Debate and Discussion

U.S. Issue: Raising Minimum Wage AND Tax Cuts
thatreevesgirl at 5:53PM, July 30, 2006
posts: 126
joined: 3-17-2006
If anyone has been keeping tabs on the House of Representatives, they passed a version of a bill last week that would raise the minimum wage to $7.25 by 2009. This was also coupled with cut for the inheritance tax. The Senate has extended their stay for an extra week and will probably see the bill during that time.

The debate for this issue comes when considering how problematic a wage increase coupled with a significant tax cut could be. The United States's economy has seen rising inflation and interest rates and debts (both consumer and national). Will this new bill have a significant effect on the economy, and what will it do?

What should you comment on:
How much will this new bill (if passed) effect the U.S. and/or world economy?
Is it a good or bad idea?
The U.S. Economy's Stability.
Any other opinions dealing with this topic.

My opinions on the topic:
As someone who has a job which pays minimum wage for a good portion of her hours (really I can't complain, its my sleep time) this directly effects me. I will be getting nearly a $4,500 pay raise in the next 3 years if it passes.

You would think that I would be all for it. No, I'm actually not. It scares me to think that the United States would pass such a reckless bill at a time when the economy stands on such a slippery slope. One false move and it could effect the entire world economy. Though there are rising economic powers in the world (China for example), I do not think that these other economic powers have enough pull to make up for the consumer base that the U.S. makes up. Therefore, America truly needs to make wise and educated economic decisions in the next few years (honestly I think that the U.S. is going down the crapper economically, but why drag the whole world down with us)

Reasons that I think that this is a dangerous bill:
The top 1% (most rich) Americans pay over 32% of our taxes, and the bottom 1/2 (least rich) only pay under 4%. Make a burden for those paying the most taxes and it could destroy the system (my ref-


There are not many jobs that pay minimum wage, but in those industries that do, I think that it could devastate them. I believe that these are also jobs that have remained steadfastly American in nature (rather than being taken offshore or relocated to another, cheaper country). If we lose these (agriculture is one that I think is important to mention) it is possible to see the price of items such as food and services skyrocket (HYPER-INFLATION…my biggest fear).

The one saving grace that this bill could have:
Consumers of goods (all that little crap we buy) tend to be those with less financial means. Oddly this is because those with less money put more value in the number of objects they own, rather than the value of the objects they own (if you don't believe me, do some reasearch into poverty and statistics dealing with poverty and you will see that this is true). So it might spur consumerism for awhile, until hyperinflation sets in.

Please post your opinions, I would love to debate this with you.
last edited on July 14, 2011 4:14PM
thatreevesgirl at 6:16PM, July 30, 2006
posts: 126
joined: 3-17-2006
Yes, it is so horrible that people with millions of dollars may have to pay just a little bit more. Dear god do I feel bad for them.

You need to remember that it is that 1% that stabilizes the economy though. I hope you're saying that in a few years when U.S. businesses are struggling more due to more stress. Research has shown that tax cuts for business are effective, and increased running costs are not.

Tater Salad
Who gives a fuck, I get more each hour, I'm happy.

Let Bush sort that other shit out.

I'm happy about it too, but there really are other implications that go along with your raise.
last edited on July 14, 2011 4:14PM
Ronson at 6:17PM, July 30, 2006
posts: 837
joined: 1-1-2006
The popular misconceptions about the minimum wage is that in raising the employees salary, the company will have to charge more for products, or will be forced out of business.

There will always be some businesses that are poorly run, or sell products whose market isn't big enough to support a rise in the minimum wage, but the vast majority can absorb the increased salary.

The other misconception is that raising the minimum wage will hurt our economy. This has been proven time and time again to be untrue. By giving the poorest among us (those working full-time minimum wage jobs) more money in their pocket, we increase the buying power of every market in the country.

Compare this with “trickle down” economics - where the rich are given tax breaks that will allegedly give them money for further investment. It does, but not enough and not all in our country. Their disposable income increases, but they don't dispose of it because they don't need to.

Someone on minimum wage will start buying more necessities - because they don't have “disposable income”. Instead they might get a used tv or a little more food. Maybe a DVD player or go to a movie on occasion. It spreads the money around in a VERY local area.

Encouraging the growth of the middle class also has this effect, but even more so. Every time.


I'm not too surprised that the rich are getting yet another tax cut. That's what right wing politics pretends to do.

But you watch, if this bill goes through and the minimum wage goes up and the rich get a tax cut there's a chance our economy will improve.

And if it does, the right wing will claim it's the tax cuts.

But it will actually be the increase in minimum wage. It always is.
last edited on July 14, 2011 3:10PM
thatreevesgirl at 6:36PM, July 30, 2006
posts: 126
joined: 3-17-2006
And if it does, the right wing will claim it's the tax cuts.

But it will actually be the increase in minimum wage. It always is.

The thing that worries me is in the ten years since the last increase (well, it'll be twelve by the time its instated) the debt level in this country will have trippled. I think that it is a dangerous combination to have people armed with more disposable income, high interest rates, and stress on business.

As I stated in my opinion of the one saving grace of this bill (it will give disposable income and allow those in poverty to buy more goods), it might be a temporary fix. Like someone trying to patch up the Titanic as it is sinking. I think that increases are effective during times of economic stability, but have less impactful effects during times of economic instability.

History of the Rate Increases-

Also I think that this is a backdoor way for the federal government to kick people off of welfare (which I am not necessarily against them being kicked to the curb). By raising the minimum wage, it will bump some of those people off of welfare and giving them (in my opinion) a false sense of financial security. I think that many of these people will see disposable income, where they should see a gap for where their welfare checks and food stamps were. I think that it is a dangerous situation for a financially frivolous nation to be in.

