Where Does Your Paycheck Go? - Update

I previously blogged about the allocation of my personal income as well as the US government's revenues. The Simple Dollar explores the same idea in a 20 May 2007 post, Figuring Out Exactly How Much Your Time Is Worth.

They started the year with an interesting series: 31 Days To Fix Your Finances. The Simple Dollar comes to us by way of the always useful and entertaining Lifehacker.

Where Does Your Paycheck Go? - revisited

A previous post regarding how my personal paycheck is allocated each week left me thinking that I need to start devoting some of my available income to the tax for people who are bad at math or find a long, lost, wealthy relative. As it turns out, the kind public servants at the US Government Printing Office care about how its paycheck, US tax revenues, is allocated as well. Originally, John W. Schoen at MSNBC responds to the question, "Where do my income tax dollars go?" The answers are later distilled by the Consumerist (with hourly tallies included by yours truly):

• Health Care: $219.40 - 8.78 hours
• Social Security: $206.60 - 8.26 hours
• Military: $196.50 - 7.86 hours
• Income Security (Unemployment insurance, food and housing, retirement for federal workers, etc): $132.70 - 5.31 hours
• Interest on Debt (The US Government's Version of Credit Card Payments): $85.30 - 3.41 hours
• Transportation: $26.50 - 1.06 hours
• Colleges: $19.00 - 0.76 hours
• Federal disaster relief and insurance spending: $17.40 - 0.70 hours
• Administration of justice: $15.40 - 0.62 hours
• Public Schools (K-12): $15.00 - 0.60 hours
• The Environment: $12.40 - 0.50 hours
• Agriculture: $9.80 - 0.39 hours
• General government costs: $6.90 - 0.28 hours
• International development and humanitarian assistance: $6.30 - 0.25 hours
• Social services related to education and training: $6.20 - 0.25 hours
• Space Program: $5.50 - 0.22 hours
• General science and basic research: $3.40 - 0.14 hours
• Community and regional development: $3.20 - 0.13 hours
• Workers training programs: $2.70 - 0.11 hours


• Totals: $990.20 - 39.61 hours

Perhaps the unlisted $9.80 - .39 hours goes to some slushfund?

If I ignore the Federal progressive tax rates and assume that the $1000/week earner and myself are taxed at the same rate, let's see what happens when I cram the figures above into my previously claimed allocations (5.325 hours each week to fund Federal and State taxes, 2.950 hours each week to fund Medicare and Social Security and 2.254 hours each week to fund personal health, dental and vision insurance).

Coming soon! Until then...

Interesting:

• The sum of the top three categories are a full 70% more than the sum of all other categories combined
  
• More is spent on arresting and detaining criminals than is spent on educating a nation of K-12 graders
• 4.5 times more money is spent on the government's interest payments than on college contributions (where the majority of students take loans to pay interest back to the government and multi-national financial services firms)
• More than 5 times the amount of potential preventive and proactive local and community development funding is spent/squandered on disaster relief after the fact
  

Sigh....

Where Does Your Paycheck Go?

I was recently reviewing my benefit information at work and adding a new family member, etc. when it occurred to me that I could spend a few minutes computing how my income is allocated each week.

Disturbing. Based on a 40 hour US work week I've determined the following:

Pre-tax Allocations

• Voluntary retirement contributions: 6.000 hours
• Federal and State income tax: 5.325 hours
• No local taxes so I'll lump Medicare and Social Security together: 2.950 hours
• Health, dental and vision insurance contributions: 2.254 hours

Pre-tax total: 16.53 hours

OK, that leaves me with 23.47 hours of pay to fund the other necessities. Let's see where that goes:

Post-tax Allocations

• Mortgage: 7.993 hours
• Commuting costs: 2.909 hours
• Property taxes: .892 hours
• Property and vehicle insurance: .832 hours
• Student loan repayment: .629 hours
• Life insurance: .559 hours
• Utilities: 1.234 hours

Post-tax Total: 15.048 hours

This leaves a remainder of 8.422 hours of pay to cover food, maintenance, savings, vacations, child care, education and discretionary spending.

I am very glad my spouse has income as well or we would be rather strapped otherwise. I'm not sure how so many people make substantially less money yet manage to live in MA. Three days ago, the Boston Globe posted this piece by Robert Kuttner:

"REPRESENTATIVE Barney Frank of Newton , chairman of the House Financial Services Committee, was in town this week to hold a hearing on the squeeze on household incomes and housing costs. In city after city, costs of both rentals and owner-occupied homes have been outstripping paychecks.

Northeastern University economist Barry Bluestone testified that median housing prices increased by about 50 percent in Greater Boston between 1999 and 2006, while real household incomes were basically flat. In 1998, Bluestone calculated, the median-income family could afford the median-priced home in 148 of 161 Greater Boston communities; by 2006, in just 12 communities.

The cost of rentals has been rising just as fast. All this, of course, represents a real hit to family incomes. If you have to spend half of your income to get a roof over your head, you are that much poorer. If you have to double up to get a decent place to live, that's a decline in your standard of living."

On the same day the Worcester T&G provides details from the Central Mass Housing Alliance's 2006 Out of Reach Report (part 1, part 2, part 3), focusing on the Central MA region.