Americans Pay More in Taxes than We Spend on Food, Clothing, and Medicine

Is that right? If so, is it reasonable?

tax taxes pig piggybank dollar signs chalkboard
Photo by GotCredit under CC BY 2.0 license from pxhere.

Via memeorandum, I came across a CNS News report headlined “Americans Spent More on Taxes in 2021 Than on Food, Clothing and Health Care Combined.” It’s based simply on looking at recently-released US Government data.

According to newly released data from the Bureau of Labor Statistics, Americans in 2021 once again spent more on average on taxes than they did on food, clothing and health care combined.

During 2021, according to Table R-1 in the BLS’ Consumer Expenditure Survey, American “consumer units” spent an average of $15,495.28 on food, clothing and health care combined, while paying an average of $16,729.73 in total taxes to federal, state and local governments.

“A consumer unit,” the BLS says in the glossary for its Consumer Expenditure Survey, “comprises either (1) all members of a particular household who are related by blood, marriage, adoption or other legal arrangements; (2) persons living alone or sharing a household with others or living as a roomer in a private home or lodging house or in a permanent living quarters in a hotel or motel, but who is financially independent; or (3) two or more person living together who use their income to make joint expenditure decisions.”

On average in 2021, American consumer units spent $8,289.28 on food; $1,754.39 on clothing (apparel and apparel-related services); and $5,451.61 on health care.

That equaled a combined $15,495.28.

At that same time, American consumer units were paying an average $16,729.73 in net total taxes.

These included $8,561.46 in federal income taxes; $5,565.45 in Social Security taxes; $2,564.14 in state and local income taxes; $2,475.18 in property taxes; $105.21 in other taxes—minus an average of $2,541.71 in stimulus payments received back from the government.

The same was true the previous year:

In 2020, according to BLS Table R-1 for that year, American consumer units paid an average of $17,148.12 in net total taxes and paid $13,927.74 for food, clothing and health care combined.

The $17,148.12 in net total taxes that consumer units paid on average in 2020 included $8,811.78 in federal income taxes; $5,392.35 in Social Security taxes; $2,429.71 in state and local income taxes; $2,353.42 in property taxes, and $71.87 in other taxes—minus an average $1,911.01 in stimulus payments received back from the government.

The $13,927.74 that consumer units paid for food, clothing and health care, included $7,316.47 for food; $1,434.26 for clothing; and $5,177.01 for health care.

Now, CNS is something of a crank site founded by and run by Terence P. Jeffrey, formerly of the Washington Times and Human Events and campaign manager for Pat Buchanan’s 1996 Presidential run. His fundraising pitch is hysterical:

If only there were a news source we could trust. One that told the truth, asked the hard questions others won’t ask and refused to hang anything on anonymous sources.

There is such a news source, and you’re supporting it. CNSNews, run by veteran journalist Terry Jeffrey, covers the news as it should be, without fear or favor. CNSNews follows stories leftist media refuses to cover, such as the enormous costs of our COVID response and the green roots of our energy crisis.

CNSNews has become one of conservative media’s most trusted sources for original reporting, investigative reporting, and breaking news. It is the hard news arm of the only organization dedicated to fighting leftist bias in the media and entertainment areas.

We really need an unbiased site to ask hard questions that those damn lefties refuse to answer!

But, in this case at least, Jeffrey is simply taking the topline numbers reported by the BLS. It seems straightforward enough to take these numbers and compare them to tax numbers in the same reports. And a sign of good faith to subtract COVID-related stimulus payments from the tax totals.

So, it seems to me that these numbers are reasonable ones to use and the explanations are

1. The BLS figures undercount food, clothing, and healthcare expenditures and/or overstate taxes. I haven’t dug into how these figures are calculated. But it seems reasonable that the BLS has a much better idea of how much we’re paying in taxes, since the IRS collects that information in detail, than it does our other expenditures. Additionally, while Jeffrey quite reasonably deducts stimulus payments, it’s arguable that we should also deduct other payouts from the figure.

2. It’s perfectly reasonable that all-in payments for federal, state, and local taxes should exceed expenditures on food, clothing, and health care. Government provides a lot of services, including the common defense, infrastructure, law enforcement, dispute resolution, education, a social safety net, and so much more. Meanwhile, even in this time of high inflation, food is a pretty small share of our budget, clothing is absurdly cheap, and a lot of folks get their health care for free or close to it through government programs paid for by taxes.

