immigrants (those commonly referred to as Illegal) paid an estimated $25.7 Billion into the Social Security Fund in 2022, despite the vast majority of those individuals never obtaining an Immigration Status that would allow them to receive SSI Benefits. To put that in numbers that are easier to digest, it means that more than $2,300 was paid into Social Security for each of the 11 Million Undocumented Immigrants living in America, while only a small percentage of those Immigrants will ever be able to collect on what’s been paid in. We’ll set aside discussions of the immorality and predatory nature of that disparity for now, because that’s a whole different conversation.

This one-way exchange is not new, as actuaries performed a study in 2013 that showed Undocumented Immigrants were responsible for $12 Billion paid into the Social Security Trust in 2010. Some of this, of course, arises from the use of false or stolen Social Security Numbers by Undocumented Workers to obtain employment, which is (as we know) a crime. But how many of us would commit a crime just to work and pay taxes? Most of them are not criminals, though, as it’s estimated that at least half of all Undocumented Immigrant households utilize an Individual Taxpayer Identification Number to file taxes.

Assuming a plateau with no further upward trend since the numbers for 2022 were assessed (as unrealistic as that might be), if we remove all Undocumented Immigrants from America, we will be losing $25.7 Billion every year that would otherwise be paid into the Social Security Trust. This means that it’s likely to lose solvency earlier than the updated 2032 estimate. And that is just from Undocumented Immigrants. Documented (Legal) Immigrants contribute substantially more, but some of them are also eligible to benefit from the program.

Thus, the Trump Administration’s plan to not only remove Undocumented Immigrants, but also strip Documented Immigrants of their legal status to Deport them, is going to cut down on the amount of money going into our Social Security Fund, while only marginally impacting what is paid out.

And, despite what certain people seem to believe, the administration won’t make up that lost revenue by discovering fraud. Despite the literal bullshitting done by Elon Musk, Donald Trump, and all the parrots who couldn’t stop themselves from repeating their claims, there has been no evidence of widespread fraud in the Social Security Administration. In fact, the program has a 99.7% Payment Accuracy Rate. The 0.3% consists not of fraud, but mostly of incorrect payment amounts due to errors or delays in payment. Also, despite the fraudulent nonsense I had to hear from Musk and the people who couldn’t think for themselves if their lives depended on it, only 0.1% of payments go to people 100 and older. This is–as you can probably tell–statistically accurate.

Of course, it’s not just Social Security that’s being financially stripped by these counterproductive policies.

Undocumented Immigrants have contributed close to $100 Billion in Federal, State, and Local Tax Revenue, often paying at higher rates than the Top 1%. Studies have shown that providing Work Authorization to all Undocumented Immigrants would add $40.2 Billion in Tax Revenue. If you care about the conditions for Immigrants living in America, this is what you should be endorsing. Otherwise, hundreds of thousands of people are paying in more than their fair share, while being ineligible to reap the benefits…much the same as it is with Social Security.

Unlike Elon Musk’s fictional claims of Social Security Fraud, none of this is about how I “feel” or some “vibe” I have. Contrary to the talking heads and pundits on Fox News, OAN, and Newsmax, I’m taking the time to read the reports and studies on the topic. What I’m sharing here are facts reinforced by studies, research, and years of data. These aren’t opinions. There aren’t two equal sides to this discussion, and it’s not ambiguous or open to debate.

In the simplest terms, and phrased in a way I trust the intended audience would understand, “The facts don’t give a fuck about your feelings.”

How Income Taxes Work…and Why The Big Beautiful Bill Isn’t So Beautiful

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It stands to reason that I’m no fan of the Congressional Budget Bill that was recently signed into law. There’s a lot to hate about the contents of that legislation, and I’ve touched on some of those things previously. But it’s worth taking a moment to look at the “good” portions of what we’ve all heard referred to as the “Big Beautiful Bill” as well. This is, after all, the bill that everyone is so proud of and so certain you should be proud of too.

