Brad Wardell's views about technology, politics, religion, world affairs, and all sorts of politically incorrect topics.
Working for the government
Published on September 1, 2004 By Draginol In Politics

Often times I see people describe those who vocally support tax cuts as being "greedy". But it isn't "greed" that drives that generally IMO. It sure isn't for me. It's about labor. The average tax payer works 10 to 12 hours per week for the government. That's quite a bit of "community service". But here's a fact that most people don't realize: Most people who are "rich" work a lot more hours per week - hence work even more hours for the government.

A lot of people who are considered "wealthy" are that way because they work a lot of hours. Personally speaking, I typically work between 10 to 16 hours per day, 5 to 6 days per week.  I've time sheeted it before and the total hours comes out to being between 60 and 75 hours per week depending on how busy things are. Let's say it averages to around 65 hours per week.

To convert this this to a 5 day work week and you have 13 hours each day, 5 days per week. 

So a person like me, working a 13 hour, 5 days per week schedule is working for the government for the first 6 hours each day.  That's 30 hours per week that I spend working for the government. I am almost a full time employee for the government. My "payment" from the government comes in the form of living in a nation that has the infrastructure and created an environment where someone like me, who grew up very poor, could start his own business and become well off.  So I don't begrudge that -- except when people try to argue that I'm not doing enough.  Because I'm not just paying a lot more in raw dollars to the government, I am working a lot more hours for the government -- nearly 3 times as many each week!

Statistically, people who make over $200,000 per year work more than 40 hours per week -- a lot more than 40 hours per week. Contrary to what some people will tell you, ones income is largely tied (directly or indirectly) to how much wealth they create which is a function of their productivity and time. Those at the top end of the scale tend to be people who are both very productive in their wealth generation and work a lot of hours.

According to the department of labor, those making $200,000 per year or more have a mean work week of 59 hours (I wish I had the link handy as it had a lot of other very handy stats in the report). And if you shave off those who earn a substantial part of their money via investments that number would undoubtably go higher.

Needless to say, when you're working 20 to 30 hours per week for the government, you tend to look darkly on those who suggest that a cut of say 3 to 5 hours you spend working for the government as "welfare" or a "giveway".

That's also a reason why people like me get up in arms when someone starts comparing real welfare to things like "corporate welfare". 

Let me illustrate that point with an analogy:

3 neighbors are working 5 hours a day to build a community play ground. One person is sitting on a chair watching us working. They will be using the playground when it's done but they're not helping build it.  One day, they get a note saying that they only have to work 4 hours per day on the playground. At hearing this news, the person who's been sitting on a chair the whole time says "Aha! See, you're no different than I am. That hour you just got off is welfare!"

That sort of thinking rankles me.  When someone argues that a tax cut/tax incentive is really no different than welfare it ticks me off. Because at the end of the day, it's labor we're talking about. One person is doing labor for the community and the other isn't.

You can debate whether that person should be doing more or less labor for the community, but you cannot deny that they are doing labor for the community. By contrast, the welfare recipient (defined as someone who is not paying income taxes but receives financial aid) is not putting in that labor.  And if you want to quibble on that point, I think most people would agree it's absurd for someone who's either not working at all or at best is working an hour or two each week (for the community) to pick too much on the guy who's working 20 to 30 hours per week for the community -- or to try to equate the labor of the two. 

The average # of hours the "working poor" put in each week total is 15 hours. That's total hours. I'm doing 20 to 30 hours each week for the community and then the other 30 to 40 hours for my family. And so are millions and millions of other people.

I am not suggesting that we should eliminate such welfare programs. On the contrary, I strongly support safety nets. The United States is a wealthy nation and the opportunities it provides should make every citizen feel they have a duty to the community to ensure no one goes hungry or lives without shelter.  But at the same time, don't describe a cut in the number of hours I'm working for the government as "welfare".

So next time you see someone complain about "corporate welfare" or demonizing "the rich" or arguing for higher taxes for "the wealthy" remember this - they're not just paying more than others, they are, statistically, working more hours for the community as well.


