Where Government Money Comes From



Jacky Hood writes,

> All government grant money comes from taxpayers.

Unless this means, trivially, “all money comes from someone”, then the statement is false.

A certain amount of money comes from resource royalties. If the resources are destined for exports (as most are) then taxpayers do not contribute to this revenue at all.

Similarly, a lot of government revenue comes from profits on operations. Here, for example,  the government runs the liquor store, and makes a profit. This money is returned to revenues. Crown corporations (ie., government-owned companies) in Canada run energy utilities and used to run telecommunications companies. These can make money, and when privatized contribute a sizable amount to revenues.

Governments also make investments. The most famous were the investments the US government made into banks and the auto industry after the 2008 crash, which eventually returned them a profit. But governments make loans (not all of them forgivable) all the time.

Governments also obtain financial leverage though ownership of assets. When France sold Louisiana, or Russia sold Alaska, they were converting these assets. Even though it’s hard to imagine similar sales today, governments sell or lease large numbers of their assets. Even our province makes money by leasing campsites on crown land.

Why is this important? Because the language of “all government grant money comes from taxpayers” is calculated to create a negative impression of government investments and government spending. This negative impression should be countered as it reflects more propaganda than truth.

Indeed, even money paid by taxpayers that becomes grants might not actually represent a cost to taxpayers. A grant to an OER agency, for example, that results in significant savings for students and higher education institutions, may result in *less* money being paid by taxpayers. In such a case, the statement that the money “comes from taxpayers” completely misrepresents the impact and flow of the money. This isn’t a case of spending their pizza money, this is a case of *giving* them pizza money.

We may as well say “all private enterprise earnings come from taxpayers”. The level of support for private enterprise is so significant, the scale of the public subsidy so massive (through everything from free infrastructure to fire and police and military security, though to trade laws, patent protection, and other rules and sanctions, government investments, loans and incentives, and more) that if it were not for taxpayer intervention, private enterprise would not be able to exist at all.

The argument that government grants represent a taking of funds from individuals and enterprises is misleading and unsound, and should not be propagated implicitly or overtly.

-- Stephen

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