JasonM
09-25-2007, 02:03 PM
http://docs.law.gwu.edu/facweb/jsiegel/Personal/taxes/debt.htm
Some people claim that 100% of the money the government gets from income tax goes to pay interest on the national debt.
Not true. In fact, not even close.
This myth is easily debunked by just looking up the numbers involved. Unfortunately, looking things up is a skill many tax protestors lack.
Let's look at the Budget of the United States.
The amount collected from income tax greatly exceeds the amount spent on interest on the national debt every year. For example, in 2006, the individual income tax raised $1.04 trillion (click this link and see page 30 of the historical tables). The government’s net interest expense in 2006 was $226 billion (see page 54 of the tables). That’s about 20% of individual income tax revenues, not 100%.
Twenty percent of all income taxes is a lot of money. Interest on the national debt is a big amount and the national debt is a legitimate concern. But it’s not remotely true to say that all income taxes go to pay interest. Net interest is only about 1/5 of annual income tax revenue. (And that’s not even counting $353 billion in corporate income tax revenue.)
(By the way, the “net interest” figure is used because quite a bit of the interest goes to government trust funds. The interest paid to the trust funds essentially amounts to the government paying interest to itself (by just moving money from one government account to another), so it makes sense to disregard that interest in calculating the amount of interest the government pays. But even if you look at the “gross interest,” that was $406 billion in 2006. That is, again, a big amount, but still only about 40% of income tax revenues, not 100%. See page 72 of the tables.)
So the claim that 100% of income taxes pay interest on the national debt is completely not true, as anyone can see by just looking up the figures.
(continued in link)
If this is true, that means Ron Paul made an erroneous statement a while back.
Some people claim that 100% of the money the government gets from income tax goes to pay interest on the national debt.
Not true. In fact, not even close.
This myth is easily debunked by just looking up the numbers involved. Unfortunately, looking things up is a skill many tax protestors lack.
Let's look at the Budget of the United States.
The amount collected from income tax greatly exceeds the amount spent on interest on the national debt every year. For example, in 2006, the individual income tax raised $1.04 trillion (click this link and see page 30 of the historical tables). The government’s net interest expense in 2006 was $226 billion (see page 54 of the tables). That’s about 20% of individual income tax revenues, not 100%.
Twenty percent of all income taxes is a lot of money. Interest on the national debt is a big amount and the national debt is a legitimate concern. But it’s not remotely true to say that all income taxes go to pay interest. Net interest is only about 1/5 of annual income tax revenue. (And that’s not even counting $353 billion in corporate income tax revenue.)
(By the way, the “net interest” figure is used because quite a bit of the interest goes to government trust funds. The interest paid to the trust funds essentially amounts to the government paying interest to itself (by just moving money from one government account to another), so it makes sense to disregard that interest in calculating the amount of interest the government pays. But even if you look at the “gross interest,” that was $406 billion in 2006. That is, again, a big amount, but still only about 40% of income tax revenues, not 100%. See page 72 of the tables.)
So the claim that 100% of income taxes pay interest on the national debt is completely not true, as anyone can see by just looking up the figures.
(continued in link)
If this is true, that means Ron Paul made an erroneous statement a while back.