How much of each $1 of (fed) income tax goes to the Iraq war?

Factual Questions
1

First of all, I don’t even know if it is calculable, or relevant. I’m just curious.

Bonus was deposited overnight. Woot!
Roughly 42.7% of it was chopped off for taxes. Boo!
Roughly 25% of it was chopped off for Federal income tax.

I’m not trying to get out of paying taxes. Any “boo!” is uttered with my tongue planted firmly in my cheek. What I do feel justified in being cranky about at this time of year is how much money we’re spending on this damn war (and hearing about more cuts to the education budget here in California), and I’d like to at least try and see my paycheck through that particular filter, if possible.

2

In Great Debates, someone posted that the Iraq war is currently costing about $12 billion per month. I don’t know if that’s accurate, but let’s assume it is.

In 2007, the U.S. government had about 2.4 trillion dollars in revenue. Call it 200 billion per month.

Given those figures, the Iraq war is consuming about 6% of the government budget. So let’s say you paid $20,000 in income tax. In that case, you personally coughed up $1200 for the war. However, you said this was the tax on your bonus, which is deducted at your highest marginal rate. So maybe you should just apply this to your bonus - let’s say it was 5K, and $1250 went to tax. So maybe $75 of that went to pay for the war.

But of course, it’s not nearly that simple. For one thing, taxes have not gone up since the war started, so in that sense, you could say you’re paying nothing for the war. For another, there are other sorts of revenue the government collects, such as corporate and excise taxes. Income tax makes up less than half of total government revenue. So we should probably cut your contribution in half, and call it $32.50.

On the third hand, all of the money for the war is borrowed. So you’re not paying a cent. People in the future will.

On the fourth hand, a lot of this accounting is probably fuzzy anyway. The war may be costing a certain amount if you count the salaries of all the soldiers that are there, and the cost of keeping them there. But since the military hasn’t appreciably grown in size since before the war, you have to assume that most of those people would still be drawing a salary, shooting weapons in training and wargames, etc. The true cost of the war in monetary terms would be the additional cost of combat and occupation over and above what the military would have spent if it wasn’t doing those things. But then there are all the guardsmen called up, extra pay for being in a war zone and overseas, extra personnel retained through stop-loss orders, guardsmen called up, rebuilding costs in Iraq, etc.

Given all these variables, plus others (opportunity cost, etc), it’s not surprising that estimates for the cost of the war vary like crazy, from a low of a total so far of about 260 billion over the past five years to a high of over 1 trillion. As you might guess, the low figures tend to come from supporters of the war, and the high figures from opponents. The 12 billion figure quoted at the beginning is pretty much in the middle and probably a good working number.

3

Nice analysis, Sam, but aren’t your second and third hands really the same?

4

[QUOTE=Sam Stone]
Income tax makes up less than half of total government revenue. So we should probably cut your contribution in half, and call it $32.50.
[/quote]
But discretionary spending also makes up less than half of total government outlays. Social Security brings in the most money and also spends the most money, but that funding stream is detached from the rest of the budget (well, in theory, anyway).

In the end, the bottom line is the same - the “cost” of war is extraordinarily complicated and most people who do so have a political agenda that can’t be ignored.

5

In a fifth or so hand, much of the funding for Iraq has been done off-budget, i.e. not counted as part of the regular budget process but as special appropriations. Oversimplified, it’s been funded by adding to the deficit. That makes it even more difficult to determine how to apportion it for tax purposes.

6

[QUOTE=ComeToTheDarkSideWeHaveCookies]
What I do feel justified in being cranky about at this time of year is how much money we’re spending on this damn war
[/QUOTE]
Wait until you find out how much of the federal budget is spent on social programs…last I checked, roughly 60% went to social security, medicaid, and welfare.

7

[QUOTE=Exapno Mapcase]
In a fifth or so hand, much of the funding for Iraq has been done off-budget, i.e. not counted as part of the regular budget process but as special appropriations. Oversimplified, it’s been funded by adding to the deficit. That makes it even more difficult to determine how to apportion it for tax purposes.
[/QUOTE]
In addition, OMB has periodically ordered non-Defense agencies to give back a percentage of their Congressionally allocated budgets back for other spending priorities. That’s the polite response. In reality the White House is skimming non-Defense budgets and reallocating the monies to the war.

