OT: Minimum Wage Increase

[Tom Schindler]

It seems pretty clear that around 75% of the respondants to this post have been anti-minimum wage increase, with most of the 75% being in agreement that something should be done about the taxes paid instead.

Even fewer people are against the Iraqi war, but that moron in office wants more troops in Iraq!



You against that guy in Washington?



As for my stand on the minimum wage increase, I think it is a good idea. I don't buy that BS of that fewer people won't have a job. As low as our unemployment rate is, we shouldn't worry about it. Providing those unemployment rates are really accurate in real life.



Thought I doubt they are.





Tom

 

[Ryan Schaecher]

Got this from my tax law professor. Worth the read. Nothing we didn't know, or couldn't find out, but good to have it in one place.

http://www.washingtonpost.com/wp-dyn/content/article/2007/01/09/AR2007010901572.html

I found this article to be misleading and full of bunk, which doesn't surprise me comming from the Washington ComPost (*which I didn't notice until I had finished waisting my time).

The biggest lie of all is that small businesses have created most of the new jobs in America.

Individually, no. However, there are more new small businesses created everyday than large once. When the large corps. are laying people off, new businesses are created and hire. If every new business hired just (1) person, they would surpass what most large corps. hire daily.

That position ought to be reserved for a statesman with enough political confidence and backbone

Appearantly, according to the author, a "conservative" democrat is not an asset (that is to have a slightly differening view point). YET! When it comes to President Bush's cabinet, they demand that a person with a different opinion be appointed and speak up. So what's it supposed to be?

Consider, for a moment, the economic logic that lies behind Baucus's hearing this morning, when senators will hear from a panel of witnesses that includes Dave Ratner, owner of Dave's Soda & Pet City in Agawam, Mass.

Let's just belittle the "little guy" that Democrats say they stick up for..... yeah. Right.

It's also worth noting that, according to the Internal Revenue Service, small-business owners, sole proprietors and the self-employed are, as a group, the biggest tax cheats in America

It is also worth noting that most of these small businesses are taxed as if they were an individual, thereby not having the tax shelters that incorporated companies get through simple things like dividends and the like. The exasberation of tax cheats is directly proportional to the incomprehensible tax laws that are created to punish the small business man/woman.

Real Democrats know that raising the minimum wage is the right thing to do -- economically, politically, morally.

Which is exactly why the Demonrats had to run centrist and conservatives to win this past November. They know that doing stupid stuff is a guarentee that they will not sit behind the desk in Oval Office any time soon.

And here's the thing: Most of it is nonsense.

As was this article.

 

[Thomas Rogers]

Q, I can't argue with your logic. You seem to be in the camp that if we raise wages and if we enforce the laws against illegal workers (and those paid under the table) that many illegals will go home due to the disincentive, and the higher paying jobs will start to become appealing to domestics. Like I said, that's a logical, possible result which I can't argue.



But back to my cautionary. As you say, this can't happen without an increase in wages for those doing the lower-paying jobs. Then the questions are:



- who is working these lower paying jobs and how much has their buying power increased?



- who is buying their goods and services and how much has their buying power decreased?



If we assume the dynamic is that these jobs are done by those in the lower income bracket then their buying power hasn't increased significantly overall. The problem with small numbers is if you increase them they are often still small. And if we assume the products and services mostly cater to the upper-middle and upper incomes, then again, it is unlikely the increased prices will sway the buyer from buying. The result is that we end up with an economy where the "poor" are working hard to survive, but doing just a little better at it, and the "rich" are having to pay more for many of the goods and services they used to buy at lower costs, meaning their dollar has gone down in value (add'l paid to the landscaper means less paid elsewhere).



All of this really hurts the guy in the middle the most; the business owner that relied on the cheaper labor. To maintain his profits he raised prices when wages when up, but as a result the people that buy his goods and services have a lower value of the dollar. Ultimately that means that somewhere along the way, we have to see a shrink (business failure) for the small businesses (less money to spend means shrinkage in a market).



That's why I think that we see the sentiments we see on this board. There are a lot of us "in the middle", running our own businesses, or working for small business, and when we see prices to our customers go up overall, it means the buying power of our customers go down, and we all suffer.



It doesn't excuse people breaking the law...but it goes a long way in explaining why the laws on the books aren't being enforced.



TJR

 

[Tom Schindler]

There are a lot of us "in the middle", running our own businesses, or working for small business, and when we see prices to our customers go up overall, it means the buying power of our customers go down, and we all suffer.

How is that any difference when good paying jobs are sent into another country?





Tom

 

[Thomas Rogers]

Caymen asked:

How is that any different when good paying jobs are sent into another country?

I think you are mixing up the scenarios. Giving businesses the most, legal, flexible choices that allow them to maximize their profits, lower their wages, and keep their prices down is what I support.



