Do government employees pay income taxes?

[squerly]

Trish (my wife) and I got into a discussion regarding federal & state employees paying income taxes. My opinion is they don’t pay income taxes or contribute to SS system. Her take on it is that they do. So what do you do when a friendly discussion ends in two hardened positions and the participants refuse to budge? Well go to FF of course.

My side: The government has no income outside of money it confiscates from the taxpayers and federal and state employees are paid from this pool of money. So a government employee receiving $100,000.00 a year, who is (theoretically) taxed $30,000.00, is actually being paid $70,000.00 a year and contributing $0.00 in taxes or SS. In essence, you can’t contribute to the tax roll with money you took from the tax roll any more than you can take 3 gallons of gas out of your tank, put it back in and conclude you now have more gas in the tank.

Her side: I’m confused.

So what say ye all? Do I have a valid argument here or am I indeed confused?

 

[tiredretired]

Private sector is what supports this country. Money that is made through the free enterprise capitalist system of supply and demand. That is the fuel that runs the engine.

Everything else is an anchor on the ass of the economy. Everything else stifles the growth and creates less money. Business school 101.

I voted NO because it is the truth, not an opinion.

 

[Adillo303]

Well, here is the researched answer.

http://usdailydeficit.com/do-federal-employees-pay-taxes-kinda-but-not-really/

The answer is that a government employee gets payroll deductions just like anyone else and they don't get it back. Did you expect otherwise?

The government plays games with the money and it shows up differently.

Net net to the worker? Nothing is sure but death and taxes.

 

[road squawker]

by your own (ill) logic,... if you use a tax deduction, then YOU are doing the same thing.

you confuse the INDIVIDUAL employee and the IRS AGENCY.

BTW: members of the military are BY LAW required to contribute to SS.

 

[FrancSevin]

An interesting perspective Jim. I like the way you think. And your taste in women.

Trish has it right though. We, in point of fact, are all confused on this. I think that was the plan all along. Most Americans do not understand the encroachment of taxes upon their labor. Whether income taxes, Property taxes, Transaction taxes, License fees and regulations, the hands of government sink deeper in our pockets every year.

And if they didn't keep us baffled, we might just revolt.


But it is all for our own good right?

 

[Snowtrac Nome]

the government workers are paid a wage or salary, they also pay taxes on that income especially the wage grade employees who are taxed on their full amount of their earnings, the gs wage earners are taxed on base pay only cola isn't taxed. so yes they pay taxes I get the money for wages come out of the same pool but one must compensate employees for their work. the employees are a cost of doing business you cant expect them to work for free I agree some departments seem like a waste like the irs or tsa in the end we do need the dod and a lot of others

 

[Leni]

I worked for California for 34 years. Yes I paid all of the taxes eveyone else pays and paid into Social Security.

 

[JimVT]

my vote is no. Washington state has no income tax

 

[Melensdad]

I think Federal government workers pay an illusion of taxes.

State government workers pay federal taxes but only an illusion of state taxes (if state taxes exist in that state)

Local government workers pay federal & state taxes but only an illusion of local taxes (if those exist in that specific area)

 

[Bamby]

I think Federal government workers pay an illusion of taxes.

State government workers pay federal taxes but only an illusion of state taxes (if state taxes exist in that state)

Local government workers pay federal & state taxes but only an illusion of local taxes (if those exist in that specific area)

I think Melonsdad has the closest answer.....

Essentially, the cost associated with federal employees income and payroll taxes, and the revenue they represent, net to zero. The affect is…that the federal government can essentially hire identical employees, yet effectively pay quite a bit less than a company would bringing up an interesting point…that in the end, consumers pay all taxes. In order to get $75k of cash to the employee, a company has to pay $100k because Uncle Sam want’s his “rent”…as if he owned you. That cost…is pushed all the way through the value chain and ultimately ends up on the retail shelf, raising the cost of everything…probably by a factor of nearly 2 when all is said and done. Ponder on that for a while…you can raise taxes on whoever or whatever you want in the short run, but in the long run, the economy re-adjusts back to equilibrium…with higher prices for everything as the plug.