Before I get to all of that, unfortunately, I’m going to have to spend some time on a bit of a tangent. This will be long, tedious, and number-heavy, but I will do my best to make it at least marginally interesting too. It could be beneficial for everyone to read it. It seems like many people don’t understand the basics of how taxes work, so I also want to take some time to delve into that, while discussing how we are shortchanging Social Security and our Federal Revenue by catering to the wealthiest people in America. To do that, a discussion of how Taxes work is sort of imperative.

The 2017 Tax Cuts were set to expire this year, but are now permanent. However, I’m not sure how many people actually comprehend how tax rates are applied or how the brackets work, so it might be worthwhile to dedicate some time to explaining that.

For an individual (I’m not doing this for all statuses, you can do that shit yourself):

We’re going to make this simple; we’re going to pretend you earn $1 Million a year. Yes, I understand that less than 0.5% of Households fall into that category. In America, fewer than one million Households earn at least $1 Million in annual income. Congratulations on becoming part of the Top 1%, you magnificent bastard.

For the first $11,600 you earn, you owe 10% of that in Federal Taxes, which is $1,160. The math on that little bit is simple, just remove a 0 from the end.

For every dollar you earn between that amount and $47,150, you owe 12% in Federal Taxes. This comes out to $4,266. So, if your income were exactly $47,150 per year, you would only owe $5,426 in total. But that’s not you. You’re earning a whole hell of a lot more than that now.

For every dollar between $47,150 and $100,525, you are paying 22% in Federal Taxes, which translates into an additional $11,742.50.

The next bracket takes you all the way up to an income of $191,950. At that point, you are paying 24%, or another $21,942. If you’ve been paying attention, you’ll see that our current Tax Burden is sitting at $39,110.50.

From $191,950 to $243,725, we are looking at a rate of 32% paid out to the Federal Government. That adds another $16,568 to your tax bill.

The next bracket is in effect up to $609,350, at a rate of 35%. That tacks on an additional $127,968.75. Your total Tax Burden is now sitting at $183,647.25. I know, that seems like an awful lot. But, come on, you’d be earning more than $600,000, giving up less than a third of that doesn’t seem so bad. Don’t be so greedy.

For every dollar above that, regardless of how much more you earn, we’re looking at a static rate of 37%. So, for the rest of your $1 Million income, it’s only another $144,540.50. See, that really isn’t so bad.

So, on your brand new $1 Million salary, you’d owe the IRS a grand total of $328,187.75 for the year, leaving you with $671,812.25 of your income.

Of course, there’s also Social Security Tax, which is currently 6.2% on everything up to $176,100. If that seems unreasonably low to you, next year the cap will be higher, because it adjusts annually according to the average wage index.

We’re going to stop here for a moment. Consider it the equivalent of a Scenic Overlook on a road trip. Much like a Scenic Overlook, you can take this as an opportunity to relieve your bladder. If you’d like to know one major reason Social Security is going to be depleted by 2032, we just skirted past it. One primary cause is that you (with your $1 Million annual salary) are not paying into Social Security on $823.900 of your earnings. That would have been $51,081.80 that could be contributed in addition to the $10,918.20 you’re paying in. The math on that one is easy, too, because it’s another example of simply removing a 0 or two. Instead of paying $62,000 into the Social Security fund, you only paid $10,918.20. If your salary were $5 Million, you avoided paying $299,081.80. That hardly seems reasonable, does it?

As we discussed (you lucky bastard), fewer than 0.5% of American households had an annual income of more than $1 Million in 2022, according to the World Economic Forum. Somewhere in the vicinity of 400,000 to 500,000 people earn $1 Million or more a year. Assuming they were all capped at exactly $1 Million, and there were 400,000 of them, that would be $20.4 Billion not being collected for Social Security every year because of that cutoff at $176,100. This has been a problem since the 1980s, because earnings for upper-income levels have risen substantially faster than those of the rest of the population.

