The Lowdown » taxes

How Does the Government Spend Your Tax Dollars?

Matthew Green — Fri, 12 Apr 2013 02:00:05 +0000

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Benjamin Franklin once famously wrote: “In this world, nothing can be said to be certain, except death and taxes.”

Well, the deadline for the latter inevitability (and hopefully not the former) is just around the corner.

For many Americans, mid-April means last minute scrambling and groaning, a last ditch effort to get taxes filed by the April 15 deadline.

So what happens to all that hard-earned cash of yours?

The federal budget – on which the government operates – consists mainly of revenue from income taxes and payroll taxes. In an effort to demystify what the government actually does with that cash, Google and Eyebeam last year put out a call to graphic designers and developers to help visualize how our federal income tax dollars are spent. The Data Viz Challenge, as it was called, drew some very cool entries, including the following interactives (click on each to explore the multimedia versions).

Where Did All My Tax Dollars Go?
Designed by Anil Kandangath, this won first place in the contest. It allows users to enter their income and view a clear breakdown of what services that money went towards.

Every Day Is Tax Day
Designed by Fred Chasen, this project took second place in the contest. It allows viewers to explore how many hours they actually spend working directly for the government over the course of a year, and what programs that cash funds.

Federal Income Tax Receipt
Although not actually an entry in the contest, this is a good straightforward visualization produced by the National Priorities Project that spits out a simple itemized receipt of your tax breakdown based on income.

What Do Your Taxes Actually Pay For?

Matthew Green — Sat, 26 Jan 2013 03:25:08 +0000

When Benjamin Franklin famously wrote that “in this world, nothing can be said to be certain, except death and taxes,” he neglected to mention a third absolute: our government’s eternal failure to agree on how high those taxes should be and what they should pay for.

As long as our nation continues to spend a lot more than it takes in, the issue will continue to be a saga between conservatives and liberals, the former fighting for lower taxes, fewer public services, and smaller government; the latter pushing for higher taxes on the wealthy, more government revenue, and a preservation of the social safety net. It’s like a really boring, annoying version of the NeverEnding Story (without the cool flying animals). Just think about the last few months in Washington: we narrowly averted hurling ourselves over the fiscal cliff only to re-enter into a battle over the debt ceiling.

So, why should you care? The most compelling reason is because this is your hard-earned cash that these guys are fighting over. The federal budget mainly consists of revenue from income taxes and payroll taxes. It’s about knowing how the government is spending your cash and what they’re spending it on. Along those lines, Google and Eyebeam last year put out a call to graphic designers and developers to help visualize how our federal income tax dollars are spent. The Data Viz Challenge, as it was called, drew some very cool entries, including some of the following interactives (click on each to explore the interactive versions).

Where Did All My Tax Dollars Go? Produced by Anil Kandangath, this won first place in contest. It allows users to enter their income and see a clear breakdown of what services that money went towards and how it was calculated.

Every Day Is Tax Day Designed by Fred Chasen, this project took second place in the contest. It allows users to explore how many hours they actually spend working directly for the government – based on individual salary – over the course of a year, and what programs that cash funds.

Federal Income Tax Receipt Although not actually an entry in the contest, this is a good straightforward visualization produced by the National Priorities Project that spits out a simple itemized receipt of your tax breakdown based on income.

What Prop. 30 Means For Your Taxes

Matthew Green — Thu, 08 Nov 2012 05:19:57 +0000

Kevork Djansezian/Getty Images

Wait … Californians actually voted to tax increase their own taxes?

Get outta here!

Like most Americans, California residents don’t look too kindly on the notion of raising taxes. In fact, voters have rejected statewide tax measures the last seven times they’ve been on the ballot!

So in many ways, it’s pretty miraculous that on Tuesday 54 percent of California’s electorate approved Proposition 30, which temporarily increases sales tax for everyone by a quarter cent and raises income taxes for those making over $250,000. The measure, which Governor Jerry Brown crafted and threw himself behind, is expected to raise about $6 billion a year and prevent massive cuts to the state’s already beleaguered public education system.

Here’s how it’ll affect you:

Brown staked much of his political reputation on winning what became a bitter, hard-fought, and incredibly pricey fight; both sides waged a relentless ad war, collectively spending more than $120 million.

“I know a lot of people had some doubts and some questions: Can you really go to the people and ask them to vote for a tax?” Brown told supporters at the victory party late Tuesday night. “Well here we are. We have a vote of the people – I think the only place in America where a state actually said, let’s raise our taxes for our kids, our schools, for our California dream.”

And he was right. In a state where voters haven’t approved a tax hike in almost three decades, the very real threat of huge cuts to education appears to have actually resonated with voters.

The consensus seemed to be: “Yes, taxes suck, but some things are just too important to lose.”

The temporary nature of the tax, also, likely made the measure more palatable to voters.

Interestingly, it was younger voters who turned out in force on Tuesday in support of the measure. Voters ages 18-29 – who Brown and his campaign targeted – made up almost 30 percent of the electorate and were critical in pushing the measure through.