Comments (Page 1)
on Sep 01, 2004
Good analysis. Unfortunately for the confirmed Socialist, your labor is not your own, but for the greater good. You're just too greedy to know any better.
on Sep 01, 2004
Not a particularly good analysis. Not only for the simple reason that as a percentage of total income, the rich pay around 19% of their total income to 18% for the poor after payroll taxes are factored in. The curve for hours that you "work for the government" is roughly the same for all income brackets. If a dishwasher worked 60 hours a week, his percentage in taxes would go up in roughly the same way. Of course, the rates are different, but the mathematical function is the same. In fact, the dishwasher is in greater danger of breaking into the next higher tax bracket and having his "hours worked" curve shift upwards.
on Sep 01, 2004
Lobo1113: Sorry but you're totally full of crap. Let's see a source for that. First off, you don't even define whether you're talking federal alone or federal and state.  Secondly, you totally ignore the central thesis: Even if everyone is only paying 20% of their income (which isn't true but let's use your erroneous number), if I'm working 60 hours and you're working 40 hours, that means I'm putting 12 hours of service for the government and you're only putting in 8.
on Sep 01, 2004
Well, excuse the hell out of me. I thought it was obvious that I was talking about the total tax burden. Next time, I'll type extra slow so you can keep up.

The overall tax burden means every form of tax. Federal, state, local, sales, excise, all the different kinds of taxes that every person pays. When it's all balanced out, the numbers come out to around the 20% range. Why is that? One of the main reasons is that FICA taxes phase out at a certain threshold that most wage earners never get to. That alone nearly doubles the tax burden on lower-income people. Then you factor in cost of living taxes like sales taxes. That is a significant boost in the tax liability of a lower-income person. The tax burden is far more onerous on lower-income earners than the more comfortable, and to pretend otherwise is to be willfully ignorant.

BTW if you're paying more than around 20% of your income in taxes, especially as a sole proprieter, then you need a better accountant and/or tax attorney.

Now, I'm going to retort. Stay frosty because it's apparently difficult for some folks to keep up.

Lets start simple.

In it's simplest form, your argument is that for ever five hours of work you put in, one hour goes to the government. My counter-thesis is that as a percentage of labor put in, a dishwasher has the same complaint that you have.

It's because your thesis is tied to a mathematical function that applies to every wage earner in the country. If the dishwasher worked 60 hours a week, he too would be putting in 12 hours of service to the government. But I'll put forward the further argument that you are getting compensated well beyond what the dishwasher would get, even at time and a half.

It's your choice to work those extra hours and you are getting compensated more than fairly for it. Complaining about doing your civic duty and paying the same taxes that the dishwasher has to pay is unbecoming and smacks of whining.

on Sep 02, 2004
on Sep 02, 2004
Hmm, the link doesn't work, try "average rate of taxes" on google.
on Sep 02, 2004

Lobo:  Then you need to provide a source to that data because every study I've shown shows it much closer to nearly half our income ends up going to the government in some form (federal, state, local, property, sales tax).

Here's a clue: Your unfounded arrogance is not a substitute for fact. Come back when you have some data to back up your ridiculous claim.

And unless you're doing 6 hours a day for your "Civic duty" then who the hell are you to talk about it?

on Sep 02, 2004

Thanks Madine: That is more in line with what I've seen. Lobo, like most left wingers who talk about taxes, has no idea what he's talking about. The wealthy pay around 28% of their income in taxes to the federal government alone.  In Michigan, add another 6% for the state and another 8% for sales tax. And of course, that ignores payroll taxes (and the self employed pay both sides of that), property taxes, and various hidden taxes (phone, gas, etc.). 

Even by this crude calculation that puts it at over 42%. A pretty far cry of the 20% Lobo tried to claim.

