Nope, employers just decide to pay the workers less to make up for the payroll tax. The workers that won't get hired and the workers that get paid less are hurt the most.

To broaden out a bit, I think this is one of the fundamental points we can disagree on. I argue that a company cannot function without workers; in fact, it's the workers that produce the value of a company. A factory sitting idle produces nothing, whereas someone making cars at home would -- eventually -- build a car. Thus, companies can't afford to fire their workers, even if the workers become more expensive. Given a choice between lowering profit margins and firing workers, they are forced to lower profit margins, or else simple end up producing less and becoming less competitive.

Since we seem to have different definitions for the word "profit", I'm not going to argue about what the government's profit is.

I don't actually care what the definition of profit is. My sole argument is that everything that goes into the government gets spent on something. The government doesn't have a safe where it stores money, nor does it keep any money around who's sole purpose is to make the government more money.

Every penny that comes into the government is spent on something Same with a private enterprise, eventually

My point is that this is precisely not the case. Government money is entirely demand money; it gets spent for products and services. Profit becomes Capital, which is money that either goes to products and services for the very rich (who I'll freely admit I don't care about), or more likely investment money, who's only purpose of existence is to create more money.

A certain amount of capital is important to be able to start and fund efficient businesses (i.e. factories), but there's a certain point where it's more money than we can spend on businesses, because while there's plenty of money in capital, there's not enough money in demand. The car factories are working at full speed, but no one's paid enough to be able to afford a new car.

As to your specific examples of where money goes: no one builds more cell phone towers unless they can get their customers to 'buy' the improved tower plan (i.e. they can charge more). An excellent case in point is the pitiful state of the American privately-built internet infrastructure. Similarly, you don't build another grocery store unless there's a demand for it. Etc and so forth.

If you get more profit than you can re-invest efficiently due to lack of demand, the capitalist system falls apart (cue the great depression, and every depression before and after. If you quote any sort of credit problem as the cause, I argue that credit is precisely capital being invested into demand, until it can be invested no more, demand plummets, and depression ensues).

I'm definitely not advocating government giving corporations any money

You're arguing from a status quo where there are no taxes; I'm arguing from the status quo of now. Tax breaks are the equivalent of giving corporations unrestricted money. And you can't argue for absolutely no taxes, else we couldn't provide trivial services like a justice department, military, and perhaps most importantly infrastructure.

Why? That's like paying a million people a thousand dollars to do nothing

Yup! And yes, even better would be to skip the ditch digging part. My point is that efficiency is already near infinite in capitalism. The problem is not a need for more efficiency in the system, but rather a market to sell the oceans of products too (and, from a moral perspective, a means to convert massive efficiency into quality of life).

...so the problem is we have too many cars, computers, etc.; you know, real wealth? How can we have more stuff than we can buy?

If you have 100 people and 500 cars, the extra 400 cars still have value, but they're worthless to the 100 people, who each need one car. More accurately, the cost of making one of the cars from the extra 400 is more than the use-value that one of the people could get from a second car.

As for how we can have more stuff than we can buy, the actual realization of the principle is trivial: I go down to the car salesman and am confronted with hundreds of awesome cars that I simply don't have the money for. Because my buying power is limited, and limited by my wages.

The real issue is the overpaid cops, firemen, teachers, and other bureaucrats that are bankrupting local, state, and national governments. We're talking major money here.

You're losing moral ground. Your initial claim (or at least implication) was that libertarianism is good for the people. I never contested the claim that libertarianism is good for the capitalists (business owners, etc), but I will contest that it's good for the people. When you say you want to cut the pay of fireman, teachers, etc., you're directly saying "I want to give less money to the people."

Unless you can somehow figure out a way to make more than the money you take away come back to the people in some other form, I think I can say that cushy government jobs are good for the people.

The majority stealing from a minority is morally wrong. Just like if 99% of Americans vote to steal all of your stuff.

Well of course I'd kick and scream and complain, but 99% of Americans would live better -- although not by any significant factor, thus why they don't do it to me.

But, ignoring questions of what on earth a billionaire's done to deserve millions times more wealth than the average Joe who works pretty hard for a living, why would the average Joe (and I) not be in favor of making a billionaire a multi-millionaire in exchange for our lives being substantially better? This is the 'everyone does what's in their interest' approach.

If we're going back to classical definitions of morality, I argue that what is moral is what's best of the majority of the people in the long run (in opposition to absolute morality, which is defined effectively as 'whatever your version of God says is moral is moral'). Thus, making 1% of America less happy (aww sad, they can't buy their 11th mansion) to make 99% of america much more happy (woohoo! we can buy our 1st house!) is absolutely moral. This is the 're-distribution is morally good' approach.