Despite President Trump’s assurances that the Congressional Budget Bill would remove taxes on Social Security, that is not what happened. Instead, what we received was a temporary Deduction that applies to all income for people 65 and over, though it does include Social Security income.

The final version passed by the Senate makes this a $6,000 Deduction for individuals with adjusted gross income of up to $75,000 annually, or $150,000 for couples filing together.

The deduction will expire after four years and does not apply to all recipients, including those who claim Social Security benefits before they turn 65. So, unless you’re over the age of 61, you won’t be benefiting from this temporary deduction.

This is where we locate yet another major driver behind the failure of our Social Security program. Some estimates suggest this will accelerate the depletion of Social Security by two years, pushing the date up to 2032. All while increasing the federal debt by 7% over the next 30 years. So, suppose you’re under 58 years old as you’re reading this. In that case, you can dispel any assumption that you’ll be able to benefit from the tax-free Social Security (or Social Security at all) when you do turn 65, because the Social Security Trust will more than likely be empty, no matter how much you personally paid into it throughout your employment history. I’ll come back to the depletion of Social Security after I finish going over how your taxes work and take some time to touch on the other “good” things found in the Congressional Budget Bill.

Moving on, there’s the Medicare Tax of 1.45% up to $200,000, and 2.35% on every dollar beyond that, so you’re paying $21,700 into Medicare for the year.

Deductions then factor in, and the odds are that your effective tax burden will be substantially decreased.

First, there are Above-The-Line deductions. These are subtracted from that $1 Million you earned for the year before anything else factors in, decreasing your Tax Burden by formulating your Adjusted Gross Income.

If you paid toward Student Loans, used a Health Savings Account, contributed to a traditional IRA, or any of several other things that contribute to your overall deductions, that’s something you can figure out on your own. Those things are deducted before the Standard Deduction.

The Senate version of the Congressional Budget Bill allows people to deduct income paid as tips (in careers where tips are customary). This amount is capped at a maximum of $25,000. I’m not sure how common it is for someone to earn more than $25,000 in tips over a year, but since most tipped workers are at or below the Federal Poverty Level, it seems unlikely that there are many. This is only in effect through 2028.

The Senate proposal limits that deduction on Overtime Pay to $12,500 per individual. This is also temporary, expiring after 2028.

So, those are some of the “positive” things we can look forward to.

The Standard Deduction was previously $15,000 for an individual or $30,000 for a married couple filing jointly. Once the changes took effect, the Standard Deduction increased to $15,750 and $31,500, respectively.

The new Standard Deduction of $15,750 is a given, but anything else beyond that is specific to the individual. Assuming none of the Above-The-Line deductions apply to you, what that means is that you will only be taxed as if you earned $984,250 instead of $1 Million, which would knock $5,817.50 off of your tax bill. That doesn’t seem like much, but it’s not nothing. Of course, if you have to itemize your deductions, the change in the Standard Deduction is irrelevant.

Non-itemizing filers can now claim $1,000 in charitable giving per year, and couples can claim $2,000 for deductions.

The Senate’s version of the Child Tax Credit, while slightly lower, is permanent. So, instead of a deduction of $2,500 per child, it’s $2,200, but at least it doesn’t expire in 2028 as some of the Above-The-Line deductions will.

The State and Local Tax Deduction will increase from $10,000 to $40,000, and increase by an additional 1% every year until 2030, when it will revert to $10,000. I don’t know if you live in a state where you pay State Income Tax, but chances are good that you do. That percentage is extremely variable, depending on where you live (which you know if you read what I wrote regarding Single-Payer Healthcare), so I won’t bother calculating it. I live in a state without it, but work in a state where there is State Income Tax, so this is beneficial to me.

The changes to the Estate and Gift Tax will benefit almost no one.