Or am I missing something?

FILED UNDER: Economics and Business, Taxes, , , , , , , ,
James Joyner
About James Joyner
James Joyner is Professor and Department Head of Security Studies at Marine Corps University's Command and Staff College and a nonresident senior fellow at the Scowcroft Center for Strategy and Security at the Atlantic Council. He's a former Army officer and Desert Storm vet. Views expressed here are his own. Follow James on Twitter @DrJJoyner.

Comments

  1. Dave Schuler says:

    It would be reasonable if the money were being spent to aid the needy but it isn’t. Most of it is being spent on the middle class and on war.

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  2. Modulo Myself says:

    It costs money to run a modern state–big surprise there. The whole anti-tax movement has substitute overwrought hysteria for any kind of thinking about how things work, and it’s no wonder that after endless decades of complaining about the tax code and passing useless tax cuts for the rich they are no closer to proposing actual reforms to the tax code.

    Also, just scanning only the first page of the survey the tax numbers don’t make sense. If mean income pre-tax is 84K and after tax is 74K where is the extra 8K coming from? Maybe I’m wrong but the average American is not writing the government a huge check at the end of the year.

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  3. MarkedMan says:

    Although it’s almost always a rabbit hole when you start to give weight to anything a media crank offers up, I’ll take a whack at it despite the source.

    (Ten minutes of moderate googling and chart reading later)

    As you suspected, this is just typical conservative crank BS, of the type you find coming out of billionaires boys club pet sources like Reason and The Heritage Foundation. Take a look at the chart in this article. The median household income in the US is $67K and typical deductions knock that down by at least $10K, putting them in the lower part of the $50-75K bracket, which pays on average $4.6K*. Just from this one chart I can poke several obvious holes in the premise, but it would be a waste of my time.

    This is why I don’t bother reading Reason or Heritage Foundation claptrap. They aren’t journalists or scholars in search of truth, but rather construct elaborate charades of numbers and unconnected facts to “prove” their pre-existing hobby horses. Essentially they take a premise, “any rate of taxation is too much” and spill out a bunch of numbers on the table along with some plus, minus and multiplication signs and rearrange everything until they get the answer they want.

    *I know there are other sources of taxes but FIT is by far the largest for most people, and besides I’ve never met one of these cranks that were interested in cutting anything but income taxes, the one tax that disproportionately affects the wealthy rather than the poor. Remember that Romney made his ‘48% of US citizens are parasites’ analysis based solely on whether they paid FIT or not.

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  4. Scott F. says:

    Isn’t “average” skewing the results here considerably? You know the old saw about how after Jeff Bezos walks in a bar the average customer is a millionaire?

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  5. steve says:

    On the federal level we are largely an insurance company with an army. People are paying ahead for retirement and their retirement health care. At the state and local level you are paying for education, roads, police and fire. Local taxes and services are set locally so people have the ability to decide how much they are willing to pay for. So while I dont have enough interest to see if their numbers are actually correct I do know that we have the ability to adjust both our taxes and our spending. If people decide they want fewer services, a smaller army or less insurance we can do that and cut taxes. If we want more of those we have to increase taxes.

    That said, what conservatives have done since Reagan is cut taxes without really cutting spending, except at the margins with a few things they really dont like. For example they made large cuts in IRS funding so that wealthy people could avoid paying taxes. They went after Big Bird IIRC, but he is probably a gay communist so why not. What they dont touch, wont touch, is defense spending or the insurance programs. (Ok, Medicaid if they can since its for the poor but not even much there as old people rely upon it for nursing home care.) So this is just more rabble rousing against taxes without addressing the spending side.

    Steve

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  6. Scott says:

    You could write an article with all kinds of similar permutations if you chose: Government spends more on unproductive old people and the average family spends on baby food. Government spends more on defense than the average family spends on traffic tickets. It is just dumb but headlines are the bait (which was taken) and easily remembered and repeated.

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  7. Moosebreath says:

    The proper response to anyone saying that we are overtaxed is “Compared to whom?”

    Wikipedia has a useful list comparing countries’ tax revenue to GDP. The US is below just about every developed country, as well as a number of far less developed ones, like Belize, Namibia and Uruguay.