So…to answer our question…while government employees end up with the same after tax pay as a corporate employee with similar gross pay does, their income taxes more or less manifest themselves as a discount to the federal government rather than cash receipts or actual revenues. I think that the reality is…not only do Federal employees not pay income/payroll taxes…none of us as individuals do. Instead…our employers essentially pay a consumption tax on our labor pushing the cost of a $75k per year employee up over $100k. If there were no income/payroll taxes, our employee’s take home salary would still be around $75k…but it would go a lot further because the price of everything would be 25-50% lower. Instead…consumers simply pay more. Our employer pays over $100k for a $75k employee just like at the grocery store, you pay $2, for a $1 loaf of bread.

 

[Snowtrac Nome]

I still think you are all wrong the government employee pays taxes on his income does the feds benefit yes because they take back 35% of what the employee earned there by making the real money paid by the government 35% less

 

[squerly]

I would consider tax revenue (i.e. paying taxes) to be revenue that incrementally adds to the US treasury balance. Let’s say there was a $500K in the treasury on January 1. Through the year the government paid you $100K of which you gave them back $30K and now there is $430K in the treasury.

So yes, you went through the academics of filing your paperwork and writing a check on April 15th, and because you’re 30% lighter in the wallet you sure feel like you’ve paid some taxes. But in reality your contribution adds nothing to the central fund given 100% of your paycheck came from the central fund in the first place.

The accounting that took place between you and the government equates to them actually paying you $70K for the years work, but in no way did you increase the balance of the treasury. So no, you didn’t pay taxes.

Now comes the IBM executive. He pulled in $100K from IBM and on April 15th he writes a check to the IRS for $30K. Mr. Koskinen adds the $30K to the treasury fund and now the treasury is 30K to the better. The IBM employee’s paycheck came from somewhere other than the central fund so the 30% he gives to the government actually increases the central treasury balance. i.e. He paid taxes.
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Note: I used "you" throughout my post meaning the "government employee" and in no way was I referencing anyone who made any previous posts.

 

[Melensdad]

I would consider tax revenue (i.e. paying taxes) to be revenue that incrementally adds to the US treasury balance. Let’s say there was a $500K in the treasury on January 1. Through the year the government paid you $100K of which you gave them back $30K and now there is $430K in the treasury.

So yes, you went through the academics of filing your paperwork and writing a check on April 15th, and because you’re 30% lighter in the wallet you sure feel like you’ve paid some taxes. But in reality your contribution adds nothing to the central fund given 100% of your paycheck came from the central fund in the first place.

The accounting that took place between you and the government equates to them actually paying you $70K for the years work, but in no way did you increase the balance of the treasury. So no, you didn’t pay taxes.

Now comes the IBM executive. He pulled in $100K from IBM and on April 15th he writes a check to the IRS for $30K. Mr. Koskinen adds the $30K to the treasury fund and now the treasury is 30K to the better. The IBM employee’s paycheck came from somewhere other than the central fund so the 30% he gives to the government actually increases the central treasury balance. i.e. He paid taxes.
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Note: I used "you" throughout my post meaning the "government employee" and in no way was I referencing anyone who made any previous posts.

Exactly.

The treasury, after the IBM employee paid his taxes actually increases (to $530,000 in your example) but deceased even after the federal employee 'paid' his taxes. This is a very simplistic example of why socialism goes bankrupt.

 

[Adillo303]

Y'all gotta be smarter than me. I know two things.

1) From the employee perspective, Government employees get taxed at the same rates and from the same entities as everyone else.

2) The rest of this is all mumbo jumbo that does not affect the standard of living of the employee.

Maybe the taxes spin around ,bounce of funny walls, fall down through special chutes and the government gets free money, which isn't enough money, so it borrows anyway.

Still amounts to beans and franks and the mortgage gets paid (hopefully) at home.

 

[tiredretired]

I would consider tax revenue (i.e. paying taxes) to be revenue that incrementally adds to the US treasury balance. Let’s say there was a $500K in the treasury on January 1. Through the year the government paid you $100K of which you gave them back $30K and now there is $430K in the treasury.

So yes, you went through the academics of filing your paperwork and writing a check on April 15th, and because you’re 30% lighter in the wallet you sure feel like you’ve paid some taxes. But in reality your contribution adds nothing to the central fund given 100% of your paycheck came from the central fund in the first place.