It increases from an exemption of $13.99 Million to $15 Million for individuals and $27.98 Million to $30 Million for couples who file jointly. I say this will benefit almost no one because the minimum net worth to be part of the wealthiest 1% is $13.7 Million as of this January, according to Investopedia. So, less than 1% of the population has the potential to leave an Estate or Gift of $15 Million.

Now, the trouble is that the people who could benefit from that increased exemption are the ones who really don’t fucking need it.

Individuals like Elon Musk, Mark Zuckerberg, Peter Thiel, Jeff Bezos, and other multi-billionaires avoid paying Income Taxes in several ways. Elon Musk receives no salary from Tesla, but was approved for a ten-year pay plan from the company last year that had a value of $44.9 Billion. The trick is that it was all in stocks, which means he won’t be paying any Federal Income Tax on that, while he can still use the stock value as collateral for loans, credit, and the like.

Mark Zuckerberg received an annual income of $1 last year, but received compensation amounting to $27.2 Million, which included $14 Million to cover his security and an estimated $1 Million in private jet travel. The rest, as you would imagine, came in the form of stocks.

Peter Thiel’s income is not publicly available. That’s something you might find amusing, considering what Palantir is capable of. Despite not knowing his annual income, we do know he has invested more than $5 Billion in Roth IRAs, which cannot be taxed, assuming he waits until retirement to liquidate them.

Jeff Bezos typically received a salary of $81,840, with total compensation that added up to $1.68 Million in 2022. Because of how he earns most of his money, via stock options, it was estimated he earned $8 Million every hour of the year between 2023 and 2024. And yet, there are several years in which he paid no Federal Income Tax, and has maintained an effective Tax Rate of 0.98% compared to his accumulation of wealth.

If you’re noticing a trend, you’re at least moderately observant. These people at the top of the American financial ladder are not even coming close to contributing their fair share in taxes. In part, because we don’t tax Unrealized Gains, which means all the stock options contribute to their Net Wealth and allow these people to live as they do, but are never taxed until they sell shares, and then Capital Gains Tax comes into play.

If something doesn’t seem wrong about that, you’re not paying attention.

There are years when the wealthiest people in the world are literally paying less in taxes than the people below the poverty level, and not just by percentage, but by dollar value.

Putting an end to that should be a priority. All it would take is implementing an Unrealized Gains Tax above a certain dollar value, maybe a 50% Tax on anything above $15 Million (just like the Estate and Gift Tax). Hell, Kamala Harris was far more generous, proposing a 25% tax on Unrealized Gains for anything over $100 Million. People freaked out over that because they had no idea what they were talking about, and because they were fed misinformation and fear-mongering that led them to believe their home’s increasing sales value would further increase their taxes. In reality, her proposal would have impacted fewer than 11,000 people nationally, and if you’re reading this, you’re probably not one of them. You probably don’t even know any of them, at least personally. That’s the kind of Tax Reform we need from something that anyone would consider worthy of calling a Big Beautiful Bill.

Now, I promised I’d get back to this, and I like to keep my promises. There’s one more massive driver behind the imminent failure of our Social Security program. It’s time to finish the discussion of why Social Security is likely to be bankrupt in only seven short years. We can thank Ronald Reagan and his Social Security Amendments of 1983 for that lovely little “fuck you,” with powerful assists from Alan Greenspan and a complicit and lazy 98th U.S. Congress.

Unfortunately, Trickle-Down (Supply Side) Economics was working out precisely as anyone but a moron would expect it to, and the decreased tax rates (for the highest income earners) were generating far less revenue than was promised. Our economy was in pretty big fucking trouble, because nothing but the delusional fantasies of our President happened to be trickling down. Reagan convinced a large number of people that Social Security was on the verge of bankruptcy, even though it wasn’t. But he had a solution. It was a two-pronged approach that would save everyone.