I really want to believe that Ronson, and I think it has worked in the past, but I'm not sure if its going to fly this time.
last edited on July 14, 2011 4:14PM
Ronson at 7:41PM, July 30, 2006
posts: 837
joined: 1-1-2006
Good points to be sure, thatreevesgirl.

The escalating debt and the crazy “free market” worldview currently dominating our government are definite causes for concern. If we continue to allow our jobs to go overseas and continue borrowing at an insane rate, it might not matter what the minimum wage is, because dollars will be worthless.

It's also a good point of it being a back door way to get people off of welfare. But I do tend to believe that if someone is working their ass off they should at least be able to afford essential food, clothing and shelter without government assistance. This minimum wage increase doesn't really do that.

As for “kicking them to the curb”, you are probably referring to the very few people who are able to game the welfare system (and other social programs). I think that anyone currently working for minimum wage isn't trying to do that.

But if you don't help the poorest when the economy is in crisis, the crisis just gets worse. A rising tide lifts all boats, as they say.

But this isn't a solution, it's just a small part of a potential solution. And it's undercut by tax cuts to the rich.


By the way, I need to point out something you said earlier:

Reasons that I think that this is a dangerous bill:
The top 1% (most rich) Americans pay over 32% of our taxes, and the bottom 1/2 (least rich) only pay under 4%. Make a burden for those paying the most taxes and it could destroy the system (my ref-

That's not exactly true. Most folks in the top 1% … actually the top 10% make their money from investments and dividends. Your statistics on how much they pay in taxes is correct.

But those of us who work for a living - that is offer our services to a company and earn a paycheck - pay what is called FICA tax. Now, whenever you see these tax statistics, they never include FICA because it isn't technically an income tax.

But it is a sizeable amount withdrawn from every paycheck by the government. They may not call it an income tax or include it in income tax calculations, but it's an income tax in everything but name.

From Wikipedia (bold mine):
Federal Insurance Contributions Act (FICA) tax , a kind of payroll tax, is a United States employment tax imposed in an equal amount on employees and employers to fund federal programs for retirees, the disabled, and children of deceased workers. The FICA taxes support Social Security and Medicare. The Federal Insurance Contributions Act is codified as Chapter 21 of Subtitle C of the Internal Revenue Code (26 U.S.C. § 3101 through 26 U.S.C. § 3128).

Social Security benefits include old-age, survivors, and disability insurance or OASDI. Medicare is the hospital insurance portion.

The Center on Budget and Policy Priorities states that three-fourths of taxpayers pay more in payroll taxes than they do in income taxes. The FICA tax is considered a regressive tax on income (with no standard deduction or personal exemption deduction) and is imposed (for the year 2006) only on the first $94,200 of gross wages. The tax is not imposed on investment income (such as interest and dividends).

For 2006, the employee's share of the Social Security portion of the tax is 6.2% of gross compensation (not to exceed $94,200 of compensation). This limit, known as the “FICA-wage-base”, goes up each year based on average national wages and, in general, at a faster rate than the Consumer Price Index (CPI-U). The employee's share of the Medicare portion is 1.45% of wages with no limit. The employer is also liable for separate 6.2% and 1.45% Social Security and Medicare taxes, respectively, making the total Social Security tax 12.4% and the total Medicare tax 2.9% of wages.

If a worker starts a new job halfway through the year and has already earned the wage base limit for Social Security, the new employer is not allowed to stop withholding it until the wage base limit has been earned with them. There are some cases, such as a successor-predecessor transfer, in which the payments that have already been withheld can be counted toward the year-to-date total.

If a worker has overpaid toward Social Security by having more than one job or by having switched jobs during the year, that worker will get a refund when they file their Federal income tax return

The upshot of which is that for any of us earning less than $94,200 per year we end up paying higher percentage of FICA than someone earning more than $94,200 per year. If someone doesn't earn a paycheck and makes their money from interest and dividends, they pay no FICA whatsoever.


Does that mean the poor pay the same percentage as the rich? Probably not. If I'm reading the above right, that increases the wage earner's tax by 7.65% (6.2% (SS withholding) and 1.45% (Medicare withholding)). Add that to the already existing 4% from your article and you get 11.65%

The rich still pay more, but instead of 32%-4%, it's actually 32%-11.65% … the poor pay a little over one third of what the rich do percentage wise.

But the rich get an awful lot more for their dollar. Corporate welfare has grown to disgusting proportions over the past few decades, and billion dollar giveaways are common place.

The oil industry - one of which is Exxon, reporting the two largest quarters of profit for an American company in history - is given access to our public lands for oil exploration free of charge. It's estimated that if we charged what we're supposed to instead of waiving it that we could add billions of dollars a year to government earnings.

This stuff happens all the time. Wal-Mart only builds a store if their guaranteed not to pay any property taxes for X years. After that, they either don't pay any property taxes, or they open a story in a competing township.

And don't even get me started on the military industry.

We don't include corporate welfare in any of these calculations, and it's not just shameful, it's killing us. A lot more than the occasional welfare cheat.
last edited on July 14, 2011 3:10PM
Comicmasta at 4:21PM, Aug. 5, 2006
posts: 1,338
joined: 6-4-2006
How lucky i am to live in Mexico ^-^
i have been brought back….The Boanitia..grrrrr…..Must find Super Jesus!!!!!
last edited on July 14, 2011 11:43AM

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