[QUOTE=anson2995]
Wait until you find out how much of the federal budget is spent on social programs…last I checked, roughly 60% went to social security, medicaid, and welfare.
[/QUOTE]
There is also the 85-15 “rule.” That means 85 percent of the entire federal budget is allocated to Defense, DHS, and social services, which account for only 15 percent of federal agencies. Conversely, the remaining 85 percent of the federal government only gets a 15 percent cut of the budget pie.

8

[QUOTE=anson2995]
Wait until you find out how much of the federal budget is spent on social programs…last I checked, roughly 60% went to social security, medicaid, and welfare.
[/QUOTE]

What makes you think the OP would have any problems with these payments as opposed to those for the “damn war”?

9

This may be of interest.

10

This not being IMHO/GD/Pit, I’ll just say that I am in favor of well-managed and well-monitored social programs. But my personal views don’t really apply to the core question that I am asking…how are tax dollars spent, specifically in regards to the Iraq war? I am interested in where tax money goes all the time, not just right now as we’re in the middle of a military situation that I don’t happen to agree with.

Yes, I realize it is complicated, and I appreciate any and all responses that have come through thus far. Complications aside, money is a (relatively) finite entity, and I feel that accountability is an important responsibility for our government. I’d like to think that we are not so far down the path of “who the hell knows” that there is no hope of ever knowing.

11

[QUOTE=ComeToTheDarkSideWeHaveCookies]
Yes, I realize it is complicated, and I appreciate any and all responses that have come through thus far. Complications aside, money is a (relatively) finite entity, and I feel that accountability is an important responsibility for our government. I’d like to think that we are not so far down the path of “who the hell knows” that there is no hope of ever knowing.
[/QUOTE]
Too late.

Source: So, Mr Bremer, where did all the money go? | Iraq | The Guardian

12

I heard a very long and detailed segment on NPR this afternoon about a projected price tag of $3 trillion being proposed by a couple of economists, Stiglitz and Blimes.

The segment covered a variety of other viewpoints and figures on the issue, and I honestly don’t know which one attributed a price tag of “$30,000 per US household”, but it certainly made me think of this thread.

I can’t seem to find the show I was listening to, but this BBC article touches on many of the same points.

13

[QUOTE=ComeToTheDarkSideWeHaveCookies]
I heard a very long and detailed segment on NPR this afternoon about a projected price tag of $3 trillion being proposed by a couple of economists, Stiglitz and Blimes.
[/QUOTE]

They are promoting their book, The Three Trillion Dollar War: The True Cost of the Iraq Conflict.

14

Yes, but I can say that the NPR segment (that I can’t find) was not a pandering one. It compared their research and analysis to that of many others, and there were interviews with those advancing the much more conservative estimates who are still rather incredulous at the sheer volume of funds and lack of accountability.

15

Whoops. I misspelled her last name, it is Bilmes.

16

Yay. I found a transcript of the report. (From the News Hour):

http://www.pbs.org/newshour/bb/military/jan-june08/warcost_03-26.html

17

[QUOTE=Sam Stone]
On the third hand, all of the money for the war is borrowed. So you’re not paying a cent. People in the future will.
[/QUOTE]
That’s the real answer for your present and foreseeable future taxes. You won’t pay for the war directly, but you will pay one or a couple of hundred dollars per year to cover the interest, probably for the rest of your life.

This is something I’ve been dwelling (obsessing?) on lately and have played with Historical Tables of budgets found at this site. (The tables are a 2.5MB pdf found here.)

In 2007, the expenditures were:
National defense $552.6 Billion (20.2%) [I don’t know how much of this was for Iraq.]
Human resources $1,758.5 B (64.4%)
Physical resources $133.9 B (4.9%)
Net interest $237.1 B (8.7%)
Other functions $130.4 B (4.8%)
Undistributed offsetting receipts -$82.2 B (-3.0%) [From table 5.1, page 55 of the above cite.]
Total - $2,730.2 B

This means that about 8.7% of what you pay in your current Federal taxes goes to pay for interest on the current $9.4 trillion debt.