Surplus Social Security revenue generated by a Payroll Tax Hike implemented under Reagan, to the tune of roughly $2.7 Trillion, was meant to be invested in U.S. Treasury Bonds and held in trust until approximately 2010. That was it. That was his brilliant solution. It might have actually paid off, but Ronald Reagan was (predictably) Ronald Reagan.

Of course, Reagan, being the piece of shit he was, the surplus revenue raised by the payroll tax hike went into the General Fund instead of U.S. Treasury Bonds. Reagan then proceeded to spend every dime of that surplus that appeared during his remaining time in the White House. George H.W. Bush, Bill Clinton, and George W. Bush followed suit and treated it like a fucking slush fund as well. Instead of putting $2.7 Trillion into trust, the money was spent on wars, covering the deficit from additional tax cuts for the wealthy, and shoring up other areas of the government.

Maybe this would have worked out if Social Security hadn’t stopped generating surplus revenue back in 2009, but it did. In 2010, it ran at a loss for the first time since 1983, by more than $40 Billion. This was money we borrowed from China. And we’ve had to borrow money from somewhere every year since then.

Well, we all sort of see where it goes from there. What’s worth noting is that, assuming we’d just kept the $2.7 Trillion where it belonged, and our Social Security shortage was by roughly $50 Billion every year, it could still be solvent through 2064, or 32 additional years from what is now projected.

Not Only CAN We Pay for It, We SHOULD.

/ MeltdownMessiah / Leave a comment

There’s always a lot of talk about how we can’t afford Single-Payer Healthcare here in America, and how much our taxes would increase if we were to implement a Universal Healthcare System. I got tired of listening to people who probably haven’t performed any mathematical operations more involved than basic addition or subtraction since they reached adulthood. I decided it was worthwhile to examine three countries that do provide for their citizens: Denmark, Canada, and the UK, to see how they compare to us here.

For the sake of simplicity, despite it making the whole process far more complicated for me, I’ve taken the liberty of converting all currencies to USD based on the conversion rates as they were today.

In Denmark, there is no Federal Tax on the first $8,080 an individual earns. From $8,080 to $94,224, there is a 12% Federal Tax rate. Anything above $94,224 is taxed at a rate of 15%.

If someone were to earn a hypothetical annual income of $150,000, they would face a total Federal Tax burden of $18,673.68, leaving them with $131,326.32 of their income.

There’s also a Municipal Tax rate that falls between 22 and 27% on all income. At the highest rate, it would decrease the remaining amount to $95.858.49. This means they pay a total of $54,141.51 in taxes on an annual income of $150,000. At the lower rate of 22%, it amounts to a grand total of $51,673.68 they’d pay.

In America, an individual is looking at a tax rate of 10% on the first $11,925. They pay 12% on everything earned between $11,925 and $48,475, 22% from that amount to $103,350, and 24% up to $197,300. So, the same person earning $150,000 in the United States would have a Federal Tax burden of $28,847, which is substantially higher than the federal taxes paid in Denmark.

To factor in municipal taxes, the closest comparison is to consider state income taxes, where applicable.

In the eight states where there is no State Income Tax, that $28,847 is all the individual pays, based on their annual wage. Most of us, of course, live in the 42 states where there’s an income tax levied on an individual’s wages.

Fourteen of those states have a single rate applied to all income, as opposed to a progressive system like we have at the federal level. Arizona is 2.5%, Colorado and Mississippi are 4.4%, Georgia is 5.39%, Idaho is 5.695%, Illinois is 4.95%, Indiana and Louisiana are 3%, Iowa is 3.8%, Kentucky is 4%, Michigan and North Carolina are 4.25%, and Pennsylvania is 3.07%.

In Arizona, the individual would pay an additional $3,750, and in Idaho, they would pay $8,542.50 in addition to the $28,847 they’re paying in Federal Income Tax. The larger amount is $38,389.50, so an individual living in Idaho would pay only $15,752.01 less in state and federal taxes than someone living in Denmark, on the same $150,000.

