Taxes: Here's Where Your Tax Money Just Went Almost $10,000 on military? Why not more for schools, one man asks.

April 19, 2011 -- Taxpayers can now use an online calculator to see where every dollar they've just paid the IRS will go.

Called Your Federal Taxpayer Receipt, the tool is part of the White House website, which describes it as way for tax filers to understand "how and where your tax dollars are being spent."

Want to see how much money you just paid to NASA? To railroad retirees? For military R&D, natural disaster relief, or for vocational education? It's all there, and to the penny -- your total tax bill divided up among some 40 programs and services. The allocations are based on the percentage of overall federal spending each category got in fiscal 2010.

Reactions from the first taxpayers to get Receipts ranged from anger to amusement, from resignation to surprise.

"My first reaction? Shock," says Ray, who requested that his full name not be used. Married, with two children, the 47-year-old president of a mid-sized software company confesses that he never before had paid much attention to his taxes.

"I've always had a CPA do them," he says. He expects to get a little money back this year. "I won't be seeing it, but it makes my wife happy."

To use the tax tool, Ray first plugged three numbers into the White House website: how much he paid in Social Security taxes ($6,600), in Medicare taxes ($3,200), and income tax ($38,000). The result, he says, was enlightening -- especially what he's spending to keep the nation safe.

"I mean, I don't mind paying taxes," Ray says. "Freedom is worth the price. But 26.3 percent on defense? That's $9,994 I'm paying."

Under that same heading, he notes, "ongoing operations, equipment and supplies" account for 10.5 percent of his taxes (and of everybody else's).

"I bet the majority of that is going for Tomahawk missiles we use in other countries where we're on the offense, not the defense," he says. "That's money that could better be spent right here in the U.S.."

He also says he was shocked to see how much he's paying -- "a quarter of my tax money" -- on healthcare. At his company he already pays $1,700 a month per employee for private coverage. The fact that, on top of that, he's spending $9,234 more in taxes for health care strikes him as "awfully high."

If it were all being spent on cancer research, he says, "well, I could see it. But I don't see a lot of money being spent on research."

He's right. According to his receipt, he's spending only 2.5 percent of his taxes on research, food safety and disease control, combined.

"Railroad retirement'? What's that?" he says.

Whatever it is, Ray is paying $190 on it.

He says he's appalled to see that only 4.8 percent of his taxes are going for education and job training.

"There's a town near ours where a school has had to lay off 20 teachers," he says. "How are we going to have an educated next generation if we keep laying teachers off? I say we take two fewer Tomahawk missiles and use the money to hire more teachers."

Like other Receipt recipients we talked to, he wishes there were some way to use his Receipt as a tool for feedback, to tell the government how he'd prefer to see his money spent.

"It would be nice if there were a spreadsheet at the end of it that allowed you to indicate where you think your money ought to go," he says. "I'd take 5 percent of the 25 percent the military's getting and put that into education."

When Christine, 39, got her Receipt for her $9,448 in taxes, she says, she felt the same way.

"It would be nice if I could re-allocate my money," she says. "Of course, there's no way that would ever happen. But I think it would be illuminating for the government to see how I'd spend it."

The Arizona mother of three was surprised to see that only $37.79 of her taxes goes toward responses to natural disasters, and only $47 to the national science foundation.

"Would I adjust that? I'm not sure," she says. "But what if you got a lot of natural disasters one year?"

Will the experience of getting her Receipt cause her to get involved in the national debate over the budget and tax reform?

"I've been terrified of politics, but this makes me re-think my communication with my elected representatives," she says. "We all have a responsibility to make our voices heard. I've already looked up who represents my district."

She's curious to see what other tools might be available online -- maybe from watchdog organizations that keep tabs on government spending.

"I think I'll take a little visit to those sites," she says.

Doug, 50, a marketing manager for a technology and software company in Houston, paid $8,416 in income taxes this year. He, too, found his Receipt eye-opening, and thinks it would be even more useful if it had more features.

He suggests adding "more historical information: where spending is now, in a given category, compared to where it's been historically."

Just looking at his Receipt makes him angry. He points to the very last line item, marked "net interest." It shows he paid $622.78 or 7.4 percent of his taxes "for interest on our debt."

"We can't seem to figure out how not to spend more than we're bringing in," he says. "If you're running a business and you're losing money, you have to look at the biggest percent items first to see what you can cut."

If it were up to him, he says, he'd go after the amount spent for R&D in the military.

"I know we have to maintain a strong defense," he says. "But 9 percent of the defense budget on R&D seems like a lot."

Jim, a 39-year-old travel industry professional, didn't know what he had paid in Social Security or in Medicare taxes but was able, nonetheless, to use the calculator, since users can select a general description of their circumstances and pick an income range and still get a Receipt.

The biggest surprise for him, says Jim, is how much of his money is going for the combination of health care and national defense.

"Almost 50 percent. I'd have guessed more like 30," he says. "It just makes me go arrrgh! because there're so many other places the money could go. If it were up to me, I'd spend more on education and job training. We're short-changing our future. We're going to be overtaken by other countries."

The amount of his money being spent on healthcare in particular disturbs him.

"We're spending more on Medicaid than we are on Libya. It's shocking," he says.

The amount of his money going for military R&D pleases him.

"It makes me happy to see they're getting a good chunk," he says. "But what in the world is 'defense-related FBI activities and additional national defense'? What's the FBI doing with national defense. It sounds bureaucratically murky."