Discussion: Taxes and government employees

2 posts


Let's take an example: The US federal government.


Probably not a great source for this info, but this is generally the proportions we're looking at. (It's probably a wider gap these days)

We also have a large segment of the population employed in government service.

Now what blows my mind is that the funding for all this comes from taxes. (given a balanced budget) Somehow, income taxes, sales taxes, tariffs and other fees are able to make up the pay of all these employees. If the gov't employee pays about $20,000 in federal taxes, the private sector employee pays $16,000 in federal taxes, and the private sector employer pays about $5,000 in taxes per employee, we find that about every 2 private sector employees can pay (roughly) for one federal gov't employee.

But we don't have a balanced budget, and it's largely due to entitlement programs which will not shrink.

As the gap grows between wages for public employees vs. wages for private employees expands, how will the private sector (where all taxes ultimately come from) be able to bear this growing burden? The economy is in depression, the only real job growth and wage growth has been in the government sector, and the tax rates and regulations aren't making the environment friendlier to business. Taxing the rich will help, but will only get us so far.

In this environment, we don't have sustainability no matter how many stimulus measures are passed and no matter how much the rich are taxed. The public sector will not shrink in terms of wages nor will it be stagnant. The private sector wages aren't keeping up with inflation.
Team Zissou

On another note, and purely anecdotal, I wonder about a lot of Atlanta suburbs. I see all these strip malls with glitzy national chain stores built in the early 00's. Now, the surrounding areas are getting really seedy. How long can you get by extending credit to Sec 8 recipients, ex-cons, itinerant workers, etc.? On a macro level I think welfare, including negative tax rates that 48% of Americans pay is subsidizing an awful lot of discretionary consumption.