For states with progressive tax rates, you could be facing a maximum rate of 5% in Alabama and Massachusetts, 3.9% in Arkansas, 9.3% in California, 6% in Connecticut, 6.6% in Delaware, 7.9% in Hawaii, 5.58% in Kansas, 7.15% in Maine, 5.25% in Maryland, 7.85% in Minnesota, 4.7% in Missouri, 5.9% in Montana, 5.2% in Nebraska, 6.37% in New Jersey, 4.9% in New Mexico, 6% in New York, 1.95% in North Dakota, 3.5% in Ohio, 4.75% in Oklahoma and Rhode Island, 9.9% in Oregon, 6.2% in South Carolina, 7.6% in Vermont, 5.75% in Virginia, 4.82% in West Virginia, 5.3% in Wisconsin, and 8.5% in the District of Columbia.

For someone in North Dakota, that would translate into a total State Income Tax of $2,925, while in Oregon, it would come to $12,894.50 above the federal taxes collected, or a total tax burden of $41,741.50. This is only $12,400.01 below the maximum federal and municipal tax burden on the same income in Denmark.

We already know that taxes are higher in Denmark than in the U.S.. That comes as no surprise. But now we understand what the difference is, instead of imagining some abstract higher dollar value. So, let’s take a look at two other nations with universal healthcare.

Canadian federal taxes are 15% up to $41,883.75, 20.5% from there to $83,767.50, 26% up to $129,853.86 and 29% up to $184,992.22. The same $150,000 annual salary would lead to a total of $32,693.57 in federal taxes.

The individual provinces have their own tax rates, of course. The highest rate you’d experience at that salary would be in Nova Scotia, which is 21% on anything over $112,894.50. The lowest would be Nunavut, which has a rate of 11.5% on any income above $129,853.13. Looking at the highest rate, you’d be looking at an additional $24,829.79 beyond the $32,693.57 in federal tax, for a total of $57,523.36, which is moderately higher than the highest burden you’d encounter in Denmark.

In the UK, there is no tax burden up to the first $17,220.90. We’re looking at 20% from there until $68,869.90, and 40% up to $171,441.80. So for the same income of $150,000, you’d pay a total of $42,781.84 in federal taxes. You’d also be responsible for National Insurance Tax of 8% on earnings from $17,220.90 to $68,869.90, and 2% on earnings above that. Thus, you’d be paying an additional $5,754.52 on top of the $42,781.84, for a grand total of $48,536.36, which is lower than in both Canada and Denmark, but still slightly higher than the previous examples of Idaho or Oregon.

Of course, in Denmark, Canada, and the UK, you benefit from Single-Payer Healthcare along with those higher tax burdens; burdens that may not be quite as comparatively high as people in the U.S. often imagine them to be. Those increased taxes are largely offset by what we pay for our Insurance Premiums, even with employer-provided insurance.

The cost of individual Health Insurance Premiums in the U.S. can average anywhere from as little as $1,368 to as much as $8,951 per year, and family coverage is often dramatically higher. None of that even factors in the Out-Of-Pocket expenses for care and medication or multi-thousand-dollar deductibles we’re responsible for, before Health Insurance provides any assistance at all. For example, I have comparably fantastic Health Insurance through my employer. The Deductible for my Family Coverage is $3,300 annually, with an Out-Of-Pocket Maximum of $7,500. God forbid we have to find help Out-Of-Network, though, because the Deductible there is $10,000. Halfway through July, my Insurance Premium has cost me $1,491. It’s worth noting that this is entirely separate from Dental and Vision Insurance. To put all of that in perspective, that means that, in addition to the $1,491 I’ve paid just for the privilege of having Health Insurance, I also have to pay $3,300 Out-Of-Pocket before Insurance begins contributing to further Medical Care or Mental Health expenses. Until I’ve paid $7,500 Out-Of-Pocket, all my Health Insurance will contribute is a percentage toward those costs. I want to remind you that I have exceptionally affordable Health Insurance compared to many people I know.

