Your Guide to America’s Finances (2024)

FAQs

Who does the U.S. owe money to? ›

The primary sources of revenue for the U.S. government are individual and corporate taxes, and taxes that are dedicated to funding Social Security and Medicare. This revenue is used to fund a variety of goods, programs, and services to support the American public and pay interest incurred from borrowing.

In 2023, major entitlement programs—Social Security, Medicare, Medicaid, Obamacare, and other health care programs—consumed 50 percent of all federal spending. Soon, this spending will be larger than the portion of spending for all other priorities (such as national defense) combined.

The United States pays interest on approximately $850 billion in debt held by the People's Republic of China. China, however, is currently in default on its sovereign debt held by American bondholders.

Eliminating the U.S. government's debt is a Herculean task that could take decades. In addition to obvious steps, such as hiking taxes and slashing spending, the government could take a number of other approaches, some of them unorthodox and even controversial.

Over half of federal revenue comes from individual income taxes, 9 percent from corporate income taxes, and another 30 percent from payroll taxes that fund social insurance programs (figure 1). The rest comes from a mix of sources.

High-Income Taxpayers Paid the Majority of Federal Income Taxes. In 2021, the bottom half of taxpayers earned 10.4 percent of total AGI and paid 2.3 percent of all federal individual income taxes. The top 1 percent earned 26.3 percent of total AGI and paid 45.8 percent of all federal income taxes.

Combining direct and indirect taxes, as well as taxes from state and local government, the average American family paid $17,902 in taxes in 2021.

What age group spends the most money in the US? ›

Baby Boomers (ages 55-75 years old) spend a total of $548.1 billion annually. Gen X (ages 36-54 years old) follow Boomers with $357 billion annual spend. Millennials (25-35) are next with $322.5 billion in annual spend. The Silent generation (ages 76 years and older) spend $162.9 billion annually.

Property taxes vary by state

New Jersey had the largest median property tax bill for singe-family homes in 2023. Connecticut, New York, New Hampshire and Massachusetts rounded out the top five states with the most expensive median property tax bill.

Approximately 20 percent of the federal budget is spent on defense and security.

In the United States, individual income taxes (federal, state, and local) were the primary source of tax revenue in 2022, at 45.3 percent of total tax revenue.

One of the main culprits is consistently overspending. When the federal government spends more than its budget, it creates a deficit. In the fiscal year of 2023, it spent about $381 billion more than it collected in revenues. To pay that deficit, the government borrows money.

At the top is Japan, whose national debt has remained above 100% of its GDP for two decades, reaching 255% in 2023.

Tax hikes alone are rarely enough to stimulate the economy and pay down debt. Governments often issue debt in the form of bonds to raise money. Spending cuts and tax hikes combined have helped lower the deficit. Bailouts and debt defaults have disadvantages but can help a government solve a debt problem.