How Does California’s Tax System Work?

Matthew Green — Tue, 30 Oct 2012 00:46:27 +0000

Taxes. Not too many folks like paying ‘em, and even fewer understand what they’re actually paying for. In November, California voters will decide on two major competing tax measures – Proposition 30 and 38. The initiatives are both intended to shield public schools from devastating budget cuts, although they each propose to do so in pretty different ways. Deciding which path makes the most sense requires first understanding the basics of California’s tax system. Pretty enticing, huh? Well, before we lose your attention to the latest gripping cat flick on YouTube, at least take a quick look at this animation produced by freelancer Josh Kurz. It’s a surprisingly digestible primer on a topic that’s admittedly pretty freakin’ dry … but one that’s also got some pretty huge real life consequences for almost all of us.
(Scroll down to see another KQED video and detailed summaries on both propositions)

More resources on the two tax propositions

Who Smokes? The Stats on Lighting Up

Matthew Green — Sat, 26 May 2012 00:51:42 +0000

credit: lanier67/Flickr

About one in five adults in America smokes. That’s a significant drop from even a decade ago.

In California, which has one of the lowest rates in the country, it’s down to roughly one in eight.

But disparities in smoking rates across economic, racial, educational, and gender lines remain wide. The graphic below – from the U.S. Centers for Disease Control and Prevention - is based on 2010 U.S. smoking data among adults:

Source: Centers for Disease Control and Prevention

Who smokes in California?

In the last two decades, California’s overall adult smoking rate has dropped roughly 40 percent. Among current smokers, income and education level (much more than race) still remain the two biggest predictors of who smokes. The California Tobacco Control Program survey, using data from 2008, found that:

California's adult smoking prevalence (2008). The darker the red, the higher the rate. (source: http://www.cstats.info)

Poorer counties have significantly higher smoking rates Tehama County, among California’s poorest (with a poverty rate around 20 percent), had the highest adult smoking rate – almost 23 percent. Marin County, one of the richest regions in the state, had the lowest rate – just over 7 percent.
Poorer households have higher smoking rates Households with annual incomes exceeding $150,000 had a smoking rate under 8 percent, compared with a nearly 20% rate among those with annual incomes less than $20,000.
Education level plays a big role The smoking rate among college graduates in California is 6 percent. Those without degrees: 12 to 15%!
Smoking rates are higher in rural areas Rural regions had a higher smoking rate (nearly 16 percent) than suburban and urban areas (nearly 11 percent). Interestingly, the two exceptions were San Francisco and Sacramento Counties, both of which had rates above the state average.

So why should you care?

Disparities in the state’s smoking rates bring up an interesting issue. Like most kinds of taxes – including gas, sales and property – a tobacco tax is considered regressive: one that takes a larger percentage of income from lower income groups than higher income groups. Because all smokers pay the same amount of tax for a pack of cigs, the price burden is heavier on poorer smokers than richer smokers, and it becomes more so as the tax goes up. For instance, if the tax on a pack of cigarettes were $2, and your weekly budget was only $10, that tax would be one-fifth of your entire budget. However, if your budget was twice that – $20 – the same tax would only be one-tenth of your budget. So … the more money you have, the less you feel the cost of the tax. And, of course, if you don’t smoke, you don’t have to pay the tax at all.

Because in California there are more lower income than higher income people who smoke, an increase in the tobacco tax would have a lot more impact on lower income populations. The opposite of a regressive tax is called a progressive tax – one that that takes a larger percentage of income from higher income groups. Income tax – in which you pay a percentage of your income – is really the only true example of a progressive tax in our current tax system.

Source: www.irs.gov

In the June 5 primary, California voters decide on Proposition 29, which would more than double the state’s tobacco tax and raise funds for cancer research. Some opponents argue that a tax like this unfairly burdens and penalizes the state’s poorer populations, who proportionally smoke more. Richer populations, whose smoking rates are much lower, will be less affected. The counterargument, of course, is that those same lower-income populations are already very burdened by high rates of smoking-related illness and subsequent medical costs. Increasing the tax on cigarettes will effectively discourage more people – especially youth – from smoking, especially folks who, financially, are less able to afford it. Advocates of the tax also point to the hefty burden that smoking-related illnesses place on the state’s public health care system, a huge cost shared by all California taxpayers – smokers and non-smokers alike.

What are your thoughts about sin taxes?

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Cigarette taxes are a good example of sin taxes – excise taxes used by the government to deter harmful behaviors. We’re asking you: Should the government impose “sin taxes” on behaviors that have societal costs?

Take our survey to weigh in.

Smoking by State: An Interactive Map

Matthew Green — Mon, 21 May 2012 18:19:58 +0000

U.S. smoking rates by state

Click on any state below to see the percentage of adult smokers (based on 2010 data) and the tobacco tax rate. The darker the shade of red, the higher the smoking rate.