In 2010, the U.S. government took almost $1.2 trillion from American families through individual income taxes alone, according to IRS data. According to the Tax Foundation, a tax research group based in Washington, D.C., Americans worked from Jan. 1 through April 17 this year just to earn enough income to pay all the federal, state and local taxes they're legally bound to pay.

SEE: Personal Income Tax Guide

With so much money flowing into government coffers and Americans working so hard to fund government activities, you would hope that government officials were spending that money prudently. In many cases, they aren't. Rather than focusing on protecting Americans' safety and property rights through essential functions like national defense and the court system, the federal government is squandering your money on the following projects.

Robot Dragons, Video Games, Christmas Trees, Snow Cone Machines and Chocolate
According to "Wastebook 2011: A Guide to Some of the Most Wasteful and Low Priority Government Spending of 2011" by Senator Tom Coburn (R-OK), the federal government gave $113,277 to The International Center for the History of Electronic Games, an organization that collects and studies video games. The feds also gave almost $50,000 to the second annual Hawaii Chocolate Festival, where visitors had the opportunity to taste 10 different chocolates, chocolate vodka, chocolate beer and chocolate popsicles, all for the stated purpose of supporting Hawaii's emerging cacao industry.
The federal government spent another $75,000 to help Michigan promote its already successful Christmas-tree industry (the third-largest in the United States), $130,987 for dragon robots that are supposed to teach language skills to preschoolers and $6,279 to purchase snow cone machines for emergency management services, also in Michigan.

In 2011, another $1 billion went toward tax credits for energy-efficient home improvements for individuals who don't own homes, including children and inmates, according to Coburn's report. It seems safe to assume that other tax credits are being similarly abused. The cheaters are unlikely to be caught, given the lack of documentation that must be submitted with a tax return to claim many credits.

Coburn's report implores taxpayers to ask themselves, "Do these initiatives match your understanding of the role of the federal government as outlined by the enumerated powers of the U.S. Constitution?" and "Do these represent national priorities or do they reflect the wasteful spending habits threatening to bankrupt the future of the American dream?"

SEE: How To Get The Most Money Back On Your Tax Return

Taxing and Spending
When you send $1 to the government, it doesn't provide $1 worth of services. In fact, it doesn't even come close. James Payne, a research fellow at the Independent Institute, an education organization that studies critical social and economic issues, has quantified the financial losses to our society from the tax system. In his article, "The Unnoticed Deficit That Makes Us $6 Trillion Poorer," Payne writes that the overhead costs of the U.S. government amount to $5.7 trillion in lost economic productivity, or approximately $18,000 per person. These figures tell us how much money is wasted through the government's process of taking money from one person and giving it to another.

The $5.7 trillion in lost economic productivity consists of six costs, including disincentive costs from taxes that discourage productive economic activity, compliance costs associated with the challenges of understanding and preparing tax returns, and government costs to run and support the IRS.

Add in Administrative Costs
Furthermore, there are administrative costs to run the agencies that redistribute taxpayer dollars, over-and under-consumption costs from people consuming more or less of a good or service when the government foots the bill, and lobbying costs when special interest groups pay professionals to curry valuable favors from the government.

"When government spends $100, the country winds up being $116 poorer than it would have been had that taxing and spending not occurred," Payne writes. He suggests that the government stick to providing essential services that only the government can provide and let the private sector provide goods and services like "education, scientific research, pensions, healthcare, charity, arts and roads."

The Bottom Line
The government has no business spending your money on items like those described in Coburn's report. If it cut these and other instances of extravagant spending, the government wouldn't find it necessary to spend $30,015 per household annually in funds that must first be taken from honest, productive, income-earning citizens. We could dramatically shrink the federal budget deficit and improve economic productivity, raise living standards, and relieve cash-strapped households in the absence of such waste.

SEE: Breaking Down The U.S. Budget Deficit

Photo Courtesy AP Images

Related Articles
  1. Economics

    How Bernie Sanders Has Avoided Big Money (Mostly)

    Bernie Sanders hasn't entirely avoided PACs with his fundraising, but he has gotten a lot of bang for the buck
  2. Investing News

    Obama Wants to Double Wall Street Regulation

    President Obama wants to double the budgets of the SEC and the CFTC over the next five years.
  3. Economics

    Does Big Money Hurt or Help Clinton and Rubio?

    Marco Rubio and Hillary Clinton lead their parties in raising money from Wall Street. Is that a help or a hindrance?
  4. Taxes

    Why People Renounce Their U.S Citizenship

    This year, the highest number of Americans ever took the irrevocable step of giving up their citizenship. Here's why.
  5. Fundamental Analysis

    The Evolution of Obamacare Since Its Inception

    Find out whether the Patient Protection and Affordable Care Act, also known as Obamacare, has lived up to its lofty projections from 2010.
  6. Economics

    Economist Guide: 3 Lessons Adam Smith Teaches Us

    Learn three critical lessons about economics from 18th century philosopher Adam Smith, considered by many to be the father of economics.
  7. Taxes

    Taxes: H&R Block Vs. TurboTax Vs. Jackson Hewitt

    There are more and more tax services to help ease the pain of filing income taxes. Here's our take on three of the biggest.
  8. Stock Analysis

    The Biggest Risks of Investing in Lockheed Martin Stock (LMT)

    Learn about defense contractor, Lockheed Martin, its leadership within its industry, and how the company can stay on top as the defense landscape changes.
  9. Taxes

    Confused About Estimated Tax Deadlines for 2016?

    If you run a business or have investment income, pay attention to this year's estimated tax deadlines. Here are the details, and what's new for 2016.
  10. Investing News

    Chipotle Served with Criminal Probe

    Chipotle's beat muted expectations and got a clear bill from the CDC, but it now appears that an investigation into its E.coli breakout has expanded.
RELATED FAQS
  1. What austerity measures can a country implement to curtail government spending?

    Broadly speaking, there are three types of austerity measures. The first is focused on revenue generation (higher taxes), ... Read Full Answer >>
  2. How do I file taxes for income from foreign sources?

    If you are a U.S. citizen or resident alien, your income (except for amounts exempt under federal law), including that which ... Read Full Answer >>
  3. How Long Should I Keep My Tax Records?

    The Internal Revenue Service (IRS) has some hard and fast rules regarding how long taxpayers should keep their tax records. As ... Read Full Answer >>
  4. Can FHA loans be used for condos?

    A borrower can obtain Federal Housing Administration (FHA) loans to finance the purchase of a condominium as long as the ... Read Full Answer >>
  5. Can I get dental insurance with Medicare?

    Medicare does not offer dental insurance that will cover dental care and medical supplies, such as cleanings, sealants, extractions, ... Read Full Answer >>
  6. Who can make catch-up contributions to a Health Savings Account (HSA)?

    An eligible individual who is 55 years or older at the end of his tax year can make additional catch-up contributions to ... Read Full Answer >>
Trading Center