The accounting that took place between you and the government equates to them actually paying you $70K for the years work, but in no way did you increase the balance of the treasury. So no, you didn’t pay taxes.

Now comes the IBM executive. He pulled in $100K from IBM and on April 15th he writes a check to the IRS for $30K. Mr. Koskinen adds the $30K to the treasury fund and now the treasury is 30K to the better. The IBM employee’s paycheck came from somewhere other than the central fund so the 30% he gives to the government actually increases the central treasury balance. i.e. He paid taxes.
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Note: I used "you" throughout my post meaning the "government employee" and in no way was I referencing anyone who made any previous posts.

LMAO, I pretty much said the same thing in post #2, but used fewer words, which is a switch for me.

Many government workers are a necessity, so in no way I want my words to say that many of them are not needed or unnecessary. That is simply not the case.

It remains however that free enterprise and the private sector are the only ones that add net gain to the treasury. It's all in the numbers. Numbers don't lie.

 

[k-dog]

So technically, does any private companies employees who are on government contracts pay taxes? And private companies that get federal funds through grants or cooperative agreements?

Also another way to look at it is if the employee basically fills out paperwork in such a way that they don't get taxes taken out during the year. They would be paying any taxes, of course they prolly wouldn't have a job very long.

 

[Melensdad]

. . . 1) From the employee perspective, Government employees get taxed at the same rates and from the same entities as everyone else. . .

Sure the government employee believes he is paying taxes but the fact is that the 'taxes' paid by government employees are, in fact, taxes paid by others. The government employee adds no wealth to the economy but rather, like a tick, sucks blood from his host.

So technically, does any private companies employees who are on government contracts pay taxes? And private companies that get federal funds through grants or cooperative agreements?

This is good question and it must be asked if the income from the private company is EXCLUSIVELY drawn from the public sector. If an ambulance service contracts 100% of its ambulances to the towns and cities then they are acting as defacto government employees.

But if they derive their money by contracting part of their services out to factories, sport stadiums, hospitals AND part to towns and cities then one could argue that those employees do add a service to the economy.

 

[Danang Sailor]

Y'all gotta be smarter than me. I know two things.

1) From the employee perspective, Government employees get taxed at the same rates and from the same entities as everyone else.

2) The rest of this is all mumbo jumbo that does not affect the standard of living of the employee.

This is the correct answer; all else is smoke and mirrors

Maybe the taxes spin around ,bounce of funny walls, fall down through special chutes and the government gets free money, which isn't enough money, so it borrows anyway.

Still amounts to beans and franks and the mortgage gets paid (hopefully) at home.

And there is the smoke and mirrors. A federal employee whose pay-grade indicates an annual salary of $37500 will
lose around $5625 in FITW and $2531.25 in FICA. How this is accounted for in the overall budget picture is immaterial to
this discussion; the federal employee in this example has had slightly more than 21% of the theoretical annual wage taken
back, which directly impacts the ability to keep the family fed, clothed, and sheltered. If there is SITW involved the percentage lost to taxes is of course higher.

Sure the government employee believes he is paying taxes but the fact is that the 'taxes' paid by government employees are, in fact, taxes paid by others. The government employee adds no wealth to the economy but rather, like a tick, sucks blood from his host.

This is a grossly inaccurate characterization, Bob, and I protest it on behalf of all of my fellow blood-sucking tics in the
military and also on behalf of the vast majority of honest, hard-working blood-sucking tics in federal service. While the
funds to pay all of these salaries do indeed come from the federal coffers and "real" cash may not be added back into the
system the services provided in most cases allow non-federal employees to engage in pursuits that do add to the GNP. I
believe you owe a lot of people, some here on FF, an apology.

This is good question and it must be asked if the income from the private company is EXCLUSIVELY drawn from the public sector. If an ambulance service contracts 100% of its ambulances to the towns and cities then they are acting as defacto government employees.

But if they derive their money by contracting part of their services out to factories, sport stadiums, hospitals AND part to towns and cities then one could argue that those employees do add a service to the economy.

This mixing of funding sources is outside my sphere of knowledge and I can't comment with any certainty so I'll
let someone with more data answer.

