Friday, August 12, 2011

Interest on the Debt Consumes Almost HALF of Personal Income Taxes

I attended Congressman Dan Burton's (R-IN 5th) town hall in Carmel this past evening and was pleased to hear him reference some cooperative efforts he has with Congressman Ron Paul (R-TX) but he said something very early on in his talk about U.S. fiscal matters that caught my attention.

He made a statement basically saying that interest on the debt consumed 46 cents out of every tax dollar and that they then had only around 54 cents to spend on everything else like the military, social security, etc... Immediately this struck me as untrue but I knew he likely didn't pull that number out of thin air. But, it did get me to thinking and I worked out the math on the back of one of his political flyers.

We are quickly approaching the point where annual debt service is around $500 billion (one half trillion dollars).

The Federal government budget is around $3.6 to $3.7 trillion.

Federal tax receipts are in the $2.15 trillion area.

Of that $2.2 trillion, a little less than $1 trillion is Personal Income Taxes.

So, interest payment on the debt, will likely run well over $450 billion for the current fiscal year.

$450 billion is:

...about 12% of the total Federal budget.

...about 21% of all expected 2011 Federal tax receipts.

...about 46% of all expected 2011 Federal PERSONAL INCOME taxes.

So, there you have it. Out of every dollar in PERSONAL INCOME TAXES almost half of it now goes solely to pay interest on the national debt. So, the only error the Congressman made was in not being specific enough in his language. He was, basically, correct in his statement. Anybody with two brain cells to rub together still need a wake up call?

The Federal Government is too big and it costs too much. Repeat until it sinks in.


Paul K. Ogden said...

Those numbers aren't accurate. Repayment of interest on the debt amounts to about 6% of the money our federal government pay. I've double and triple checked those numbers. It is true though we are borrowing 40 cents of every dollar we spend, a prescription for disaster.

Sean Shepard said...

Total interest on the debt is running between $400 and $450 billion a year for most of the past few years and that was at $9 trillion, $10 trillion, $12 trillion ... We're at $412 billion or so this year with two months left to go in the fiscal year.

I was using a number approaching $400 billion when I campaigned in 2008.

So, it may be 6% of what the government is paying, but it is 12% of the budget and, indeed, around 45% of PERSONAL INCOME TAX receipts (which are down to $980 billion or so from $1.1 trillion in 2007-2008(ish) ... Corporate income tax receipts are down to about $200 billion from around $380 billion I think.

Pretty sure.