Posts Tagged ‘Tax Revenue’

Throughout all of the arguments regarding the size of government, one important fact is often overlooked.  It’s not about freedom and liberty or regulation and control.  It’s not a matter of opinion, but a fact, which can be laid out mathematically, plain as day:  Creating government jobs has a detrimental impact on the economy of the country many times as great as the benefit of creating private sector jobs.  How, you ask?  What’s the big difference?  It’s just a difference of ideology, right?  WRONG! Let’s start with an example, because who doesn’t love a good example.  Let’s say you live in a country of 100,000 “working” citizens.  And…of those 100,000, exactly 1,000 of them work for the government.  Let’s also assume that every “working” citizen makes exactly $100,000 per year.  (You can use any numbers you want.  This isn’t a trick.  It’s just easier to use round numbers.)  So, the entire income of all citizens in the country is:

100,000 x $100,000 = $10,000,000,000 (ten billion dollars)

Keeping in mind that 1,000 of these “workers” are government employees, the entire government salaries would add up to a grand total of:

1,000 x $100,000 = $100,000,000 (one hundred million dollars)

So…in order to be able just to pay the government employees, the entire country would have to be taxed at a rate of:

$100,000,000 / $10,000,000,000 = .01 (1%)

And each employee would pay taxes of:

$100,000 x .01 (1%) = $1,000

Let’s assume the cost of all the government programs is equal to the government employee salaries, or $100,000,000 (This number will remain the same throughout).  So, in the scenario described above, the entire government expenditures and tax revenue would both be $200,000,000 (two hundred million dollars) and each “worker” would pay $2,000 (2%) in taxes.

Now the fun part…JOB CREATION!!!  Let’s create private sector jobs, first… (more…)

Read Full Post »