 

[Melensdad]

This is a grossly inaccurate characterization, Bob, and I protest it on behalf of all of my fellow blood-sucking tics in the
military and also on behalf of the vast majority of honest, hard-working blood-sucking tics in federal service. While the
funds to pay all of these salaries do indeed come from the federal coffers and "real" cash may not be added back into the
system the services provided in most cases allow non-federal employees to engage in pursuits that do add to the GNP. I
believe you owe a lot of people, some here on FF, an apology.

Clearly we are in total disagreement.

However I believe it is based on perception.

Yes, of course a government employee believes he is paying taxes

But the question that was originally asked, as posed in the original post, really defines a differing definition of the word tax which some here seem to miss or ignore.

That being, that if tax money is not derived from a part of the economy that is adds real wealth to the economy, but rather by removing the "taxes" from money that has already been "taxed" from others, then is it actually real tax.

The answer to that question is clearly NO

We can argue about the job of the government, but the fact is that those who work for the government are not adding to the wealth of the economy. They are not producing wealth. I'm not saying that some jobs are not necessary. I'm saying they simply don't add to wealth of the economy.

So yes, a government worker BELIEVES he is paying tax. But his entire income is actually tax money that was taken from producers. So the $100,000 income he gets, and then returns $30,000 in fictional taxes, is a $70,000 DECREASE to our treasury. It would be just as easy to tell federal employees that their income is exempt from Federal taxes and simply pay them $70,000 without drawing taxes. The net effect is identical. The treasury is still drained the same $70,000.

Now with private sector employees, those that don't suck the teat of the taxpayers, a $100,000/yr employee pays $30k/yr in federal taxes, so the treasury actually INCREASES by $30,000.

Some may call that smoke & mirrors. I call it simple logic.

One could argue the opposite and say that EVERYONE should work for the government. Pay everyone $100,000 per year, tax everyone $30,000 per year. Heck pay 1/2 the workers $100,000 and the other half $50,000, with proportionate taxes. Or pick some other mix of pay & tax. But the government would be bankrupt by the second paycheck. So clearly government workers don't ADD to the economy, clearly they extract $$$ from the economy.

I'm not saying we don't need the military. I'm not saying we don't need police. Heck I'm not even going to argue (now) that we don't need the I.R.S. or the E.P.A. All that I am saying is that the more we have working for the federal government the more of a drain it is on individual taxpayers because any way you cut it, federal employees DRAIN taxes from the economy even if they mistakenly believe they are "paying" taxes.

 

[Adillo303]

Sure the government employee believes he is paying taxes but the fact is that the 'taxes' paid by government employees are, in fact, taxes paid by others. The government employee adds no wealth to the economy but rather, like a tick, sucks blood from his host.



This is good question and it must be asked if the income from the private company is EXCLUSIVELY drawn from the public sector. If an ambulance service contracts 100% of its ambulances to the towns and cities then they are acting as defacto government employees.

But if they derive their money by contracting part of their services out to factories, sport stadiums, hospitals AND part to towns and cities then one could argue that those employees do add a service to the economy.

Bob - What the Government Employee believes is that their paycheck that must support their family is short by the amount of taxes deducted. I don't see where anything else enters into their picture.

Interestingly enough, a government worker is paid more for similar jobs than private Employees. Hence big government.

 

[leadarrows]

The cash generators provides tax dollars regardless of who or what. In that regard no one else pays taxes. If you are employed your employer pays you enough to pay taxes due on your income. In the private sector employers generate all the tax dollars not the employees. The government does not generate any money including tax dollars.
All cash flow is generated from services or products.

It's not at all complicated.

 

[Snowtrac Nome]

Bob - What the Government Employee believes is that their paycheck that must support their family is short by the amount of taxes deducted. I don't see where anything else enters into their picture.

Interestingly enough, a government worker is paid more for similar jobs than private Employees. Hence big government.

I would argue that I was a wg civil servant I left government service t work in the private sector. I make more money, and didn't have nosy people calling to my supervisor about misappropriation when a vehicle with a government plate was parked in front of my house for lunch. when working on a remote site made more sense to drive home for lunch rather, than burn up another 15 minutes of company time going back to the office to pick up my rig than go back to pickup the government rig again. I'll admit I saw a lot of waste, but it had little to do with front line employees, it was usually in management or policy. as a mechanic nothing pisses off a guy more than to be told, just document the fact you have no money to do the repairs and you will be good.