What is done with the money sent to Washington? What percent goes where?
The money that is withheld from workers’ paychecks includes state, local and federal taxes, as well as contributions toward employment-based benefits, such as health insurance or other fringe benefits that the employer offers. Only the federal taxes are sent to Washington. They include “FICA taxes” (authorized under the Federal Insurance Contribution Act) to pay for Social Security and Hospital Insurance under Medicare. The federal part also includes income taxes that pay for the general operations of the federal government — national defense, public parks, air traffic control, income security program for low-income people, such as Medicaid, food stamps, and all other things the federal government pays for (including interest on government bonds, and the national debt. In 1998 FICA taxes for Social Security were 6.2 percent of the income an individual earned up to $68,400. Workers also pay 1.45 percent of their pay for Hospital Insurance under Medicare. Employers match both shares of
