November 8, 2012 | Back to: Columns

# A realistic way to look at your federal income taxes

We have all been subject to various explanations relating to the absolutely astounding numbers of dollars that our federal government spends each year.

Numbers of billions or trillions are just plain difficult to comprehend.

And when authors try to explain how large these numbers are, they often use an analogy which is just as hard to understand (try to comprehend the number of inches between the Earth and the sun).

There has to be a better way, and I’d like to propose a useful way of thinking about the dollars our federal government spends. This current year, the federal government will spend approximately 3.8 trillion bucks. But how does this number relate to each of us?

Let’s assume you are paying \$10,000 in federal income tax this year (I think I envy you). If the feds spend \$3.8 trillion this year as currently projected, a relatively straightforward calculation will show that for each billion dollars the government spends, a little more than \$2.50 comes out of your pocket.

Obviously, if the government spends \$10 billion on something, such as a new large aircraft carrier, \$25 of that came out of your very own pocket. Also, each time the feds spend \$100 billion, your forced contribution is \$250. These are numbers we can all relate to and I find them pretty scary.

If you also take into account that approximately 40 percent of what the feds spend this year is “borrowed” (read ‘printed’ without the backup of assets of any kind), it is actually quite a bit worse.

Now back to the \$10,000 figure. You can calculate your own “contribution” by dividing your total tax by the \$10,000 figure (I chose the \$10,000 purely to make your calculation easier) and multiplying the result by \$2.50 on your handy calculator.

For example, if your total tax was \$5,000, divide 5,000 by the 10,000 and you’ll get 0.5. Multiply 0.5 by 2.50 to get a figure of \$1.25.

So you pay “only” \$12.50 for your share of that aircraft carrier. (As an aside, this year that carrier may be one of your best investments.)

But how about the money spent to bail out GM and Chrysler? And let’s not forget the money we are spending on foreign aid.

How many of your dollars would you like to send to Pakistan this year?

Dare I even mention our aid to Egypt and Libya at the present time?

Now those billions our government spends don’t seem very abstract any more, do they?

R. Simi Lyss lives in Nevada City.

How many of your dollars would you like to send to Pakistan this year?