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  8. James Joyner says:

    @Modulo Myself: @MarkedMan: That’s what I thought initially but he’s not interpolating tax figures, he’s taking the toplines from the second link.

    @steve: Yes, that’s a strong point in support of Explanation 2. The Social Security and Medicare taxes are taxes, in that they’re mandatory and go to government, but they’re essentially personal insurance.

    @Scott: I don’t think the headline argument is dumb. We spend a shit ton on taxes. The problem is that we tend not to focus nearly as much on what we get in return. While “foreign aid” and “welfare” are unpopular in the abstract, most people agree that we need schools, roads, a court system, police forces, a standing Army, a Navy, and all the rest.

    @Moosebreath: I’m not sure “as a % of GDP” is all that useful as measure of what we should be paying in taxes. We have a massive GDP and the things it measures doesn’t necessarily relate to what we need to fund. (I also make that argument with regard to Defense spending.)

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  9. Just nutha ignint cracker says:

    @Scott F.: When I was your age, it was Warren Buffett, then it became Bill Gates, but yeah.

    It’s the same type of statistic as “you can save an average of $750 dollars a year on your insurance by switching to [fill in your favorite TV ad insurer].” “An average” is doing a lot of work considering that I don’t pay $750/year for my insurance to begin with.

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  10. Just nutha ignint cracker says:

    @steve: I think you’re being a little naive about conservatives on the nursing home point. They’d be happy to push Granny over the cliff only they can’t get Congress to agree because Granny votes. Remember, there were conservatives at the local/state level saying that seniors had an obligation to die so that the nation could reopen during early Covid.

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  11. Flat Earth Luddite says:

    I can (and do) infuriate my brother-in-law by reminding him that taxes can be considered the price the wealthy pay to keep the rabble from hanging them by their entrails from lamp posts. But then again, he expects the road and sewer fairies to keep his lights and water on too.

    Funny thing, he cashes his SSI check every month while bitching about taxes relentlessly.

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  12. Andy says:

    I guess I don’t see what the surprise or relevance is. The numbers do not seem out of line with other tax data analyses I’ve seen. If anything, the tax numbers might be understated because it’s not clear if the employer portion of payroll taxes is included. Likely not for regular employees since this data comes from a household survey.

    But as another commenter noted, using the average masks a lot of variabilities, notably the progressive nature of our tax system, which is why effective tax rates are usually broken out by income quintiles.

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  13. Michael Cain says:

    @James Joyner:

    …a standing Army, a Navy…

    I suspect that one of the longer-term consequences of the war in Ukraine is going to be Americans realizing that we don’t need nearly as big a standing Army as we have.

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  14. Andy says:

    @Michael Cain:

    I suspect that one of the longer-term consequences of the war in Ukraine is going to be Americans realizing that we don’t need nearly as big a standing Army as we have.

    This is a reason I’m skeptical about a reinvigorated NATO that increases defense spending.

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  15. steve says:

    I will go back and make one comment on the costs since I am a health policy person. The article cited claims the average family spends $5, 451.61 per year on health care. On the BLS survey they cite they claim the average cost of health insurance was $3700. In fact, the average cost of health insurance for a family in the US in 2020 was a bit over $13,000 and then you have to add in out of pocket expenses. IIRC the BLS numbers average in people who dont have insurance at all so it makes the number look lower than it really is. We also know that when we pay people we look at total compensation not just salary. So people get the health insurance instead of pay, and since you dont pay taxes on it that is good for the employee. It does mean that health care for a family costs much more than the number they use. As Andy points out the employer part of SS is hidden from most people but for most of us that would not come close to the over $10,000 difference in health care costs.

    Steve

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  16. MarkedMan says:

    @steve: I can vouch for the $13K figure for the cost of annual insurance. In fact, at least for my company, it is substantially higher than that. That number is pretty much what the company kicks in, but the employees contribute monthly as well, between $180 to over $500 per month, depending on plan and number of insured. Then there are co-pays, minimum contributions, non-covered medicines and services. And of course the monthly contribution to the old age health insurance plan called Medicare. For most families with decent insurance, the entire $15K number this author cites could be eaten up by health care and still not reach real world annual expenditures. It’s another reason why their numbers are phony. A family of four that spends less than $200 a week on food expenditures (groceries, restaurants, school cafeterias, etc) is doing a good job with their budget – and that totals out to just over $10K a year. I will admit that for frugal families, clothing expenses can be quite low. My daughter loves to shop and is the master of finding $12 shirts.

