Slot machines, taxes have much in common

Published 8:30 pm Monday, April 23, 2018

Income tax season is over for another year, meaning most people are no longer thinking about how much Mississippi and Uncle Sam claim from their wages — which, of course, is just how Mississippi and Uncle Sam like it. It’s a natural thing. We look at our checks, not the list of deductions.

So, where did the money go?

As it happens, the researchers at TIME magazine provided a breakdown as it relates to the federal dollar.

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It’s staggering stuff.

Of every $1,000 paid in, almost $600 will be split almost evenly between military and health care payouts.

Of the $300 in military expenses, $60 is allocated to services for veterans and $50 to active duty military personnel. The balance goes to operations, defense contractors and such. Some fret about their taxes supporting nukes. The share allocated to America’s nuclear arsenal is $7.

Of the $300 allocated to health care, Medicaid will take the largest portion — $129. Medicaid is a federal-state program and Mississippi, which had 661,538 enrollees in January, picks up a fourth of the $5.7 billion spent in this state every year.

Almost as much, $114 of the $1,000, goes to Medicare, which provides health services to people 65 and older. Medicare is entirely funded by federal dollars and is also supported by a separate federal tax.

It hurts to think about it, but the third-highest chunk goes to nothing. Interest on the money the feds have borrowed to keep overspending income will claim $142 of every $1,000 in federal income taxes.

That’s a distressing figure when viewed in context with other outlays: $6.20 for NASA; $6.50 for agriculture; $1.10 for national parks; $2.70 for environmental protection; $7.70 for K-12 education; and a nickel for the arts.

The engine of fiscal outrage and a lot of angst in America is driven (and put to music in a few country ballads) by the firm belief that the federal government takes hard-earned money from honest working people and hands over lavish benefits to slackers. Without being so naïve as to say there’s no waste or abuse in the alphabet soup of aid programs, the fact is the total cost of food and housing assistance provided claims only $42 of every $1,000 collected. Too, many have complained about “foreign aid” for decades, and while it’s true America hasn’t been wonderfully successful at buying friends around the world, the total cost is now $13 of the $1,000.

Back to those grifters, those leeches on society that the tea party crowd seems to think are the source of all evil. True enough, the top 20 percent of income earners pay more than half of all income taxes. True enough, up to half of Americans show no income tax due on their annual returns, but they do pay taxes.

It’s kind of like a casino. A person walking out with money in her pocket will say she won cash from the casino. Not true, not true, not true. She won money other people lost.

Slot machines are tightly programmed to retain 10 cents to 20 cents of every dollar deposited. As the wheels spin, 80 cents to 90 cents is paid out, but never more than has been paid in. The casino has no risk.

In taxation, one factor is that personal income taxes account for only 40 percent of total federal revenue. Another — and far more significant in addressing the prejudice against those who “pay nothing” — is that everybody pays.

In Mississippi, a family receiving a food allotment every month pays no sales taxes on purchased food, but part of every “free” dollar is still collected in federal and state taxes of all types. The grocery store pays taxes and the store employees pay taxes. The transportation company and the truck drivers pay taxes. The farmer and the packager pay taxes. And all those taxes are collected and paid out of whatever the family has been provided.

See? Governments derive income from cash flowing through commerce much the same way that casinos derive income from cash flowing through slot machines. The “house” can’t lose.

Mississippians and other Americans spend a lot of time getting all sweaty over who pays taxes and who doesn’t. That’s really a diversion and a waste of energy.

The vastly more important topic is how local, state and federal governments choose to allocate the funds they receive from all sources. If the public focused attention on where their dollars actually go, Congress might tend to be a tad more accountable.

Charlie Mitchell is a Mississippi journalist. Write to him at cmitchell43@yahoo.com.