Taxes are a percentage of money deducted from the public to fund the government. The public pays the taxes, but have you ever wondered if the government pays the taxes? Well, let us find out then.
The Governing body:
The government of the United States is not just one governing body, it consists of more than that. The government of unites states consist of federal workers, federal agents, federal states, organizations, and much more. Moreover, it also consists of election workers and medical residents.
Does the government of the United States of America pay taxes?
If we talk in general terms, we can say that the government does not pay taxes. It is because the government itself does not have any source of income. It is run by the public and is also maintained by the public. Moreover, any disasters in the country that causes damages are also compensated using the tax money provided to the government of the United States by the public. Any damages caused to public property caused by natural calamities are also compensated using the tax money.
The tax money paid by the nationals of the country is stored in a national treasury. So when any money is required for maintenance, they take out the money from the treasury. The government does earn money, but it is considered an indirect income. If any government organization is in the constant loss for the previous year, the government decides to privatize the organization or the asset of the state. The organization might be at a loss because the government is not rich enough or does not have the finances to fix the organization and make it profitable. As a result, they sell it out to private companies. However, this is not a permanent sale. A contract is signed with the private companies that buy the organization for a certain period. In return, the organization pays the government taxes and a percentage of profit.
Moreover, when the asset of the state becomes financially healthy and profitable, the government repurchases the organization. The taxes and profit percentage are called the indirect income earned by the government. In such cases, the government pays taxes, and those taxes are directly sent to the treasury.
Furthermore, taxpayer money is used in buying things that are beneficial for the country. These items are bought from private companies inside the country or different countries. These items can be anything. A state requires a lot of stuff for its survival, and when it cannot find it in its territory, it buys it from other countries. In most cases, these countries buy a hefty amount of military supplies from countries that manufacture those products. As a result, the government has to pay the amount of that specific item as well as the tax that is applied to it to other countries.
Trading is vital between two neighboring countries and helps in the development of a state. So why does trading happen? These five reasons why trading happens and are the following:
- If there is a difference between the technologies of the two countries
- When there is a difference in demand for a specific product between two countries. Suppose Canada does not use wheat, but the USA has a greater requirement for flour. As a result, Canada will trade wheat with anything that is in abundance in the USA.
- Economical scale
- The effects of government police
The government does not pay for the actual price of the objects that it has traded, but the government must pay for the taxes on those items. Those taxes are transferred to the national treasury and are spent on the public.
Furthermore, each country carries out foreign trips that include government officials and sometimes the president. The country has to pay for all money that is spent on the government trip. Moreover, the facilities acquired by the government in another country are to be paid along with taxes. If the president of the United States visits India, the government has to pay for all security arrangements and the rent of the cars as well as the fuel consumed by the vehicles. All these expenses include the taxes the government will pay to the Indian government. So from this, we can conclude that the government has to pay taxes in other countries.
Government officials living abroad:
For any country, it is vital to stabilize and look after its diplomatic relations. Moreover, every country gives great importance to international relations with others. As a result, different countries establish offices in other countries to improving relations with them. These offices are known as embassies. Each embassy consists of staff members, the ambassador, and the family of the ambassador. The country that has an embassy in another country has to pay for all its expenses. These expenses include the salaries of staff members and the ambassador. Other extra charges include the rent of the embassy and the cars used by staff members. As a result, the government has to pay for the taxes that apply in other countries too. The tax deductions will be according to the law of the state where the embassy is situated. The security is provided by the hosting company.
Election workers employed by the government:
These are people hired by the government to help it in carrying out free and fair elections. They are hired by the government, so they are government employees and a part of the governing body. Election workers have responsibilities. Some of those responsibilities are polling worker, vote counter, ballot clerk, machine tender, and many others. Election workers are paid only when the election arrives, and they are paid daily. A stipend or fee is fixed by the government, which is paid to them after the election is over.
Moreover, these election workers are also paid compensation, which includes a wage for income tax purposes and social security. Moreover, these election workers are also paid extra charges for fuel and food.
The compensation paid to these election workers is paid under a non-accountable payment plan. These workers are given enough money for their services to the government. However, they are liable to pay for taxes even though they are government workers on a contract. Section 3402 allows them to withhold income tax on daily wages provided to them by the government of the United States.
These government workers have to pay for social security and medicare too. The payments for social security and medicare are set by FICA. The laws of FICA determine whether these government workers will pay social security or medicare taxes. Most states in the USA have provided benefits to such government workers by excluding them to pay any social security or medicare taxes. However, they are excluded if the income of these government workers falls into a category. Tax exclusion is only possible if their pay is less than the federal threshold amount that is 1800 dollars. Some states also provide a lower threshold amount for these government workers. This lower threshold is for half the year or quarter of a year.