All of this is brokered through Insurance Companies that receive massive Subsidies from the tax dollars we’re already paying. Companies that actually increase the cost of healthcare in the process. UnitedHealth Group, made famous by Luigi Mangioni, is a perfect example of this.

UnitedHealth Group raked in $372 Billion in 2023, $281 Billion of that revenue from the insurance division headed by Brian Thompson, the man killed on a New York City street by Mangioni. Only two years earlier, UnitedHealth’s insurance division obtained 72% of its revenue from Federal Subsidies, and it can only be assumed that the percentage increased by 2023. In 2024, the Federal Government spent between $1.7 and $1.9 Trillion on Healthcare Subsidies. All of this is money paid out to an industry of middlemen who have inserted themselves between people and their healthcare providers, while making massive profits in the process. In contrast, the UK spent approximately $353.5 Billion on healthcare in 2024. That is less than 19% of U.S. spending. Of course, the population of the UK is just shy of 70 Million, roughly 20% of the U.S. population of nearly 350 Million. What that means is that the Per Capita spending is virtually the same, though actually lower for the UK…but the majority of U.S. taxpayers see none of the benefits associated with that health spending. Looking at those numbers, it makes me wonder why there would even be a need to increase Income Tax rates if we weren’t propping up a parasitic and unnecessary industry in the process.

Or is it simply that the UK and other nations are better equipped to efficiently provide for their citizens than the U.S. happens to be? I’m willing to admit that we’re just not very good at doing things efficiently or effectively. I think there’s more than sufficient evidence to reinforce that perspective.

Beyond purely financial considerations, Single-Payer systems are far less likely to deny service, and when it does happen, it is typically an administrative error. Whereas, here in America, it’s a cost-saving measure on the part of the provider to maintain its profit margins.

And, the real kicker, if you don’t receive at least your premium costs in coverage from your insurer (and most people don’t), that money gets spread around to everyone else covered by the same insurance provider and to the people working there, leading to massive profits for the corporations in question and CEO salaries that can reach as high as $23 Million in total compensation. For example, even though I have reached my Deductible of $3,300 for the year, my Insurance Company is highly unlikely to pay out even the $1,491 I’ve paid so far in Premiums for their percentage of the payments before the new annual cycle begins.

Of course, none of this even takes into consideration the portion of my Premium that’s paid by my employer, which has reached almost $8,000 so far this year. So, even if my Insurance Company somehow ends up paying out $5,000 for their part of my Healthcare expenses, they’ve already got $4,419 lining their pockets without either me or my employer paying another dime toward the Premiums. I don’t get that money back. My employer certainly doesn’t receive the excess back at the end of the year either. Have you ever looked at your paychecks and calculated how much free money you and your employer are handing over to an Insurance Company that (as a policy) does whatever it can to avoid helping you? Now, take a moment to consider that all of the money coming in from people like you adds up to maybe a quarter of what the Insurance Company has for revenue.

But, of course, it’s “Socialism” if your Tax Dollars provide Single-Payer Health Coverage for every Citizen in the U.S.. But if your money is distributed between the thousands of people with the same insurer (while lining the pockets of the obscenely wealthy), then it’s an entirely different sort of thing. It’s “Socialism” even though it’s a Public Service provided by the Capitalist Governments of essentially every other Civilized Nation in the world, as well as several that we consider less than “First World” countries.

One additional benefit worth noting is that public universities cap most tuition at less than $13,000 per year in the UK. Canadians can expect an average annual tuition of under $4,800, and college tuition is not charged at all in Denmark. Whereas in the U.S., In-State tuition averages roughly $11,000 per year (ranging from less than $7k in Florida or Wyoming to more than $20k in Connecticut or Pennsylvania), and Out-Of-State tuition explodes to an average of around $30,000 (from less than $13k in South Dakota to more than $60k in Michigan).

