Question

The US National Debt in 2018 is $21,599,377,345,082.00 . What is the required payment per year to complete pay off the debt in 20 years, assume 2% interest. If there are 141.2 million tax payers how much would each tax payer have to pay per year over the 20 years?

Answer 1

Part 1)

The amount of yearly payment can be calculated with the use of following formula for payment:

Annual Payment = Rate of Interest*(Present Value)/(1-(1+Rate of Interest)^(-Periods))

Here, Rate of Interest = 2%, Present Value = $21,599,377,345,082 and Periods = 20

Substituting these values in the above formula for Annual Payment, we get,

Annual Payment = (2%*21,599,377,345,082)/(1-(1+2%)^(-20)) = $1,320,947,031,974.96 (answer for Part 1)

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Part 2)

The amount each taxpayer will have to pay per year over the 20 years is determined as below:

Amount to be Paid by Taxpayer Over 20 Years = Annual Payment/Number of Taxpayers

Here, Annual Payment = $1,320,947,031,974.96 and Number of Taxpayers = $141,200,000

Substituting these values in the above formula, we get,

Amount to be Paid by Taxpayer Over 20 Years = 1,320,947,031,974.96/141,200,000 = $9,355.15 (answer for Part 2)