What is our government spending our tax money on today?

There are lots of exciting activists, organizers, and policy gurus who have a comprehensive pulse on policy prescriptions for closing the value gap for marginalized communities and we’ll talk about that in our fourth and final “Do Black Lives Matter in the American Economy” series next week. Today though, we will set the context at a very high level by taking a practical look at how much tax revenue comes in every year, how the government spends this revenue, and what communities are asking us to stop spending money on now so that we can focus our tax money and policy efforts on equity.

What does our budget say about our collective morality?

At Perspectives, we like to remember that budgets, whether personal, non-profit, for-profit, or governmental, are numerical expressions of our moral intent.

According to the Tax Policy Center, $3.5 trillion in tax revenue is collected across all forms of taxation. Let's take a look at how that $3.5 trillion breaks down into federal, state, and local revenue.

Source

For federal budgets, social security, unemployment, and medicare combined take up about 60% of the budget. Military spending is 3rd highest at 16%. State and local governments spend about 43% of their total budgets on public welfare and public K-12 education combined. 7% is spent on policing and corrections. One has to imagine that there are lots of inequities due to how we fund these systems and there are plenty of external costs pushed onto poor and low wealth people due to unfair policing and justice system practices (ticketing, court fees, legal services, prison profiteering, bail, etc). This analysis does not even begin to take these costs into account.

Getting back to a strict focus on the known government budgets, military spending at the federal level comes out to about $600B and local spending on policing and corrections comes out to somewhere between $115B - $200B. At the end of the day, $800B - $1T of our local, state, and federal tax dollars are spent each year on policing, corrections, and militarism. Rounding up, that means a SHOCKING 28% of our collective tax revenue is spent on militarism and the prison industrial complex. For context, the US spends 3X what China, our closest competitor, spends on militarism alone.

Activists, organizers, and policy makers are absolutely right! Reducing or eliminating these line items is possible (defund or abolish the police as an example) and would free up significant resources for government innovation projects.

What about additional revenue?

The wealth tax is the main way that progressive policy makers cite to raise additional revenue. Estimated government revenue increases (even from center / center right think tanks) range from an additional $800 billion to an additional $4 trillion.

What do government budgets have to do with equity?

Even with this rudimentary budget analysis, it is clear that we have the money to fix our economy and build a great society that is equitable, just, and morally repaired from the sins of racism.  A budget is a moral document that indicates clearly and numerically what we care about as a collective American society. Available dollars, even without more imaginative budget engineering, could dedicate $800 billion to $4 trillion dollars to closing the historic value gap for poor, low wealth, and BIPOC communities (healthcare, income, wealth, etc) and closing this gap would generate explosive economic growth. We have to involve ourselves at the local, state, and federal levels to ensure our tax dollars are budgeted in ways that reflect our collective priority for a more just and equitable society.

Wrapping up this series next week...

In our final newsletter of this Black Lives Matter + Economy series, we will discuss ideas from activists and policy makers on how we could spend diverted or raised money to implement or scale experimental, new, and fresh ideas that center equity and reset our relationship to our government, public policy, and our politicians.