How Much Tax Revenue Goes On Interest Payments?

This may be a silly question really...

What proportion of my tax dollars goes on interest payments to 'private' institutions rather than being circulated back into the system to pay for government projects, if indeed any interest payments are made?

I have seen figures quoted for government debt and how much each citizen 'owes' so I am supposing that the finance that created that debt in the first place must have come from somewhere. I am thinking that this financing comes from the anecdotal 5% of people who control 95% of the wealth.

Interest is paid on debts. When a government takes on debt from a private source, are they using the future productivity of their electorate as collatoral? How much interest do we pay? Or is that too simple?

Sorry if this is in the wrong place.

How about 100%

After President Ronald Reagan was elected, he appointed a group to look for ways to trim the fat. It was called the Grace Commission and was made up of 150 of the top business and economic minds in the country.

In 1983-84 the Grace Commission released its final report (after 2 years of study). In it, the Grace Commission determined that 100% of all income tax revenue collected by the goverment went to pay the interest on the debt owed to the Federal Reserve.

I love it when someone argues that although federal collection of a person's labor might be illegal, its necessary to pay civic services....WRONG.

They might as well cut out the middle man (IRS and goverment) and send our money directly into the hands of the private stockholders of the Fed (rockefellers, rothschilds, goldman-sach, etc)

1913 Federal Reserve Act....
1913 the 16th amendment is allegedly ratified...

Hmm...

Originally posted by admriker444
In 1983-84 the Grace Commission released its final report (after 2 years of study). In it, the Grace Commission determined that 100% of all income tax revenue collected by the goverment went to pay the interest on the debt owed to the Federal Reserve.

Interesting.

If this is the case, how are government projects and services paid for?

That '100 percent' is looking a bit poorly

Here's the cover page of the actual Grace Report report, which summarizes its main findings.

Among other things, it says that

Resistance to additional income taxes would be even more widespread if people were aware that:

* One-third of all their taxes is consumed by waste and inefficiency in the Federal Government as we identified in our survey.

* Another one-third of all their taxes escapes collection from others as the underground economy blossoms in direct proportion to tax increases and places even more pressure on law abiding taxpayers, promoting still more underground economy-a vicious cycle that must be broken.

* With two-thirds of everyone's personal income taxes wasted or not collected, 100 percent of what is collected is absorbed solely by interest on the Federal debt and by Federal Government contributions to transfer payments. In other words, all individual income tax revenues are gone before one nickel is spent on the services which taxpayers expect from their Government.

We may conclude at least three things from this.

First, that '100 percent of what is collected' is actually only 50 percent even according to the Commission's own calculations.

Second, what is collected is spent not just on Federal debt service but also on 'transfer payments'. What are transfer payments? These are:

- welfare payments
- social security payments
- publicly-funded pensions
- public support for students, including scholarships and financial aid

...and so on. Definition here

A payment of money by the government to an individual that does not form part of an exchange but rather represents a gift without anything being received or required in return. Examples of transfer payments would include student scholarship grants, welfare checks, and social security benefits. Establishing programs providing for transfer payments from the budget to particular favored categories of the population represent one of the most direct ways in which a government may pursue policies of income redistribution.

The third thing we can conclude is that the Commission's calculations are very likely to be biased and untrustworthy. Its members obviously had an agenda very different from their stated mission of identifying 'waste, fraud and abuse within the federal government'. They were antitax corporate fat cats who were lobbying for tax and regulatory cuts, and trying to prevent the levying of additional taxes.

Although their source is hardly a neutral one, it is hard to argue with the following comments:

The (Grace) Commission was created by President Reagan in June 1982 to identify ways to root out waste and mismanagement in the federal government. But the Commission's real agenda was to make some distinctly partisan, business-oriented interpretations of "waste" -- food stamps, educational loans, toxic dumping regulations, nutrition programs, small town post offices.

Comprised of 161 top corporate officers, the executive board wanted to enjoy the official status and legitimacy of a government body without having to observe the rigors of the democratic process. The Grace Commission's deliberations were closed to the public and press, and even the names of task force members were withheld until the threat of a congressional subpoena pried them loose. Given the overwhelming pro-business bias of the Commission's 36 task forces, conflicts-of-interest soon emerged: oil companies urging EPA to weaken hazardous waste regulations, food companies urging less stringent federal inspections of meat, poultry and egg processing operations.

Anyway, isn't government debt largely comprised of bonds, which are held by private and institutional investors? How does that translate into being in hock to the Federal Reserve? The ultimate lender is the bondholder, not the Reserve, surely?

Educate me. I'm a tough sell, though.

[edit on 31-8-2007 by Astyanax]

Both...Thanks for replying.

Originally posted by admriker444
They might as well cut out the middle man (IRS and goverment) and send our money directly into the hands of the private stockholders of the Fed (rockefellers, rothschilds, goldman-sach, etc)

I have often thought this myself and I wonder if the actual purpose of government is to arrange loans with the toil of the populace acting as collatoral. It's actually a nice little set up.

Originally posted by Astyanax
If this is the case, how are government projects and services paid for?

I have a theory about this. Lets say a hospital is needed. The people expect the government to pay for it. Government cannot immediately raise sufficient funds to pay for said hospital so they are forced to go to 'private' source for funds, which must be paid back with large interest rates applied. Future tax revenues collected go straight to aforementioned 'private' institutions.

I know this is highly simplified, but if this is wrong, can somebody put me straight.