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  17. Raoul says:

    I would put the statement as a statistical lie. Clothing, food and healthcare have relative fix costs so the more one earns the more he or she will pay in taxes whereas the fix cost remain the same. The better we do, the more we pay in taxes so as a society we should strive for more of us to pay taxes than fundamental necessities. You know what country pays less in taxes than food, clothing and health? Angola.

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  18. Gustopher says:

    That is quite a source you found there, James.

    Here’s another headline from their front page:
    ‘My Son Hunter’ Debuts and Demand Overwhelms Film’s Website

    Most of the rest of their headlines are more subtle, but there’s a very particular bias and cherry picking.
    – As Heir to Throne, Charles Said He Would Rather Be ‘Defender of Faith’ vs. ‘Defender of The Faith’
    – D.C. Mayor Declares Public Emergency, Allowing Her to Establish a $10M ‘Office of Migrant Services’

    These are weird right wing cranks who should never be read. It’s the stuff that makes you dumber for reading it because you’ll just remember “I read somewhere that…” and forget that you read it from someplace that is just right wing fan fiction.

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  19. wr says:

    @Michael Cain: “I suspect that one of the longer-term consequences of the war in Ukraine is going to be Americans realizing that we don’t need nearly as big a standing Army as we have.”

    And then increases the defense budget by another ten percent.

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  20. grumpy realist says:

    @Flat Earth Luddite: My version of your axiom is “taxes are the price we pay for living in a civilised society.”

    I’m always sardonically amused at the people who retire to low- or no-tax states and then complain that there are no services for them. What were the idiots thinking?!

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  21. gVOR08 says:

    @Gustopher:

    These are weird right wing cranks who should never be read.

    I read their “about us” statement. They’re right upfront that being RW cranks is what they’re about.

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  22. James Joyner says:

    @Gustopher: I’m quite explicit in the OP about the nature of the site. I caveat that they are pointing to USG published data and linking to it so that we can check the math. It appears to be right. So, at that point, the discussion is about the numbers, not the identity of the person who noticed them.

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  23. Flat Earth Luddite says:

    @steve:

    At the time I was teaching bankruptcy practice to aspiring paralegals (and herding baby lawyers) nearly 2 decades ago (gasp!), affluent students were stunned to discover that (IIRC) 70% or more of consumer bankruptcies were directly related to medical expenses. My friends still active in the industry tell me that hasn’t changed, the adjusted numbers reflect 70-80% of consumer bankos are tied to catastrophic medical costs.*

    *I know that, if not for the benevolence of the Sisters of Providence hospitals here in Puddletown (and two of my surgeons), my out-of-pocket costs would have been way more of the $6M than the <10% SWMBO and I paid out of pocket. At that, we celebrated last December by finally paying off the outstanding balances from my treatment 2011-2015. And yes, that amount took into account the 80% Medicare paid for my treatment.

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  24. Scott F. says:

    @Andy:

    But as another commenter noted, using the average masks a lot of variabilities, notably the progressive nature of our tax system, which is why effective tax rates are usually broken out by income quintiles.

    Also notably the regressive nature of food, clothing, and medicine costs.

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  25. RWB says:

    For the nutbag press, the headline is often the object. It leaves an impression of the facts that may actually be corrected if you read to the end of the article, but most people read just enough to convince them of their preconceived notion if they read the text at all. The headline “Americans Spent More on Taxes in 2021 Than on Food, Clothing and Health Care Combined.” implies the headline “Americans Spent More on Taxes under Biden …” and I am sure I will be hearing exactly that from Trump cultists today. If you read to the end of the article you learn that the taxes were actually higher under Trump, but they will not believe this when you tell them. Mission accomplished.

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  26. Jc says:

    Echoing RWB above – its all an anti tax framing headline. How about “Americans pay three times their total tax burden for housing” – now what is outrageous, oh yes, the cost of housing. Or ” The cost of college education for most Americans is equivalent to 6 years of all their taxes combined” Geez, college costs are insane! – You get my drift…I would just look at tax revenue as a percentage of GDP by country. USA is pretty far down that list, but Americans are convinced they are overtaxed, so this type of “reporting” does work.

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