Of Course Millions Make Money Off of Federal Taxes

Apparently 15 million American households receive more money from the IRS than they pay in federal and employment taxes. According to the author these 15 million Americans have learned to game the system:

In the last 40 years, Washington has passed a series of laws, such as the Earned Income Tax Credit and the child tax credit, that send money to lower- and middle-income families through the tax system. Republican presidents started and expanded some of these credits. Democratic presidents have started and expanded some of these credits. No party exclusively owns or disowns the Freeloading 15 million.

Thus, argues this author, these 15 million Americans have learned to make the tax code work for them and they now receive more money from the government in credits than they pay in taxes. However, I suspect that this figure is woefully underestimated. The author does not at all mention the millions of households whose sole source of income is from Federal, State, and local governments. What about the freeloading 16 million State and local government workers or the 2 million civilian Federal Government workers or the who-knows-how-many contractors to Federal, State, and local governments?

It truly does amaze me that so many people think that government workers pay taxes. If you were to ask anyone whether government workers pay taxes, I suspect that very likely response will be, "Well, their pay stub shows that taxes were taken out of their base salary, ergo, they pay taxes." Government workers and contractors do not pay taxes, they are paid out of taxes. The only reason government workers "appear" to pay taxes is due to the accounting trick in their pay stubs. If a government worker's check says he was paid $100,000 with $30,000 taken out in taxes, it means that he received $70,000. It does not mean that he earned $100,000 and had $30,000 taken away from him. 

On the other hand, a businessman in the private sector who earns $100,000 and has $30,000 taken out actually earned $100,000 in the market and lost $30,000 in taxes. He would have had his entire $100,000 had the $30,000 not been taken out for taxes. However, without the businessman's $30,000 and the tax payments from millions of others who work in the private sector like him, the government worker would not have been paid anything because there would have been no revenue out of which to pay him.

But I can't fault governments for using this trick. If a government worker's pay check clearly reflected the fact that he does not pay taxes, the vast majority of Americans might realize that there are in fact two classes of people in this country: the tax payers and tax consumers. And the tax payers might rise up against their exploiters. However, this accounting trick appears to be quite efficacious at blurring the line between tax payer and tax consumer because so many tax payers believe that they are sharing the burden of government with tax consumers.

Comments

[Redman]

Brutus, in fact, the govt. has an ownership interest in jobs it controls/manages and can, therefore, extract a tribute/tax from those that exercise the privilege to engage in those jobs. The fed. govt. does not have an ownership interest in private sector jobs and therefore has no authority to extract a tribute from those engaging in them. The 16th amendment did not change this truth. See www.losthorizons.com for details and evidence of this truth.

[trevor]

Of course the feds have no moral authority to extract property from the private sector - that's why it's theft.

[Redman]

It is not moral authority I addressed, it is legal authority. The feds have no legal authority to extract property from workers in the private sector via federal income taxes. It's a scam and all the folks have fallen for it.

[trevor]

I agree with that. In fact I believe I read the other day that governments today operate somewhere in the range of 80-90% above the law, constitutionally or otherwise.