There’s a misconception that some people hold that civil servants don’t have to pay taxes on their wages. It’s simply not true, though. Paying taxes is something that is built into the economies of most modern societies, so civil servants, being part of those societies, also pay taxes.
Your next question may be, then, why do civil servants pay tax? The answer is, there are several reasons. Below are some of them:
- No taxes means no tax deductions
- Compensation comparison
- Government programs would cost more
- Cost sharing for infrastructure and public services
- Civil service pay is income to that household
There are more reasons than we’re going to discuss, but our list includes some of the most major ones.
No Taxes Means No Tax Deductions
There are things that come along with paying taxes that benefit taxpayers in certain scenarios and situations. As taxpaying citizens, we get deductions for things like medical expenses, items that affect the cost of a home, retirement savings, and more. If civil servants didn’t pay into the system, they wouldn’t get to make those deductions, therefore owning a home would be more expensive, saving for college would be harder, as well as for retirement, and other major life expenses.
When people are looking for a job, they often will do a comparison of the relative compensation for their prospective jobs. When one of those jobs is a private corporation paying a salary that will be taxed, and the other one is a civil service public sector job where there will be no taxes taken out, it’s very hard to compare the salaries of those jobs, even if they are similar in nature.
So, why does this fit in as a reason for civil servants to pay taxes? If people can’t compare public sector jobs regarding how much they’re going to get paid, it would make it more difficult for governments and other civil servant sectors to hire people. Even just setting the pay rate by the hiring agency would be a much harder task because of having to account for the unpaid taxes.
It makes much more sense that all kinds of legal workers should have to pay taxes so compensations are comparable across the board. There are many private sector jobs that are the same or similar to the public sector jobs available. Civil service workers do pay taxes so if you compare their pay rates to many of the pay rates of private sector workers doing similar jobs, you’ll be able to easily see that, generally, civil service employees make more than those in the private sector jobs of the same type.
Government Programs Would Cost More
Some people have argued that civil service workers don’t need to pay taxes, they should just be paid less to account for their not paying them. Their argument is that then the rest of the citizens working in the private sectors wouldn’t have to pay as many taxes to pay the salaries of civil servants, as that’s where some tax dollars go.
It doesn’t really work that way, though. The savings you would see from the majority of positions would be minimal, as there are more lower paid civil service positions, such as postal workers, than there are higher paid positions. That means the majority of the savings would come from people paying less in taxes anyway. While there are some government programs, like NASA, that employ people who make higher salaries, these are fewer and farther between.
Being able to tax all of the civil servant positions throughout the country is important for keeping the cost of various government programs at lower levels. In fact, without those taxes, it’s likely privately employed citizens would have to pay more taxes to the government.
Cost Sharing for Infrastructure and Public Services
Tax dollars go to pay for a lot of different things. Obviously, some of that money is used to pay the wages of government and civil service positions. That money goes to pay for other things too, like the streets and the roads that we all drive on, “we all” including civil service professionals.
The people in these jobs drive on city and state roads, thus they should help pay for them. Also, civil servant workers enjoy the same protection by members of the police department and the fire department as the rest of society does, thus they should help pay for their services, too.
We also reside in a country with a large military comprised of several different branches. Civil service employees benefit from the existence of that military just as much as everyone else in the country does, thus they should pay into the system that pays for military members’ salaries.
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Civil Service Pay Is Income to that Household
Working citizens pay taxes on their income. That’s the way this society was created, eventually, anyway. The federal income tax was created in 1913, through the addition of the 16th amendment. At that point, it became legal to levy a tax on the wages of US workers. However, it didn’t mean that everyone was paying the tax.
There were other regulations in place that kept different groups of workers from being taxed. One group, in particular, was the population of Washington DC. They weren’t allowed to vote until 1961, and thus weren’t paying federal income tax until after that either. It was assumed that most residents there worked for the government which was the reason for that set up. The 23rd amendment was added in 1961 to allow residents of DC to vote, and to add them to the groups paying federal income taxes since by then most residents weren’t working for the government.
Yes, civil service workers and government employees get paid from tax dollars. However, that money is income to the household it’s going into. That household is part of society, a society that has all sorts of services and other things that are paid for with tax dollars. It makes perfect sense that an employee who is making an income in this country, regardless of what the source of the income is, should be paying taxes.
There certainly are some people who feel that civil servants shouldn’t have to pay taxes on their income as that money was made through taxation. Not only that, but there are also arguments that these people are providing a service to the public that is invaluable, and thus their income should not be taxed. While these views are valid points to make, it would actually do more harm than good if employees in the public sector weren’t taxed.
Instead of saving taxpayers money in taxes, it could end up causing an increase to the taxes that privately employed workers pay. Government programs could end up costing more. The cost sharing for infrastructure and services wouldn’t be spread across as many people so either those things would suffer, or it would cost other types of workers more in their taxes. Civil service workers do pay taxes because they’re working citizens who benefit the same way from those taxes as others do.
Do government employees pay Social Security taxes?
Today, government employees do pay Social Security taxes just like those working in other industries. It wasn’t always that way, though. It had been that if you were a government worker that was hired before the year 1984, you didn’t pay any Social Security tax. You paid into the Federal Employees Retirement System only. From 1984 and beyond, government employees would still be part of the FERS plan, but did start paying into Social Security and receiving the benefit.
Are federal employees exempt from state taxes?
In some cases yes, but when it’s regarding retirement benefits. You’ll find that some states will exempt state and federal government employees from having to pay state taxes on income during retirement. It’s a benefit that government employees can get which most employees in the private sector won’t get. For the most part, though, all employees in a state will be required to pay state taxes on regular income from wages.
What are examples of civil service jobs?
Civil service jobs are performed at three different levels—local, state, and national or federal. Some examples of these would be teachers, police officers, firefighters, and librarians. You can also work for different government agencies to be considered a civil servant. Some of the other fields you can get into for civil service include engineering, healthcare, IT, and administration jobs.
You can get a civil service position that is considered to be professional, or at the sub-professional level. Most of the professional positions will include the requirement that the applicant has an advanced education degree of some type. There could also be other requirements, such as security clearances or a passing grade on an established exam. Sub-professional level jobs are more of the support roles to the professional jobs. While there may still be an exam requirement, there isn’t usually the need for a college degree for sub-professional positions.
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Please note: This blog post is for educational purposes only and does not constitute legal advice. Please consult a legal expert to address your specific needs.
Hi! I’m Shawn Chun and I’m so grateful that you’re here.
Civil servants are some of the hardest working, most generous people I know. I have been passionate about all types of civil service career paths for years now and enjoy sharing everything I continue to learn about them.
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