Government “produces” goods and services that are low-priority for individuals. In fact, it can only inhibit or rearrange production. It cannot produce anything without an act of consumption. The government is not a wealth generator.

Various individuals who are employed by the government expect compensation for their work. One of the ways the government can pay them is by taxing true wealth-generators—those individuals generating goods and services demanded by consumers. By doing this, the government forces an exchange of less valuable goods and services (i.e., government-produced goods and services) for more valuable goods and services produced by wealth-producers. Consequently, this weakens the wealth-generating process and undermines economic growth. By taxing wealth-generators, the government forces them to exchange more for less.