Friday, August 04, 2006

Estate Tax on Minimum Wage Bill? It's a tax on the Death of Common Sense!

Other than in some bizarre world of state-supported class warfare, the recent (and recently defeated) bill teaming a Minimum Wage hike with cutting the Estate Tax was politics at its lowest.

We're all suffering because of the disparity between poor and rich. None of us are benefitting from the fact that the lowest paid worker in the US earns less that he or she has, adjusted for inflation, since the introduction of the Federal Minimum Wage. I'm not suggesting a Minimum Wage beyond that as a safety net (although a Living Wage, adjusted for local cost of living, would be a tremendous boon for all), but it is just plain wrong for the best and wealthiest country in the world to ensure that our lowest-paid workers can not sustain a family of four above the poverty line.

In this great country, we do not create royalty. The Estate Tax (go directy to jail, do not pass go, do not collect two hundred dollars if you call it the Death Tax...) is not an either/or proposition - the bulk of this un-earned income should be passed to heirs, but it is reasonable to expect some of this to be redistributed, as our founding fathers would have suported. And please, no hysterical stories of farms or small businesses going under - if the founder of a business is wealthy enough to be affected by the Estate Tax, he or she can afford a lawyer and a financial planner to keep this from happening.

In this great country, we value hard work and families. Minimum Wage earners are actually working for something (unlike trust-fund kids in most cases) and deserve respectful treatment and a place at the table. If employers won't do this, simply because they can, the safety net of the Minimum Wage is a reasonable way to direct these business owners to contribute to their brothers, their neighborhood, and their society.

After all, the GAO's own studies show some interesting things: most new jobs are created by small business owners. Most Minimum Wage-earning employees are employed by small business owners. Small Business owners in the states with the highest Minimum Wage are also the most prosperous, even adjusted for increased cost-of-living in these states. These same small business owners benefit most from more stable employees, safer neighborhoods, increased local spending, etc., that the increased Minimum Wage delivers.

A spending cut (instead of a tax cut/welfare for the wealthy) would be appropriate to balance a Minimum Wage hike. Maybe even a federal tax break to the business owner for each new employee hired at the Minimum Wage or higher after the Minimum Wage is increased.

I can already hear the Republican congressional candidates already practicing their speeches: "We tried to increase the Minimum Wage in congress, but the Democrats voted it down!" When will people stop believing this crap?


Anonymous said...

Neither Minimum Wage nor a so-called Living Wage will change the wide disparity in the economic classes...nor should they. If you want to live where everyone makes the same wage and is offered the same goods and services, you need a time-machine trip back to 60's Soviet Russia. It's called communism.
The only thing Minimum Wage does is push the cost of goods up. Always has, always will. Remove the minimum wage and the average wage of working Americans will actually rise. Why? Because companies and and owners will have to compete for GOOD help, and good help demands better wages. Those who choose mediocrity (or worse), who fail to show up for for, and who demonstrate an incompetence in their job will be left behind. Actually no different than today.
All that said, IF we want to keep the Minimum Wage law, let's make it across the board. The biggest inequity is for waiters and waitresses. Just because they are tipped for their service (or not for the lack of it) is no reason to penalize them on hourly wage.

seriousfun said...

You're right about Tips, anon. - the tip compensation system is a quaint custom that we in the US should stop supporting (although I don't know what postition the federal government should have in this cultural change, except trying to keep economic equity).

Your boiler-plate condemnation of the minimum wage as socialism is a little paranoid, unsupported by careful study (and IMO by common sense).

We have a lot of social programs for the rich and the poor in this country - face it. Minimum Wage certainly re-distributes wealth, but in a local economy, that extra money gets redistributed immediately back into the local economy; MW earners aren't giving it to brokers, lawyers, accountants, multi-national corporation (at least as stock purchases), etc. They give it to landlords, grocery stores, doctors (whole other discussion...) auto parts stores, etc. Consumer spending fuels our economy, and a reasonable MW is one important part to help everyone participate.

MW may drive local prices and services up, but there is no study I have found that showed a net loss in jobs from MW increases. Long term, stable families mean fewer taxes and a safer, better educated society for us all.

If, for example, we all earned enough to pay our doctors for everyday medical care, using insurance just for catastrophic events, healthcare for all of us would be better and cheaper. There are an infinite number of examples of these benefits.

The last time I worked for the MW, it was $2.10/hr. Coming from a freelance job, this MW job allowed me to eat regularly, pay my rent, etc.! I gave GOOD help! This employer would have probably paid less than that if able, but he wouldn't have gotten me, and workers who would work for less wouldn't have been as good as me. Mediocrity exists at all economic, cultural, and success levels, there is no gurantee that any MW worker is inherently mediocre. At least not in America. Get it?

Imagine if all of a sudden our least desirable jobs paid enough to suddenly become desireable to entry-level workers, students, etc. How many people would cross the border from Mexico, for example, if there were no jobs to be had here?

A rising tide doesn't come from the rain trickling on us, it is a great swelling from the deep. I