But luckily for Lobo, people are willing to work those extra hours to create jobs for people like him.

on Sep 02, 2004
Little Whip,

Let's use Wal-Mart as an example of big business. A town has local stores which pay say $15 per hour. The town gives tax breaks to Wal-Mart to build a new store, but they don't give the same tax breaks to the local stores. Wal-Mart moves in and people choose to shop there because the prices are cheaper (partly due to labor costs, partly due to the tax incentives, partly due to economies of scale). The local stores go out of business. Wal-Mart pays it's employees say $10 per hour. Wal-Mart profits are not spent in the town. So although the town seems to benefit when a Super Wal-Mart moves in, a recent study showed that five years after moving into a town, it is a statistically significant probability the town raises taxes, compared with towns of equal size and demographics which did not have a Super Wal-Mart move in. The towns which embrace big business are essentially decreasing competition. Less competition is great for business because you are more profitable. The Robber Barons were incredibly profitable.

Now look, all I'm asking is that you don't present big business as all good. Job creation is certainly a goal. I'm not anti-business and I'm not anti-jobs. But we need to be wary of big business. It is not necessarily our friend in the end. Local business/small business has an important role. Just think about software. Do you want only 10 software design companies, or many? Is it worth having more jobs if none of them pay a living wage?

The Bush record is that millions of jobs have been lost. The ones that have been replaced pay a lower wage on average (i.e. lose a manufacturing job, but created a job at Home Depot). Isn't it the working class people who need our support rather than big business right now?
on Sep 02, 2004
Lobo: Then you need to provide a source to that data because every study I've shown shows it much closer to nearly half our income ends up going to the government in some form (federal, state, local, property, sales tax).


Studies? What studies. All I see is your usual storytelling device of taking your own experience and plastering it onto every other person's situation. Doesn't work. Still, I see no studies, just opinions presented as fact. Not surprising coming from a liberterian (the "I want it all and I want it for free" crowd.)

BTW, I did the suggested google search and five pages in, there was not ONE article that addressed my point. At all. Every last one of them concentrated on federal taxes.

So I'll break it down further for you. What these studies are not including are consumption taxes (sales & utility taxes for example), property taxes, government fees, and any other host of expenses that are largely flat regardless of income levels. What they don't include is the downward pressure of capital gains on the tax rate (which, if you aren't aware, is the source of the vast majority of income for the well to do. If you make as much as you claim to and you don't have a significant capital gains income, then you are doing something seriously wrong.) They also don't even make the proper assumptions such as consumption as a function of total income. Every study shown in the suggested google search is severely flawed in it's approach.

I'll use this analogy for a demonstration on consumption taxes. Say you just got your weekly check for 4,600.00 (after taxes) and you go to get a pack of cigarettes. In line behind you is the gas station attendant who just received his paycheck of 250.00 (after taxes). He buys the same pack of cigarettes. Let's set the pack of cigs at 4.00 a pack with a "sin" tax of 30%.

Total sin tax: $1.20
Total burden for you: 1.20/4,600= .026% increase
Total burden for GSA: 1.20/250 = .48% increase
As you can see, the tax burden of the GSA is 1840% higher against his total income than it is for you.

Let's extend the lesson

Let's say for instance that the GSA buys a two year old Cavalier. And at the same time across town, you buy a 02 Jaguar. Where I live, car registration is based on age of the car, not on cost. So the two of you would pay the same registration fee each year.

Your yearly income: 239,000 ( 4,600 X 52)
GSA yearly income: 13,000 (250 X 52)
Yearly registration fee: 125.00
Registration fee as a percentage of your income: .0005
Registration fee as a percentage of GSA income: .0096
Again, the GSA's tax burden on the same purchase is roughly 1840% higher than yours.

Not only is it inherently regressive, you also have to figure the assumption of percentage of total income based on consumables. A person with median income (~31,000.00) will most likely spend upwards of 90% of his take home pay. At least half of that will be subject to further taxation. Utility tax, sales tax, property taxes (even if you rent, the same proportion of overall property taxes is passed along to the renter.)

Compare that to the well-off person who on average can only eat so many meals a day, smoke so many cigarettes, own so many cars, take so many vacations, etc and so on. Any rich person with even a modicum of money sense will spend about 40 percent of their income on taxable items. There is a myth that the rich spend way more money than the poor. The problem is that it's not nearly as high a percentage of overall income. (BTW, if YOU are spending a significant portion of your salary, then get help. You need to learn how to manage your money.)

