Here's How You Raise the Minimum Wage
As you all know I am not a big fan of raising the minimum wage, because I frankly feel if you want to make more than minimum wage then you should have something more than minimum wage skills. Now, with that said, I have figured out a way to increase the minimum wage, without having an adverse effect on business and consumers.
You see, when you raise the minimum wage, particularly in slow economic times, a company only has one of three options: raise prices, take smaller profits, adjust your workforce to make up for the increase in costs (i.e. fire people or reduce their hours).
I solve that problem in couple simple moves.
- People who make less than $10 an hour won’t have to pay taxes.
- Since they won’t have to pay taxes, employers will not be required to do any withholding in their pay checks so they all get an instant raise.
I did a little math using salarycalculator.com. A person making $10 an hour has an annual salary of slightly more than $18,000 a year. Their taxable income though is just under $11,000, provided they have no deductions. They will pay about $2,700 in federal and social security taxes. By not having them pay taxes we have just put a few thousand dollars in their pockets. And don’t forget this also counts for state and local income taxes. So that number is likely somewhere north of $3,000. And they don’t have to wait until tax time to get their money back, since there is no withholding that is instant cash in their pocket.
The only requirement is that they do file if they make more than $18,000 annually.
And here is another benefit, since they now have extra cash they don’t need as much government assistance, so we don’t have to pay more in food stamps, welfare and other social programs.
Now there is one loser in all this, the government since it will have less taxes to take in, but that’s really not all that bad seeing how according to the Tax Foundation, the top 50 percent of taxpayers are paying 90 percent of the taxes anyway. And if you’re making minimum wage, you’re probably not in that 50 percent.
So, let’s do a quick recap, those who make less will now have more money in their pockets which means more empowerment and less government dependency. And then the rest of us won’t have to pay as much for social programs.
It’s a win-win. What do you think?