Do public officials pay taxes?
Public officials are also part of the governing body. So who are public officials? A person is called a public official if he or she is part of the government or participates in activities related to the government. Advisor to the president on health care is a public official. These officials are given monthly salaries depending on what kind of position they have in the government.
Public officials pay taxes, and they also do not pay taxes. It depends on what type of tax they are paying. The salaries public officials receive are from the state treasury. As a result, the public pays for the salaries of these public officials. If the public official is excluded from paying self-employment taxes as they are employed by the government.
If the official has any other sources of income, he will have to pay those taxes. Suppose the government official runs a business and receives a monthly revenue from it, he will have to pay taxes on that income. Taxes paid on that income will be equal to the rate any random citizen pays on that specific income. The same applies to investment. If the government official receives any income from investment, he will have to pay those taxes.
Moreover, any extra spending for personal means will also have taxes on them. They are liable to pay those taxes just like a random citizen.
Taxes by federal workers:
Yes, federal workers pay taxes just like random citizens, but the tax they pay is transferred directly back to their employer. The employer of these federal workers is the government of the United States. So the government pays them that little extra just so that it is given back to them.
So can we say that if their actual salary is lower than their nominal salary, they don’t need to pay any taxes? Well, that’s not the case. This procedure is a little complicated. We cannot compare federal workers to people that work for a private organization. People who work for private organizations have lower post-tax salaries than the pre-tax salary. The difference between the two revenues does not go entirely to the employer. It creates a gap between the receiving amount to the employer and the amount that the employee pays.
I will explain this procedure with an example. Suppose a private firm pays its employees 100 thousand dollars a year for a job. After all tax deductions, the person who works for the private company receives a total amount of 80 thousand dollars. It means that the person paid 20 thousand dollars in taxes to the government. On the other hand, if the same person works for the government has a salary of 125 thousand dollars, he will also have to pay taxes. He pays the government 25 thousand dollars in taxes and receives 100 thousand dollars. So what the government did is that it paid the federal worker 25 thousand dollars just to take it back in taxes and also helped him in earning 20 thousand dollars more than the person working for a private company.
Another way of saying this is that the taxes paid by the employers are equal to the tax paid by the employers. As a result, the net income will be zero if the employers were to receive rebates for their income taxes.
It is considered unfair by some people as they say the government does not benefit the people working for private companies. It discourages employment as it creates a gap between the payment of private employers and the net income the employees receive. Moreover, it also distorts the composition of the work as the federal government outnumbers other employers.
People who are fee-basis officials are considered to work under self-employment, and these officials can not be called employees concerning their work. However, they are considered government employees. Any person who receives a salary, even if it is called fees, is an employee who receives income. All revenue learning employees have to pay taxes such as social security and employment tax.
Emergency workers are people hired by the government in a situation of emergency. They are non-permanent and are employed for a little time. It makes them government workers for some time, and so they are a part of the government. The government pays them for their services during the emergency. Some of these emergencies could be floods, fire, storms, tsunami, or other natural calamities.
Emergency workers provided the benefit of not paying social security and medicare. This exclusion of taxes is provided under section IRC 1321 B 7 F. these individuals do not include permanent workers of the government even though they work full time or half time. People who are already working as emergency workers with the government are already provided with these incentives, so they do not need extra benefits.
Is it compulsory for congress members to pay taxes?
Yes, the congress members have to pay taxes. These members of the house receive salaries on a monthly or yearly basis and they must pay taxes on them. Since they are congressmen and the lawmakers of the country, they have given themselves some extra benefits. It differentiates them from the taxpayers.
A while ago, they passed a law that if any member of the congress was the owner of a second property; he has to pay 3000 dollars in taxes annually. So what they did here is that they fixed the price of tax that has to be paid and removed the factor of rate.
It does not apply to taxpayers as they have to pay an annual tax on the property. The tax rate is deduced by the interest on the house, the mortgage paid by the resident, and the total value of the residence. For members of congress, they will have to pay only 300o dollars in taxes, no matter how expensive the property is.
Income tax payment by congress members:
Most people say that congress members are employees of the state, so they do not need to pay any income tax. It is false as members of congress have to income tax just like the taxpayers. The US law states that any person who receives an income or revenue has to pay income tax. It also applies to members of the state that includes senators and representatives. This income includes tax deductions from military personnel, government officials, and private employees.
It concludes that the government does pay taxes. The government as a whole has components such as government organizations and government employees. Each component has a different set of rules for tax payments. Some have to pay lower taxes whereas some pay taxes that are at the same rate the public pays their taxes. As a result, we can conclude that any organization or employee that lives in the United States of America and generates revenue has to pay taxes and it does not matter if the person is working for the government or any private organization.