Do public sector employees contribute to tax revenue?

Bryan · April 1, 2011

Do public sector employees contribute to tax revenue?

This deserves it's own thread, because the subject derails the tread it was started in.

The side discussion between myself and Blueblood went like this:

Govt jobs aren't "real" jobs.

Not ones that contribute tax revenue anyway.

Or create wealth

Or contribute to the economy.

It's funny that some people (mostly lefties) don't understand that Public sector jobs don't contribute, they only take. Tell a CUPE member that they don't actually pay taxes, and watch their heads explode. Draw it out, show them the math, and they'll still argue vociferously. It's crazy.

Which was followed by exactly what I predicted; a simpleminded left-wing inability to just think for a second to understand the math.

So here it is.

Private sector employees and private businesses pay taxes. That is where the tax pool that governments do their spending comes from. That is where the salaries for public sector employees come from too. Public sector employees do not contribute to the pool, they only withdraw from it. When these people "pay their taxes", they are not contributing to the tax revenue, all they are doing is returning a small portion of what they took out. The result is still a net negative to the tax pool. If you are a public sector employee, "your taxes" don't pay for anything, because you don't actually contribute to the tax pool. The net effect is, you don't really pay taxes at all, you just spend them.

Is that clear enough?

Edited April 1, 2011 by Bryan

ToadBrother · April 1, 2011

Do public sector employees contribute to tax revenue?

This deserves it's own thread, because the subject derails the tread it was started in.

The side discussion between myself and Blueblood went like this:

Which was followed by exactly what I predicted; a simpleminded left-wing inability to just think for a second to understand the math.

So here it is.

Private sector employees and private businesses pay taxes. That is where the tax pool that governments do their spending comes from. That is where the salaries for public sector employees come from too. Public sector employees do not contribute to the pool, they only withdraw from it. When these people "pay their taxes", they are not contributing to the tax revenue, all they are doing is returning a small portion of what they took out. The result is still a net negative to the tax pool. If you are a public sector employee, "your taxes" don't pay for anything, because you don't actually contribute to the tax pool. The net effect is, you don't really pay taxes at all, you just spend them.

Is that clear enough?

Do you have a real statistical analysis for this?

Bryan · April 1, 2011

Do you have a real statistical analysis for this?

If you think you need stats, you need to read it again, because you've completely overlooked the point.

ToadBrother · April 1, 2011

If you think you need stats, you need to read it again, because you've completely overlooked the point.

I think I need stats because what I see is an argument bereft of data.

Wilber · April 1, 2011

Do public sector employees contribute to tax revenue?

This deserves it's own thread, because the subject derails the tread it was started in.

The side discussion between myself and Blueblood went like this:

Which was followed by exactly what I predicted; a simpleminded left-wing inability to just think for a second to understand the math.

So here it is.

Private sector employees and private businesses pay taxes. That is where the tax pool that governments do their spending comes from. That is where the salaries for public sector employees come from too. Public sector employees do not contribute to the pool, they only withdraw from it. When these people "pay their taxes", they are not contributing to the tax revenue, all they are doing is returning a small portion of what they took out. The result is still a net negative to the tax pool. If you are a public sector employee, "your taxes" don't pay for anything, because you don't actually contribute to the tax pool. The net effect is, you don't really pay taxes at all, you just spend them.

Is that clear enough?

So?

TimG · April 1, 2011

Many public sector employees increase the income that can be made by private sector employees. For example, free roads encourages economy growth and development. The benefit provided by these employees likely exceeds the value of their services.

The trouble is many public employees exist only to reduce economic activity by doing things that are deemed 'socially useful' by the government. These employees are a net drag on the economy and their value depends on whether an individual believes they are engaged in 'socially useful' activities.

Edited April 1, 2011 by TimG

Scotty · April 1, 2011

Private sector employees and private businesses pay taxes. That is where the tax pool that governments do their spending comes from. That is where the salaries for public sector employees come from too. Public sector employees do not contribute to the pool, they only withdraw from it. When these people "pay their taxes", they are not contributing to the tax revenue, all they are doing is returning a small portion of what they took out. The result is still a net negative to the tax pool. If you are a public sector employee, "your taxes" don't pay for anything, because you don't actually contribute to the tax pool. The net effect is, you don't really pay taxes at all, you just spend them.

Is that clear enough?

Either your thread is poorly named or you're a tad confused. For the question was whether they contribute to tax revenue. and that is not really something which can be argued. There are numerous services performed by public sector employees whose absence would markedly lower tax revenue. These workers exchange their services for money, just like any other worker out there, and pay taxes, just like any other worker out there. Yes, their salaries come directly from the taxpayer, but innumerable private sector enterprises work in whole or in part for the public, and so every employee's salary also comes from the taxpayer. You can start with everyone who builds and maintains roads, highways and bridges, as an example, whether they are public sector workers or work for a private sector company contracted by the government.

