2007-09-18 12:47:04 · 5 answers · asked by Kostas H 2 in Business & Finance ➔ Taxes ➔ Other - Taxes
The income tax goes to pay for most things funded by the government. In 2006, the government collected $1.04 trillion in individual income taxes. Total tax receipts totaled $2.4 trillion.
Some conspiracy theorists claim that all income taxes go to the Federal Reserve as interest on the government debt. This is obviously false. The total government debt is approximately $8.9 trillion. In order for all income taxes to go the interest payment on the debt, the interest rate would have to be approximately 11.7%. The interest is not anywhere near this rate. The interest rate on U.S. Government debt is approximately 4.7%.
Anyway, the Federal Reserve only holds about $800 billion of the debt. In 2006, the Federal Reserve collected about $36 billion in interest from the government. AS REQUIRED BY LAW, it returned a large portion of this to the U.S. Treasury. This can clearly be seen in the INDEPENDENTLY AUDITED financial statements of the Federal Reserve. These audits are part of an ANNUAL REPORT to Congress.
http://www.federalreserve.gov/boarddocs/rptcongress/annual06/pdf/audits.pdf
Page 3 of the above document has the auditor's report on the Board of Governors financial statements. Page 21 has the independent auditor's report on the combined financial statements of the Federal Reserve Banks. Page 23 shows the income statement where the interest receipts of $36 billion are shown. Farther down the page is the payment of $29 billion to the U.S. Treasury.
2007-09-18 13:23:45 · answer #1 · answered by NGC6205 7 · 3⤊ 1⤋
It goes to the government where it's used for a variety of purposes, support armed forces, education grants, pay interest on the national debt, etc. None of it goes to the federal reserve.
2007-09-18 20:31:52 · answer #2 · answered by Anonymous · 0⤊ 0⤋
Income tax is used to pay for the cost of government. It goes to the U.S. Treasury.
2007-09-18 20:18:05 · answer #3 · answered by Sherry 2 · 1⤊ 0⤋
The federal reserve is not responsible for the federal budget. You are probably thinking about the treasury: http://www.a2dvoices.com/realityCheck/markets
2007-09-20 21:26:37 · answer #4 · answered by M D 4 · 0⤊ 0⤋
Someone has been reading Tax Protester rantings.........
2007-09-18 21:13:51 · answer #5 · answered by Wayne Z 7 · 0⤊ 0⤋