Monday night’s presidential debate, centered on foreign policy, barely scratched the subject of taxes. In fact, the word, “tax” and modes thereof appeared only eight times in the 1.5-hour final showdown between President Barack Obama and former Governor Mitt Romney, compared with over 100 times in both the first and second debates.
Taxes are typically regarded as a matter of domestic, rather then foreign policy; however, roughly 20% of the U.S. budget (61% of which comes from federal tax revenue) for FY 2011 and 2012 was allocated towards defense and international security assistance. When considering myriad forms of defense spending, such as veteran’s benefits, this budgetary portion rises to nearly 30%, leaving tax wonks scratching their heads as to why neither candidate highlighted the role taxation plays in dictating foreign policy.
The official website of each candidate offers a slightly more clear vision on how much of your taxes should go to defense and international security.
- Keep Defense Spending at a floor of 4% of GDP (In 2012 it was 3.4%), which at current estimates of economic growth would cost $7.8 trillion over the next ten years, an increase from current levels.
- “The cost of preparedness may sometimes be high, but the cost of unpreparedness is almost always higher—not just in tax dollars but in human life and in the survival of liberty and representative government.”
- Says Obama is: now responsible for nearly $1 trillion in defense cuts over the next ten years that his own Defense Secretary has called ‘devastating,’” and that he, “is holding our national security and our commitment to veterans hostage to his agenda of tax increases.”
- $5.7 trillion, at current baseline, in defense spending over next 10 years
- “Use half the savings from ending foreign wars to pay down the debt and the other half to invest in infrastructure at home.”
- Says Romney will: “Increase defense spending by $2 trillion more than the military is asking for, increasing the deficit,” and, “the Romney-Ryan budget could cut funding for Veterans Affairs by $11 billion while giving new tax breaks to millionaires and billionaires.”
The bottom line: Regardless of the outcome of this election, expect a big chunk of your tax dollars to be allocated towards international security and defense. While the candidates do differ in their spending projections, speculation on this subject is volatile. American taxpayers won’t find much relief from defense related spending anytime soon.
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.