Does the existence of roads and highways contribute to tax revenue? Well uh, yeah. :rolleyes:

blueblood · April 1, 2011

I think I need stats because what I see is an argument bereft of data.

Ali velshi on cnn whenever the us jobs reports breaks down where the jobs are going, his sidekick christine romans also contributes to the breakdown in that they both say that private sector job growth is positive for the economy. This is the same ali velshi who brings up the income gap in the usa and is wondering why middle class wages have flat lined when there is global competition

Public sector jobs do not create wealth and are funded by our best friend the tax system. Its funny that they "pay" income tax which is essentially tax dollars paying their salary taken off their pay check.

blueblood · April 1, 2011

Many public sector employees increase the income that can be made by private sector employees. For example, free roads encourages economy growth and development. The benefit provided by these employees likely exceeds the value of their services.

The trouble is many public employees exist only to reduce economic activity by doing things that are deemed 'socially useful' by the government. These employees are a net drag on the economy and their value depends on whether an individual believes they are engaged in 'socially useful' activities.

Those roads aren't free. Paid for with taxes and those of us who drive, vehicle registration, liscencing fees, and fuel taxes.

Bryan · April 1, 2011

Just to be clear, I am not claiming in any way that public sector job are all useless. Many of them are performing a service that does contribute, and some of those services are essential. But you could also make prisoners do many of those same jobs, get similar benefit, and not have to pay them union salaries.

I'm strictly talking about whether public sector employees themselves personally actually "pay" taxes. Because they don't.

Edited April 1, 2011 by Bryan

TimG · April 1, 2011

Those roads aren't free. Paid for with taxes and those of us who drive, vehicle registration, liscencing fees, and fuel taxes.

That is my point. We pay those taxes but the economic benefits we receive from roads likely exceed the costs.

ToadBrother · April 1, 2011

Just to be clear, I am not claiming in any way that public sector job are all useless. Many of them are performing a service that does contribute, and some of those services are essential. But you could also make prisoners do many of those same jobs, get similar benefit, and not have to pay them union salaries.

Because we all want convicted criminals in the civil service.

I'm strictly talking about whether public sector employees themselves personally actually "pay" taxes. Because they don't.

By your brilliant, data-free argument.

ToadBrother · April 1, 2011

That is my point. We pay those taxes but the economic benefits we receive from roads likely exceed the costs.

The economic value of good roads since ancient times has been long known. That's why the Romans put a helluva lot of effort into building and maintaining their vast network.

I'd say roads probably pay for themselves in economic benefits many times over.

Wilber · April 1, 2011

Just to be clear, I am not claiming in any way that public sector job are all useless. Many of them are performing a service that does contribute, and some of those services are essential. But you could also make prisoners do many of those same jobs, get similar benefit, and not have to pay them union salaries.

I'm strictly talking about whether public sector employees themselves personally actually "pay" taxes. Because they don't.

Of course they do. They earn their money and pay some of it back in taxes. Once they are paid the money belongs to them, not their employer. By your argument. A. Employees of private companies engaged in government contracts don't pay taxes either. B. If you work for a private company you don't pay taxes, your employer does.

Edited April 1, 2011 by Wilber

blueblood · April 1, 2011

That is my point. We pay those taxes but the economic benefits we receive from roads likely exceed the costs.

What you are talking about is public sector jobs boosting wealth creation. I.e. Police, road workers, etc. Which is why we pay taxes. Initially that wealth creation starts at the private sector. That road is useless when there are no goods created by the private sector travelling on it.

Wild Bill · April 1, 2011

That is my point. We pay those taxes but the economic benefits we receive from roads likely exceed the costs.

Maybe yes, maybe no! Studies have shown that the gasoline taxes MORE than pay for the roads! Just ask the CAA! The money goes into "general revenue" for use Lord knows where!

The question is to undefined for an easy answer. Yes, public sector workers pay taxes. Still, that money came from OTHER people's taxes! Is it a net gain or loss? Strictly mathematically, it's a loss. In terms of economic contribution, it may not be. That would depend on which SPECIFIC task they do for the economy and the public good!

In the private sector that question is never asked. If someone didn't want the product or service that company would not exist and there would be no employees involved.

In the public sector, there is the "official" line as to what all those civil servants are doing and there is the reality, which is not always the same. There are a lot of public sector workers doing tasks that are only politically motivated by their political masters, tasks that might not actually have any real benefit or are of benefit but nowhere near being cost-effective when handled by the public sector.

As usual, it all DEPENDS!

Wilber · April 1, 2011

What you are talking about is public sector jobs boosting wealth creation. I.e. Police, road workers, etc. Which is why we pay taxes. Initially that wealth creation starts at the private sector. That road is useless when there are no goods created by the private sector travelling on it.