Therefore, I support offshoring as a choice for companies. Likewise, this country, through it's actions until now has defacto supported illegal workers and people paid under the table, regardless what the laws say. When a law is widely broken and unenforced, the true intent of the law and the worth of the law becomes meaningless.



So, you asked, how are those two different? Well, they are 180 degrees apart! The scenario I gave was about limiting choices that cause a rise in prices that squeezed the businessmen in the middle. You asked how that is different from businesses sending good paying jobs overseas; and that scenario has businesses legally maximizing profits and lowering costs and wages. Your examples were two different sides of my bias.



Now, I understand your real question may be: "But doesn't sending jobs offshore hurt those in the middle income bracket as well?"



And to that question (if that was what you really meant), I could simply counter with federal wage and employment statistics and answer "NO. The data shows that over the past 10 or 20 years it hasn't!"



TJR

 

[Tom Schindler]

The data shows that over the past 10 or 20 years it hasn't!"

Neither has raising the minimum wage!



Both, mean, can mean, might mean, could mean, do mean, may mean, don't mean, the loss of jobs. Giving a corporation the flexibility to send our jobs to maximize their profits is no different then giving some college kid trying to pay for college the flexibility to maximize his profit by raising the minimum wage.



Both could be a chance to gain jobs.



With unemployment as low as they claim it is, this is not going to impact the economy one bit! I welcome the benefits of having my 401(k) account start to grow again as soon as the democrats get back into office. Little to no growth over the last 6 years is starting to get old.





Tom

 

[Thomas Rogers]

True to that, Caymen, both of those things you mentioned could mean loss of jobs. But both neither necessarily means an overal positive, or negative impact to the economy, the job market as a whole, or the average national wage.



Caymen said:

I welcome the benefits of having my 401(k) account start to grow again as soon as the democrats get back into office. Little to no growth over the last 6 years is starting to get old.

I started my current job in Dec 2002, and opened a 401K with the company. It's rate-of-return, to-date, is almost 40%. Not too shabby as that's an avg APY of almost 10%.



TJR

 

[Tom Schindler]

But both neither necessarily means an overal positive, or negative impact to the economy, the job market as a whole, or the average national wage.

Why worry about the minimum wage? The real solutions to this economic mess would be so easy to fix, but those in charge have no incentive to do it. They do not have our best intrests in mind.



My 401(k) was running really well right before Bush became president. After that, it started slowing down. With Bush in office, it still hasn't started to grow and I just about recovered from 9/11. I would love to have a 10% return a year. At that rate, I would be sitting on a million bucks in another 30 years, even if I never added another dollar to that account.





Tom

 

[Thomas Rogers]

Caymen says:

The real solutions to this economic mess would be so easy to fix, but those in charge have no incentive to do it.

Please share that easy solution!



TJR

 

[Tom Schindler]

You already know about it and support it.





Tom

 

[Ryan Schaecher]

One of the biggest political incentives to raise the minimum wage is being overlooked...



"WE GET MORE MONEY IN TAXES TO SPEND!!! YIPPPEEE!!!!"



Think about it... a 40% raise in one group's pay, means:

(1) Higher income tax

(2) Higher FICA (don't forget a 40% increase in pay means nearly 80% increase in FICA as the employer matches)

(3) High income from sales tax (the worker will undoubtedly use the increase to buy what he/she can when he/she can... his dollar will be worth less in a year so he'd better hurry)



I've solved the reason why Demonrat's want the increase....

 

[Tom Schindler]

R Shek,



Someone needs to make up the loss in Tax's the Republicans cut for the Rich folks.





Tom

 

[Thomas Rogers]

Caymen, you are saying that "fair tax" will solve all our economic problems? I don't see that, but then again, I haven't ready the book. I don't see it bringing back offshored jobs, which I think you consider a problem.



TJR

 

[Tom Schindler]

I don't see it bringing back offshored jobs, which I think you consider a problem.

Labor is only one part of our economic problems. Another is the amount of money a corporation spends JUST to comply with those tax laws that change every year. Corporations are being tax's unfairly compared to companies like Toyota and Honda. They get tax breaks that Ford and GM would absolutly love to have. Why do you think Chryslers headquarters are in Stuttgart Germany and not the USA. Why do you think the big oil companies operate tanker ships under a foreign flag. Why do you think most cruise ships do not fly under the American flag.



Tax's. tax's, tax's.



Sure it won't solve everything, but for crying out loud, solving the big problems is the best step you can take to minimize the the other problems.







Tom

 

[Johnny O]

Like I said earlier, I run a legit business in a line of work where most people are under-the-table. It's a smaller scope, but insurance and taxes cost me a crapload of money, especially insurance. Once I was trying to explain that to someone and they said "You don't have to take it out on your customers." :blink: Excuse me?

