Revenue stream flows from private sector
Published 12:00 am Sunday, February 3, 2013
The state Legislature’s efforts to alter our system of taxation are certain to be met with resistance by several groups. Not coincidentally, some of those groups currently pay little or no taxes. This has nothing to do with deadbeats. The burden of the deadbeats pales in comparison to that of legitimate recipients of checks drawn from various public treasuries.
Mitt Romney had one thing right: we do not need to raise taxes, we need more taxpayers. What no politician dares utter is the fact that all new revenue comes solely from the private sector. Since I am unlikely ever to hold public office (if nominated I will not run, if elected I will not serve, and after I serve two terms I will not issue an executive order repealing the 22nd amendment), I am unafraid to address the issue.
The private sector provides all real tax revenue. Public sector employees, in effect, pay no taxes. Deductions may appear on the pay stub, but the treasury gains no money in the transaction; it merely loses less. If you give me $1,000 for my toil, services rendered, or materials, and I give you back $250, am I going to be able to convince you that you have made $150 on the deal? If so, please contact me immediately so that we may begin and repeat this process as soon as possible. If we dip five gallons of water from a well maintained swimming pool and pour a gallon back in, have we gained a gallon of water? Of course not.
Let’s take two workers, one public sector and one private sector, each with a paycheck of $1,000. Our treasury starts out with $1,000 in it. Each check has $250 deducted from it. The treasury is left with $500. We need two more private sector taxpayers earning the same amount just to break even.
This is not meant to bash public sector employees in any way. We need our military, teachers, police, fire, rescue, and infrastructure. Some of the brightest stars in my constellation of friends and acquaintances are public sector employees, including that brightest star of all, my lovely and gracious wife. The point is that we need a lot more private sector employees, entrepreneurs, as well as evil, greedy venture capitalists. We need real taxpayers, not the ones who get most or all of their withholdings back every spring because of various credits, deductions, and exemptions. We need more like Mitt Romney who, despite contributing over two million dollars to the federal treasury, was criticized for paying only 14 percent. Meanwhile, General Electric paid zero dollars, which is OK because their corporate rate was 35 percent, or their fair share; symbolism over substance.
Many people who work for private sector contractors and suppliers are de facto public sector employees because the money used to compensate them comes from a public treasury. They build roads, bridges, schools and other government projects, but they pay no taxes. If a $20 million dollar state project results in $5 million dollars in federal taxes, we are now dipping water from one end of the pool and pouring a little of it into the other end (less some spillage from administrative costs). Add in the tremendous number of government retirees receiving pensions, veterans receiving benefits, costs associated with state colleges and universities, those receiving unemployment benefits or some other type of public assistance and oh, yes — lest my opponents on the left jump out of their Birkenstocks — subsidies for big farm and big oil, plus any number of other outlays, and hopefully we can agree that we should encourage more private sector activity as well as tax reform. A flat tax would increase the number of taxpayers. Reduce the rates and remove deductions and loopholes, including corporate rates. The big companies do not pay those taxes anyway. They are like tariffs; they may write the checks but the expense is passed on to the consumer.
We need public sector employees, but we must be able to pay them without going bankrupt. The level of the water in the pool is maintained by hanging the garden hose over the edge and turning on the spigot, keeping in mind that every drop of fresh water comes from the private sector.
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