Do Government Employees Pay Taxes?

President Obama's Stimulus bill - among many other nefarious things - has allowed him to triumphantly declare that his policies have "saved or created" blabbedy blah number of jobs. I use the all-purpose "blabbedy blah" in lieu of a hard number, mostly because his declarations on this question have been all over the map. One day it's 2 million, the next day, 3.5 million. Much has been written about the weasel-wordiness of the "saved or created" qualifier he uses, but what would you expect? OffHisMeds would only point out that the association with Obama is likely to do harm to the reputation of weasels.

The Stimulus has sown its Trillion Dollar largesse almost exclusively across the Public Sector, including hundreds of billions to the States to help them make payroll for Teachers, Cops, Fireman, regulators, fussbudgets and the millions of others who enjoy full-time pay and Bennies for their part-time, generally pointless jobs. But is this subsidy of Public Sector jobs a good thing? From OffHisMeds' perspective, it depends on how you answer the following questions: 1) Is Public Sector employment wealth-creating economic activity? 2) Do Government Employees pay taxes?

Is Public Sector employment wealth-creating economic activity?

In a word, No. Putting aside all of the arguments from the Usual Suspects who harangue us poor souls in the Private Sector about the virtues of "Public Service", you can reach this conclusion simply by observing that the bulk of what is produced in terms of services by the Public Sector is not exportable, nor are they services that rational consumers would willingly pay for. Government services by their very nature are a) regulatory, b) immune to the market pressures that would make them better and less expensive, and c) imposed on the people. That is not to say that some level of government employment is not necessary; after all, somebody's got to provide for the Common Defense, polish up the Lincoln Memorial, staff the 15% of classrooms that actually provide an education or drive the one profitable bus route in Houston, TX.

It is to say, though, that close to 100% of Public Sector employment is a net drain on our real economy. A necessary evil, if you will. The Private Sector represents goods and services that people actually demand and willingly pay for, and are subject to the competition that makes them a good value. Thus, they represent economic activity that produces wealth. Since Government generates little in terms of services people actually want - much less at competitive prices - they can't be said to generate wealth.

Do Government Employees pay taxes?

In a word, No. Since we have established previously that Government doesn't generate wealth, if you don't generate wealth, it's a physical impossibility to generate tax revenues. To the extent that government employees pay taxes, they are paying with somebody else's tax dollars, or they are paying with the debt that governments incur to cover payroll. All government employees - be they city, county, state, federal or school district - are paid by tax dollars from the Private Sector, so in the Best Case, you could only say that they pay their taxes with other people's tax dollars, depreciated since that money is at least once removed from its origins.

This situation is exacerbated by the fact that there are entirely too many government employees as a percentage of the economy, and that - across the national spectrum - they are grossly overpaid for their jobs. This has the dually perverse effect of a) pushing up their income brackets, forcing people and businesses in the dwindling Private Sector to surrender evermore of their useful dollars to cover not just payroll but the "taxes" paid by Public Sector employees, and b) Inflating the available tax revenues available to government. The triple irony of this situation is that government at all levels justifies endless rounds of extraordinary spending by the federal government based - at least partly - on the hyperinflated government payrolls that already exist. One need only look at the effect of government revenue sharing for education and Medicaid - the spending levels of which become a federal mandate, even if the feds stop sending the money - to understand what I'm talking about. For another example, look at Obama's $23 Billion emergency spending bill to "prevent thousands of teachers, firemen and policemen from losing their jobs".

It gets worse. In addition to the roughly 25 million government employees who roam the land, another 25 to 30 million allegedly Private Sector jobs are actually an extension of Federal, State, County and Local government, in the form of the thousands of businesses who provide products and services to those governments for everything from copier paper to computer systems to school buildings to utilities to road construction: and all paid for by your tax dollars.

Which makes you wonder why Obama has been so modest in his declarations of jobs "saved or created". He's pissed away $1.2 Trillion in the past year. Were you to divide that by $60,000.00 (the average pay package including Bennies enjoyed by government worker across America), he could triumphantly claim to have "saved or created" 20 million jobs, very close to the number currently employed by government.

The only problem is that - as we have demonstrated - there is not a lick of real money coming from any government worker in terms of tax revenues, and catastrophically less tax revenue coming from the decimated Private Sector.

So no, government employees do not pay taxes, and more's the pity, since there's not 50 million taxpaying jobs left in the Private Sector to offset the 50 million in the Public Sector.