March 28, 2011 -- Would an itemized receipt from the federal government make paying income taxes less painful, maybe even fun?
A bipartisan group of lawmakers and public policy experts thinks so, and it has begun a campaign to make the Internal Revenue Service provide every U.S. taxpayer with exactly that.
A receipt, they say, would show where each cent of your annual tax payment goes, making abstract government programs more concrete and personal opinions on tax cuts, or hikes, better grounded in facts.
"Presumably, Americans will never like paying their taxes," David Kendall and Ethan Porter write in an article laying out the proposal in the journal Democracy published this month. "But with the right policy proposals -- and with their implementation -- they might not despise doing so."
The document, envisioned as no more than one page, would allow taxpayers to see and make sense of proportional differences in federal funding for programs such as NASA, environmental protection, foreign aid and veterans affairs, they say.
It would be mailed to taxpayers who file with paper forms and emailed to those who file electronically, according to the proposal.
The receipt would identify the total tax paid and itemize how much proportionally went to the top 32 federal budget expenditures. More comprehensive data could be found online.
"With a well-designed receipt, myths and misconceptions about taxing and spending that refuse to die would be met with a mortal blow," Kendall and Porter wrote.
One of the most common myths, according to polls, is that U.S. taxpayers spend more on foreign aid than they do on Social Security or Medicare.
A household with $50,000 of income that paid $6,883 in 2010 federal income taxes, for example, would learn that the largest portion of its money went to defense programs ($1,375), social security ($1,334) and Medicare ($845).
Only $43 went to foreign aid.
"During this tough economy, American taxpayers deserve to know exactly how the government is spending their hard-earned dollars," Massachusetts Republican Sen. Scott Brown, who is sponsoring legislation to create a tax-receipt system, said in a statement.
"That kind of transparency is the first step towards addressing our exploding debt and deficit."
Federal debt per American is $45,000. Interest payment on the debt is the sixth-largest, federal-budget expenditure.
"Taxpayers have a right to know where their money goes, how much Uncle Sam is borrowing on their behalf and what they get in return for it," Democratic Florida Sen. Bill Nelson, who also supports the tax-receipt legislation. said.
Costs to Create Tax Receipt
Supporters of the tax receipt acknowledge that the idea could spark controversy on how it would be itemized and costs to produce it. But, they say, it would allow people on both sides of the national tax debate to make their points, with better facts.
Republicans could use the receipts to highlight areas of too much spending, while Democrats could use them to show beneficial government programs and areas needing more investment, they say.
Kendall and Porter estimate the cost of implementing the receipts would be at least $15 million in postage fees to mail the documents to the two-thirds of U.S. taxpayers who file paper returns.
But there would also be costs of building and developing a website and staffing the operation.
"Yet, no matter your ideology, it would be hard not to cheer the increases in public knowledge and accountability that a receipt would leave in its wake," they say.
Do you know where your tax dollars go? Take our Taxpayer IQ Quiz.