Now, onto capital gains. For the financially retarded, the capital gains tax is the tax on PROFIT from an investment. If I have a 30,000 CD earning 4% APR, then at the end of the year, I will earn 1,200.00 in interest. That 1,200.00 tax rate will be taxed at 20%. So I'll have to pay out 240.00 in taxes (not bad at all considering I did NOTHING to earn it.) Or if I buy a stock of google for 105.00 hold onto it for year, recieve 3.00 in dividends and sell it for 125.00, then I only pay taxes on my 28.00 gain (5.60, still not a bad deal considering it's not earned) The studies that were presented here include earned income, but don't include investment income (capital gains) income. The reality is that most millionaires make the substantial portion of their yearly income in capital gains (dividends, investment gains, etc.). In contrast, nearly all lower income families make insignicant income through capital gains (mostly through savings accounts.) Now, a little math lesson, if you are paying a 32% rate on lets say 25% of your income, and 20% on the other 75%, what does that make your total tax burden?

23% (based on an assumption of 300,000.00 yearly income earned and unearned)

Of course, these numbers are dependent on the proportions of each individual case and some folks who make a good living just don't know fuck all about handling money (I can think of at least one person on this board.) But it all averages out in the end.

So have I sufficiently demonstrated the downward pressure on the tax burden of rich people vs. poor people, or are you just disinclined to LEARN something?

And while you may cast aspersions on my character, background, education, interests, etc, it's painfully clear that I know FAR more about handling money, tax codes, economics, and general finance than you do. You may HAVE more money than me at the moment, but I guarandamntee you that if we started out with the same amount of money, at the end of a year, I'd have far, far more to show for it than you.
on Sep 02, 2004
The Bush record is that millions of jobs have been lost. The ones that have been replaced pay a lower wage on average (i.e. lose a manufacturing job, but created a job at Home Depot).


Unfortunately I'm at work (and on brake) now so I can't get to the data. But the average income has increased 12.5% in the last three years. With almost no inflation this is a net increase. I know this data was brought forward by someone else on this Forum before and it was from a good source. This is one of the doom and gloom statements Kerry keeps repeating, but after doing research on this one and the myth that jobs have been lost under Bush (3.9 million increase) I have found them both untrue.

If knowone else posted the data before I get home I'll put it up.
on Sep 02, 2004
I have to say, Lobo, your figure is MUCH more accurate a reflection of my tax burden than Draginol's 42%. The reason, as you point out, is the important contribution of capital gains in lowering my tax burden. Draginol also included 8% in sales tax which makes no sense at all to me unless he spends every dollar that he makes every year. Some Americans do.

What you didn't address, for people who are self employed, is the 15.3% on the first $90,000 or so. This is a painful factor I didn't see you include. You also didn't address state tax, which keeps your figure low. I'd say 33% is a good figure for a start, but with good accounting you can get it to 25%. You are pretty pathetic if you are in the 40th percentile.
on Sep 02, 2004
If knowone else posted the data before I get home I'll put it up.


Thanks, Lee! This is one of the reasons I love forums like this.

on Sep 02, 2004
Inigo

This is what I got off my earlier post. The other about income I know was posted near my origanial post I may be able to find it before my lunch is over, but I've got it saved at home.

U.S. Department of Labor
Bureau of Labor Statistics

Employed in July 2004: 139.7 million

Employed in Dec 2000 (last months of Clinton): 135.8 million

Net increase of 3.9 million jobs


Reference:
http://stats.bls.gov/news.release/empsit.nr0.htm

ftp://ftp.bls.gov/pub/news.release/History/empsit.01052001.news

If you lessened to what John Kerry says: "Jobs have been lost under this administration, and I will do something about it."

He is right tectonically. Jobs have been lost, but he fails to say jobs have been created to replace them. You should listen to the guy, along with all politicians Dems and Reps., with an open mind. Both sides do the same tricks.


This info is about a month old, but I don't think it's changed much from the origanial post.

My Two Cents
on Sep 02, 2004
Wow! I cannot fathom why the republicans are not trumpeting the 4 million net job figure over and over!

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