Chicken or egg. Private sector generates the wealth but needs the infrastructure to do it.

BubberMiley · April 1, 2011

That road is useless when there are no goods created by the private sector travelling on it.

More accurately, the goods are useless if there is no road to transport them to the consumer.

I'm surprised a grown-up would even be making an argument like yours.

msj · April 1, 2011

Public sector jobs do not create wealth and are funded by our best friend the tax system. Its funny that they "pay" income tax which is essentially tax dollars paying their salary taken off their pay check.

It's not funny at all. It makes complete sense.

Like any employee, PS employees get their gross pay for which income tax, cpp and ei are deducted.

That money flows to the various pots from which the government spends money.

It's not rocket science and it's not really that funny - it's how the world works.

What is it about reality that you fail to understand?

ToadBrother · April 1, 2011

More accurately, the goods are useless if there is no road to transport them to the consumer.

I'm surprised a grown-up would even be making an argument like yours.

Building proper roads has been seen as the duty of the state for thousands of years. There are multiple reasons to build roads (and by extension, the construction of railroads). In part it is to project the state's power and influence. Rome built roads to facilitate the quick movement of armies and couriers. The United States built the interstate system in no small part for the same reason. A good road system is critical to defense and security. The other part is economic. A good road system substantially aids in the movement of goods and services, making transactions and transport much easier. I don't think people realize just how difficult it is to carry on mercantile affairs on large landmasses without decent road and rail networks. North America, in particular, was literally built on top of roads and railways. You look at what settlers had to put up with in the early 19th century (Donner Party anyone) as compared to the last decades of the century. And even the railways, while private interests, were built with a helluva lot of direct and indirect government subsidy, because everyone knew that a long-distance transportation network was essential to a modern state.

Bryan · April 1, 2011

Of course they do. They earn their money and pay some of it back in taxes. Once they are paid the money belongs to them, not their employer.

The salary still comes out of tax revenue. If a public employee gets $1000, and his taxes on that are $300 , he didn't add $300 to the tax pool, he removed $700 out of it.

By your argument. A. Employees of private companies engaged in government contracts don't pay taxes either. B. If you work for a private company you don't pay taxes, your employer does.

I wouldn't argue against that. It's still the private enterprise that generates the tax revenue. Money goes in to the tax pool.

Edited April 1, 2011 by Bryan

blueblood · April 1, 2011

More accurately, the goods are useless if there is no road to transport them to the consumer.

I'm surprised a grown-up would even be making an argument like yours.

Goods were not useless before roads. They were still made and provided initial capital to get taxes from. A sane govt would spend those taxes on making roads so more goods can travel easier.

If a road is to be built a road will be built, government or not. Govt just does it cheaper.

msj · April 1, 2011

Private sector employees and private businesses pay taxes. That is where the tax pool that governments do their spending comes from. That is where the salaries for public sector employees come from too. Public sector employees do not contribute to the pool, they only withdraw from it. When these people "pay their taxes", they are not contributing to the tax revenue, all they are doing is returning a small portion of what they took out. The result is still a net negative to the tax pool. If you are a public sector employee, "your taxes" don't pay for anything, because you don't actually contribute to the tax pool. The net effect is, you don't really pay taxes at all, you just spend them.

Is that clear enough?

Hmm, PS employees pay taxes in the same way a private sector employee pays them: total income less deductions arrives at net income. Then net income less other deductions arrives at taxable income. Tax payable is based on this number.

So, if PS employees are only paying a "small" amount of tax back then I wonder why you complain about taxes paid by anyone else.

PS employees pay income taxes like anyone else. They also pay HST, property tax, "SIN" taxes, fees, duties, etc.... just like anyone else.

So, if this is "small" then why complain about taxes in the first place?

And, yes, on a net basis a PS employee is "costing" us more (like, duh) but that doesn't mean their job is a waste of tax dollars when a proper cost/benefit analysis is done (ie. value for services).

blueblood · April 1, 2011

It's not funny at all. It makes complete sense.

Like any employee, PS employees get their gross pay for which income tax, cpp and ei are deducted.

That money flows to the various pots from which the government spends money.

It's not rocket science and it's not really that funny - it's how the world works.

What is it about reality that you fail to understand?

Wouldn't it be more efficient and easier on the CRA if public sector employees got paid their net salary with zero govt deductions since their pay comes from those various pots in which govts spend their money?

ToadBrother · April 1, 2011

Wouldn't it be more efficient and easier on the CRA if public sector employees got paid their net salary with zero govt deductions since their pay comes from those various pots in which govts spend their money?

Source deductions management are largely automated, and have been since the 1960s. I doubt you would save that much, and worse, you would essentially have two parallel systems.