Ireland vs US: Where your taxes go

In the article Ireland vs US: Taxation , some of the differences between government mandated income tax in Ireland and the United States were highlighted. With multiple differences in how taxation occurs in each country, there are bound to be variations in how these funds are utilized. 

Additionally, because the United States and Ireland are nations that differ significantly in size and population, the total budget and how much of that comes from tax dollars will contrast significantly. In 2017, Ireland’s total expenditure was €69.1 billion; the United States spent $4 trillion. These differences in total expenditure make sense in some ways, given that Ireland is home to 4.804 million people, while the United States houses 327.2 million. 

Ireland’s three largest areas of spending within that year are Social Protection, Health, and Debt Servicing/ EU payments. €20.12 billion, 29.11pc of the total spending, funded Social Protection. Social protection encompasses the funding of many social welfare benefits that you must be eligible for to receive. There are many categories that fall under the social welfare umbrella including disability and illness, unemployment, and families/children. These systems are put into place by the government so that people who are in hard situations can have the ability to get off of their feet or at least maintain an acceptable standard of living. 

Ireland spends €14.8 billion, 21.42pc of the total, on health services. This umbrella of health includes a variety of medical services, and what you are able to get entirely covered depends on age, disability, income, etc, although everyone is entitled to some form of government funded healthcare services. Additionally, maternity services and childcare up to the first six months of a child’s life are entirely free of cost to the family; these services are funded by the national government. 

The third largest spending category of debt servicing/EU payments comes in at €10.4 billion, which is 15.05pc of total spending. Debt servicing costs are the annual interest that a country must pay on their debt. Ireland is currently at around €200 billion in debt, which as you can imagine racks up a huge amount of interest that must be paid off before the debt itself can be recovered. Beyond debt, Ireland each year is required to pay the EU a membership fee, which  includes fees on certain areas of governmental income.

The United States three main budget blowing categories are Medicare, Medicaid, CHIP and marketplace subsidies, Social Security,  and Defense and international security assistance. Medicare, Medicaid, etc. utilizes 26pc, Social Security uses 24pc, and Defense uses 15pc of the total budget. 

Due to differing political and economic cultures, Ireland and the United States value different parts of their budget.  Ireland tends to focus their tax payer budget much more heavily on social services, while the United States focuses much more on defense and security. Neither budget is incorrect, but they are a good indication as to what each country finds significant value in.

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