Ain't no expensive workers' comp insurance or environmental laws in China.

Had lunch with my new insurance agent today. He bought. Good thing. $2294.91 down, $1146.71 a month for ten months, and a final payment of another $2294.91.

Who pays for that? My customers.

Anybody else want to be self-employed?

 

[Thomas Rogers]

Caymen, so it's your opinion that Ford and GM aren't given tax breaks to keep manufacturing in certain towns, or to lure new plants into new states and locals?



If we waved a magic wand and abolished all corporate taxes do you REALLY think that would bring manufacturing back to the states? I don't.



BTW, Chrysler's headquarters are where they are because they were bought out by a foreign company, I suppose.



TJR

 

[Thomas Rogers]

I hear you JohnnyO....I too run my own business. About 1/2 of my gross income last year came from a company I run part-time as sole employee. I don't have any employees other than me, so I can't completely understand.



But I do see what it takes to be an employer, pay UC, and SSI and Medicare. Still, trust me on this, even if we didn't have to pay any taxes (federal, state, local, SSI, or Medicare) we STILL wouldn't ever be on a level playing field with most offshore countries that are getting many of our jobs (China, India, Russia, etc). Take away ALL the taxes and even the most heavily taxed still take home more than 60% of their pay, and most any person living in one of those countries I mentioned would LOVE to work for far less than even 60% of the average wage paid in America.



It's COL (Cost of Living) that makes the playing field unfair, and that's something we simply can't easily fix, without true "protectionism".



TJR

 

[Ryan Schaecher]

Someone needs to make up the loss in Tax's the Republicans cut for the Rich folks.

Since I just lost all the post I was workign on, I'll keep this one short.



This notion that the Tax Cut favored only rich is misleading at best and incorrect and downright irresponcible otherwise. Everyone WHO PAID TAXES got a rate reduction. According to the Congressional Budget Office (the CBO), the Top 1% of income earners pay 32% of the Income Tax. The Top 5% pay 51.4% and the Top 10% pay 63.5% and the Top 20% pay 78%. The bottom 20% Pay nearly nothing, and most actually get a subsidy.



If you want a tax cut the benefits 75% or more of the country, then you have to include "the rich" as "the poor" don't pay taxes.



The percentage reduction was the same, but when someone makes $250,000 vs $50,000, the actual amounts are significantly different. Why? Do the math. Same percentage reduction, but significantly higher amounts.



The $250,000 a year salary will pay $36,548 + 33% of the amount over $150,150.



The $50,000 a year salary will pay $4,090 + 25% of the amount over $29,701.



(this is according to the Schedule X for Single Filers for 2005 found on the IRS website)



The same CBO report used above also noted the income to the government since 2001 has increased, but the burden placed on the middle and lower classes has diminished. So yep , those tax cut sure helped the rich out. Oh yeah, the CBO study was request by the Demonrats...



Supply Side Economics at it's finest. Tax cuts work to stimulate the economy EVERY TIME they are tried. Tax hikes on the other hand, pretty well kill the economy EVERY TIME they are tried.



I have posted examples of this ad-nausium over the past 5 years and am not going to re-hash that out tonight.



Pull your "tax cuts for the rich" head out of the dark crevasse that it's stuck in. I know that I enjoyed getting that $300 check from the government at the time. I could use another one now!

 

[Thomas Rogers]

R Shek, Caymen,



Just did a prelim on my 2006 tax return.



AMT is going to hit us hard again this year, and because of it we get no personal exemptions ($16,500, or $3,300 per family member), no ability to deduct state and local taxes, no misc tax deductions, no higher education deductions (my wife is going back to school) and several phased-out deductions for many other things. The AMT made my tax bill go up another $1,700 above and beyond what it would have been without it.



My federal tax bill alone this year could have bought a brand new car, in total.



Welcome to the 33% tax bracket!



Yeah, the "rich" get all the tax breaks.



TJR

 

[Gavin Allan]

Actually an auto worker(as an example)if you include his benefits and pension plan actually makes about $60.00 -$75.00 an hour. The taxes paid by the middle class worker earning $60,000 to $100,000 is actually incredibly low when compared to Europe, England or Canada. If they were taxed at that level the government would be awash with cash and could pay off it's $7 trillion plus national debt. Once that was paid off then taxes could be cut again. But the workers would not be able to buy the toys they want if taxes went up and would vote the government out of office. When you don't make enough in taxes to pay for debt charges and running the government you have to borrow and if you apply that thinking to your own personel situation, where you spend more than you make, something eventually has to give. China right now is preventing that by occurring by propping up the government's spending by buying all the bonds the government issues to cover it's shortfall. That will only last as long as China needs the US market.