All citizens must pay taxes each year. But why is it so important that we all pay our taxes? There’s more to it than the possible penalties and fines you face from the IRS when caught not paying your taxes.
Both federal and state taxes go towards running the country and maintaining the vital infrastructure and aid programs.
Keep reading to learn five answers to the question, why are taxes important?
Table of Contents
1. Social Security
The largest national expense is the Social Security program. This funding accounts for about 24 percent of the federal budget. That’s about $945 billion.
You see on your paycheck that a portion of each check goes towards Social Security. This money then goes towards making monthly support payments to retired workers. The program has expanded over the years to include supporting families of workers who qualify as retired, disabled, or deceased.
Several healthcare programs use tax monies for funding. These include Medicaid, Medicare, CHIP, and the Affordable Care Act marketplace. These programs help people obtain medical treatment that they wouldn’t otherwise receive.
Medicare helps about 59 million people who are over 65 who have disabilities. The CHIP program helps about 69 million low-income children receive medical care each year.
3. Safety Net Programs
Sometimes people find themselves in a financial bind and are unable to support themselves. They could face mounting debts from creditors or even the IRS. Several tax-funded federal programs support people that find themselves in this situation.
Programs like the IRS fresh start program, SNAP, low-income housing assistance, school meals, child care assistance, and home energy cost assistance all help those living below the poverty line.
5. Military Funding
A smaller portion of the federal budget goes towards funding national defense and international security-related activities. You’ll hear about this spending most often when you hear discussions of the Defense Department.
A portion of the military budget goes towards the efforts in the Middle East.
The United States has debt it needs to pay off. As of 2020, the interest on the federal debt is $593.1 billion. The interest payments that the government makes on its debts owed are from tax payments.
This debt is owned by businesses, individuals, and foreign banks. The majority of it is in the form of bonds, notes, and treasury bills. Then a minor percentage of it is securities, savings bonds, and TIPS.
Why Are Taxes Important? They Fund Our Country
As you can see, the taxes you pay each year go towards to cost of running several vital federal programs. Some assist those who cannot work due to injury, illness, or age. Others go towards military operations and protecting the country.
While you may not know where your dollars go precisely, you should no longer ask why are taxes important? They are essential for both fulfilling your duty as an American citizen and for the running of the country.
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