What does income tax pay for?

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Every year, the government takes in loads of money in income tax in order to pay for an array of federally funded programs. In 2008, the federal government spent £1.9 trillion. Income taxes pay for programs such as low-income housing assistance and defence.

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The government spends around £406 billion for defence and security-related activities such as veterans' programs.

Social Security

About £401 billion goes to Social Security and 35 million retirees. The amount averages to £676 per retiree.


Three health insurance programs, Medicare, Medicaid, and the Children's Health Insurance Program (CHIP), accounted for 20 per cent or £389 billion of your tax dollars. Medicare provides health coverage to people older than 65 or those who have disabilities. Medicaid and CHIP provide health or long-term care to low-income children, parents, the elderly and people with disabilities.

Local Development

The government uses 19 per cent of income taxes to support programs such as education, science and environment-related activities. Tax dollars are also spent on career training and transportation.

National debt

The government must make interest payments on the money it has borrowed to pay for the deficit. Taxes pay the interest on these loans.

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