Which is to say that you can be both healthier and better well-educated at substantially less cost in those nations, even when you factor in the increased tax burdens. Of course, as I pointed out already, there’s no reason to raise the taxes individuals pay in the U.S. if we were more efficiently utilizing the slightly higher amount the U.S. already pays Per Capita for Healthcare Subsidies than the government of the UK.

Don’t let idiots and fear-mongers influence you. None of the nations discussed are “Socialist” countries. They just take the role of government more seriously, providing for the public good.

It might also be worth noting that, in 2023, UnitedHealth Group donated $792,500 via PAC contributions to federal political campaigns. Roughly 54% of those PAC contributions went to Republican candidates and 45% went to Democrats.

It also spent an even more substantial amount of PAC funds on In-State campaigns all across the U.S.. This was divided up between individual candidates, party contributions, and ballot measures.

And, in 2024, UnitedHealth Group (according to its filing with the U.S. Senate) dedicated $6.85 Million toward lobbying efforts, above and beyond Millions in PAC spending. Think about that for just a moment. This Corporation receives most of its revenue from Federal Subsidies. And then it spends a small portion of that revenue to support the campaigns and political parties that ensure it keeps getting that money.

It’s easy to spend that kind of money when a company brings in a net income of $14.4 Billion (which was UnitedHealth’s lowest profit margin since 2019), a number heavily impacted by the Billions they spent recovering from a cyberattack on one of their claims processing subsidiaries. With everything adjusted accordingly, they proudly claimed a record high profit of $25.7 Billion for last year.

Spending $6.85 Million through lobbyists and millions more through PAC contributions isn’t a challenge when you have that kind of profit involved. The amount spent on corporate lobbying was, after all, only 0.048% of the net profit.

Of course, UnitedHealth Group has already dedicated $3.37 Million toward lobbying efforts so far in 2025, so they’re hardly skimping on graft despite it not being an election year.

While the industry rakes in massive profits, it’s happy to return the favor by lining the pockets of politicians and political parties across the political spectrum, all to ensure it has its interests taken care of.

If you can look at this and think it’s fine, while Single-Payer Healthcare would be too costly, you’re not only missing the point, but you’re being intellectually dishonest.

Foreign Aid & International Relations

/ MeltdownMessiah / Leave a comment

It seems to me that public comprehension of foreign financial aid is generally pretty low.
Less than 1% of the US Federal budget is typically distributed in the form of foreign aid to other nations, mostly developing nations, but also countries where there are US military bases in place (it’s more than you probably think).
What’s especially humorous to me is the fact that these same people I see complaining about foreign aid being sent to other nations are often the same ones talking about how defense is the most important budgetary concern. It’s like they’re entirely oblivious to the plain fact that federal spending in the form of foreign aid is one of the most important tools in the box where national defense is concerned…no, I misspoke, it’s not like that…it is that. They’re entirely oblivious when it comes to anything pertaining to diplomatic relations, foreign policy, and total federal spending. It’s perhaps not their fault that they’re stupid people, they suckle at a steady diet of bad/misleading information and memes in place of study.
The same people who I see shouting out about American exceptionalism and the superiority of capitalist social and economic structures are seemingly unaware of the way foreign aid is a propagandic method to encourage capitalist transitions in other countries.
I suspect these people also aren’t aware of the fact that more than 3/4 of the foreign aid doesn’t actually go to foreign governments or entities of those governments. It’s perhaps too much to expect that these same people recognize that part of that calculated budget dedication to foreign aid is in the form of military aid (troops and training).
It’s clear that altogether too few people take the time to read or study history in even the most rudimentary sense. This is precisely why I suggested that there needs to be a better focus on sociology and history in our educational system…and not just the, “America is Awesome,” variety certain politicians have been so fond of.