It’s a common question that Utahns direct to their governments at all levels — especially during tax filing season. Where do our tax dollars go?
At the federal level, they fund our federal defense and programs like Social Security and Medicare. But increasingly, our tax dollars are being used just to pay the interest on our growing national debt.
If our budget challenge isn’t a problem our leaders are willing to address, little else should be made of our other fiscal successes.
Millions of Americans are filing their 2025 taxes and seeing larger refunds this year. President Donald Trump can take some credit for that — as he recently has in tours across the country this tax season — but he and other leaders should recognize the large and growing fiscal challenges that we face as a nation.
According to the Congressional Budget Office, net interest on our debt was 18.5% of total revenues raised in fiscal year 2025 and 36% of individual income taxes. The previous high-water mark as a share of total revenues was 18.4% in 1991.
The president, to be sure, likes to complain about high interest rates, yet history shows the problem lies elsewhere. In 1991, yields on 30-year U.S. Treasury bonds were above 8%. Last year, the yield stayed below 5%. Even with more manageable interest rates than in the past, Americans are seeing their tax dollars go straight out the door to pay interest rather than for other uses of their hard-earned money.
By 2036, more than one out of every four dollars raised in total revenue will go to pay interest on the debt. When looking just at individual income tax revenue, it’s one out of every two dollars. Meanwhile, spending on more critical programs like defense will shrink to a share of revenues of 13.3%.
Even though few policymakers have offered a concrete vision for our nation’s finances, Trump must know that, today, we spend more than 100% of revenues. He may point to his trade war as the solution to this problem, but in the 2025 fiscal year, the U.S. spent $1.8 trillion more than the revenues that came in. By 2036, deficits will reach $3 trillion — and that’s with the higher tariffs that were in place before the recent Supreme Court decision.
This is not sustainable.
Republicans have long looked to economic growth as a solution, and credit should be paid where credit is due: last year, the president signed some of the most pro-growth tax policies available in the One Big Beautiful Bill Act (OBBBA). Businesses across Utah will respond by investing more, hiring more and increasing wages and salaries. Workers will face lower tax rates on earnings from their jobs. In all, this will result in a larger economy.
Indeed, Tax Foundation finds growth pays for about 16% of the major tax cuts from the OBBBA.
But growth will not solve everything. The Congressional Budget Office currently expects spending to grow faster than the economy in all but three years over the next decade.
The president should be honest with Utahns about these challenges.
Unfortunately, he fully ignored the issue in his State of the Union address, and it’s one he is not discussing back on the campaign trail. Instead, he continues to focus on some of the gimmicks he’s signed into law, like the new tax preferences for tips, seniors, overtime and auto loan interest.
But behind the gimmicks and hyperbole, the real fiscal situation is getting worse. It will not improve without good leadership.
With spending growing faster than the economy, tax hikes that cause economic harm will do little to address the long-term imbalances. There are certainly less harmful options to raise revenue, like cleaning up the tax code and broadening the tax base. But spending programs like Social Security and Medicare need major reforms. Otherwise, we are left with what we face today: a debt that continues to climb and a mountain of interest that is set to dwarf our tax dollars.
Good leadership requires building a political coalition that is willing to make difficult decisions to stabilize our fiscal trajectory. The moment is coming when that sort of leadership will be critical. If we continue to ignore this problem, it will be to our own peril.