The Office of Management and Budget (OMB) presents the annual deficits and Federal Debt in unadjusted dollars (a dollar from 1970 = a dollar from 2008), as a percentage of the GDP for the year incurred, and in constant (FFY 2000) dollars to adjust for inflation. In only 25 of the past 100 years has the US Government spent less than it took in. In the past 50 years, that happened in only 6 years, 4 of which were during the latter part of the Clinton Administration.

From my evaluation, if you consider unadjusted dollars, we have paid off past debt through 1977. If you consider GDP accounting, we have paid it through 1941. If you consider constant 2000 dollars (which I think is the most reasonable), we have paid the debt through 1942. So, some of the Federal taxes you pay this year are going to pay for World War II. Startling isn’t it?

Using the constant 2000 dollars accounting, various administrations are directly responsible the current Federal Debt in the amount of:

FD Roosevelt - 16.3%
Truman - 0.6%
Eisenhower - 1.0%
Kennedy - 1.1%
Johnson - 2%
Nixon - 4.9%
Ford - 4.0%
Carter - 6.1%
Reagan - 24.3%
GHW Bush - 14.5%
Clinton - 0% (A surplus during administration)
GW Bush - 25.3% (Projected through the end of his term using OMB figures)

Multiplying these numbers by the 8.7% paid to debt interest, you get 2.201% of your future taxes*, likely for the rest of your life, will go to pay the interest on the $2.15 trillion increase on the Federal Debt under the GW Bush reign. The impact from Reagan’s tax policies is about the same. This year I’m paying about $110 to cover interest on debt from the Reagan era.

It is interesting to note that the increase in the Federal Debt is about the same as some projections of the cost of the war.

  • This number will vary a bit as future expenditures happen and the overall debt changes.
18

[QUOTE=Mycroft H.]
FD Roosevelt - 16.3%
Truman - 0.6%
Eisenhower - 1.0%
Kennedy - 1.1%
Johnson - 2%
Nixon - 4.9%
Ford - 4.0%
Carter - 6.1%
Reagan - 24.3%
GHW Bush - 14.5%
Clinton - 0% (A surplus during administration)
GW Bush - 25.3% (Projected through the end of his term using OMB figures)

[/QUOTE]

That’s pretty awesome, just FTR… but how is it possible that Truman did so little spending despite having to shell out for half of WWII and rebuilding Europe and Japan?

19

Thank you. Glad I could share this project’s results.

One thing to bear in mind is that Truman took over April 12, 1945 and the war finally ended September 2, 1945. This would have all been part of the FFY 1945 budget (Oct. 1, 1944 - Sept. 30, 1945) and in my figuring, that was included under FDR’s contribution.

In the Historical Tables I linked to earlier, pages 47 and 48 have the overview of the Truman years which I took as 1946 - 1953 (Federal Fiscal Years) as those were the years influenced by his budget. (There could be argument about how much influence an administration has on spending of the following administration. I took it that if a president was sworn in Jan. 20 of a particular year, he could influence the budget starting Oct. 1 that same year but considered the next FFY. This decision of mine is debatable.)

Defense spending decreased sharply from 1945-50 while the receipts remained pretty steady. The decrease more than offset the increased expenditure to rebuild Europe and Japan. I assume this is the line item in the table for “International Affairs” which rose to $5.8 billion in 1947 and $6.1 billion in 1949 (in current dollars). This allowed a couple of years of surplus funds which helped Truman’s overall contribution to the deficit. By 1951 the post-war boom was chugging along which increased revenues and off-set the increased spending on the Korean war.

So, in summary, Truman did not have to pay for much of the direct defense cost of WWII but did get to see the benefit of the post-war economy until 1953. Unfortunately I am not smart enough on this whole subject to know much about the costs and sources for the post-war rebuilding in Japan and Europe. Hopefully others can add to that part.