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Where Do Our Federal Tax Dollars Go?

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Publication Date: April 2008

Publisher(s): Center on Budget and Policy Priorities (Washington, D.C.)

Author(s): Matt Fiedler

Special Collection: John D. and Catherine T. MacArthur Foundation

Topic: Banking and finance (Taxation and tax policy)

Keywords: Economic projections; Fiscal future; Federal budget

Type: Report


Since the government collects taxes in order to finance public services, it is useful to examine where tax dollars go when thinking about these crucial tax-policy decisions. All told, the federal government spent a bit more than $2.7 trillion in fiscal year 2007, representing about one-fifth of the nation's Gross Domestic Product (GDP) or slightly less than the historical average for the last three decades. Of that $2.7 trillion in expenditures, more than $2.5 trillion was financed by federal tax revenues. The remaining $162 billion was financed by borrowing and, hence, will ultimately be paid for by future taxpayers.