Abolish Minimum Wage

So we raise their wage. Ok they now have more money but, the cost of their goods and services they enjoy has gone up and, their taxes have gone way up. What exactly did they gain? Not to mention the people above the minimum wage. They have seen the increase in the cost of goods and service not to mention their taxes go way up yet they did not get a raise. They have lost out in that deal.

Minimum wage in the U.S. increases with interest and stays within the range of a constant value by a few dollars as this chart shows. It is lower or higher in relation to this constant depending on the economic prosperity of the country. Cost of living may have an effect, but it's fairly obvious minimum wage hasn't been keeping up with the dramatic increases in living expenses that have been seen even in just the past 5 years.

Why not? Do explain.



If so you would need to explain why.

Your assuming that those that make more than minimum wage are just so well off that they can bear the burden of paying more for everyday items and a lot higher taxes. I'll give you that some can but certainly not all of them can. Since the cost of living has gone up for them and they have not received a raise then their standard of living has gone down. This comes at the cost of helping those who make less then them. So one would hope that it would be better for those now at the new minimum wage. yet since the cost of living has gone up and taxes have gone up it's basically a wash or worse.

Okay, lets do some actual math using real world values instead of a subjective and invisible variable you define as "above minimum wage".

U.S. Tax Brackets (Financial Year 2012-2013)

Marginal Tax RateSingleMarried Filing Jointly or Qualified Widow(er)Married Filing SeparatelyHead of Household10%up to $8,925up to $17,850up to $8,925up to $12,75015%$8,925 to $36,250$17,850 to $72,500$8,925 to $36,250$12,750 to $48,60025%$36,250 to $87,850$72,500 to $146,400$36,250 to $73,200$48,600 to $125,45028%$87,850 to $183,250$146,400 to $223,050$73,200 to $111,525$125,450 to $203,15033%$183,250 to $398,350$223,050 to $398,350$111,525 to $199,175$203,150 to $398,35035%$398,350 to $400,000$398,350 to $450,000$199,175 to $225,000$398,350 to $425,00039.6%$400,000+$450,000+$225,000+$425,000+
Sources:

http://www.irsmedic.com/2012/11/08/irs-tax-brackets-2013/
http://www.taxbrackets2013.com/post_cliff_brackets.html/

Current Minimum Wage: $7.25 (non-tipped, non-youth)

Source:

Fair Minimum Wage Act of 2007

Okay, so we've laid down the 2013 tax bracket and the minimum wage for 2013 as well, now we can logically come to a conclusion over whether or not residing in a tax bracket that would be above the one minimum wage is in actually means you make similar income and thus have a similar quality of living.

Alright, first we need to calculate just what tax bracket minimum wage falls into using a healthy year of 40 hour work weeks.

$7.25 * 8 * 5 * 4 * 12 = $13,920

So we've discerned from this that being paid minimum wage means you'll be taxed 15% on your income. Let's take that off and see what we get...

$13,920 * 0.85 = $11,832

Now let's find out the wage you'd need to be making in order to be within the next tax bracket.

$36,250 / 12 / 4 / 5 / 8 = $18.88

Now let's take off 25% of that in order to find out how much a person in this tax bracket is left with at the end of the day.

$36,250 * 0.75 = $27,187.50

Okay, so we've figured out that if you land just within the next tax bracket you're pulling in over twice the amount of money you would be on minimum wage, let's figure the real difference between these two numbers.

$27,187.50 - $11,832 = $15,355.50

At the end of the day, if you're making $18.88 per hour, you're pulling in $15,355.50 more than you would be if you were making minimum wage, this is clearly a pretty large difference and banking that extra money will very obviously lead you to having a higher quality of living than those who make minimum wage.

Making more money almost always means making more money, the only time tax brackets become a problem is if you land directly on the next tax bracket within a few thousand dollars. You're definitely going to lose out on some money in comparison to the previous tax bracket, but enough to bring your quality of living down to the same standards of those making minimum wage? Not a fucking chance.

The main problem with 'Murica's minimum wage is that it is far too low. In Alberta, Canada (where I live), minimum wage is $10.50 per hour or $20,160 CAD per year, the difference between that and the U.S. minimum wage is about $5,678.4 USD per year (2014/01/14 conversion rate). There is a clear difference when you travel between the two countries that the quality of living in the U.S. is much lower than in Canada, and while not all of that can be blamed on the low minimum wage, it's certainly a big factor.

I've seen people state here that lower wages = lower product pricing = economic growth. This is utterly retarded and there is little factual evidence available to support this, an excellent counter argument would be to simply compare Canada and the U.S., Canadians make a higher relative minimum income, but our products are always priced relatively the same when taking currency value into account.

Now the real problem with tax brackets comes in at the point where they're based on fixed amounts, let's take a look at a tax system that actually works in greater favour of the people:

Australian individual income tax rates (residents)

Financial years 2012-13, 2013-14

Taxable incomeTax on this incomeEffective tax rate0 – $18,200Nil0%$18,201 – $37,00019c for each $1 over $18,2000 – 9.7%$37,001 – $80,000$3,572 plus 32.5c for each $1 over $37,0009.7 – 21.9%$80,001 – $180,000$17,547 plus 37c for each $1 over $80,00021.9 – 30.3%$180,001 and over$54,547 plus 45c for each $1 over $180,00030.3 – 44.9%
Source:

http://www.ato.gov.au/Individuals/Income-and-deductions/How-much-income-tax-you-pay/Individual-income-tax-rates/

As you can see here, Australia's tax brackets are variable rather than fixed and income is taxed to a dollar accuracy. This is a fantastic way to go about taxing the populace and has shown time and time again to work in Australia's favour. There is no chance for loss because you're moving into the next tax bracket

Conclusions:

Minimum wage does not have a huge impact on the prices of products unless it is in the extreme lows like China's, a higher minimum wage actually does give a greater benefit to the people of a country and their quality of living. Making income that places you within the tax bracket above the minimum wage bracket does not mean you'll have the same quality of living, it will be much higher because at the end of the day, you're still making over twice the amount. Australia's income tax system kicks ass.

@Pyre
I'm sorry. The post that you quoted me on was a reply to ecchigaijin. I'm sorry I didn't make that clear in that post so I'm sorry for wasting your time. Though the information you gave was interesting it was irrelevant to my post.

On a side note you mention that goods in Canada and The US are about the same according to this site cost of goods is generally higher in Canada. Average income is higher in the US:

http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Canada&country2=United+States

Also using this site I can compare prices of goods in Canada and Australia Since
Australia has a higher minimum wage:

http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=Australia&country2=Canada

And between Australia and the US:

http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=United+States&country2=Australia

Also how bout India and the Canada since India has a really low minimum wage:

http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=India&country2=Canada&displayCurrency=CAD

And how bout China and Canada:

http://www.numbeo.com/cost-of-living/compare_countries_result.jsp?country1=China&country2=Canada&displayCurrency=CAD

Also I'd like to point out that according to the information you gave comparing income taxes in the US and Australia a person making minimum wage at full time employment pays more taxes in Australia than the US.

You're right, people are getting paid less, but are paying more taxes than ever before. I am almost afraid to ask but what is the fuckin' government doing with all the money, because they sure are not putting it into country and the infrastructure and its people.

Clearly you do not understand how that table works. Australians get paid $16.37 for minimum wage per hour, this equates to $14.66 USD. This is over twice the amount that a minimum wage worker in the U.S. would be making. It works out to about $31,430.40 AUD, or about $28287.36 USD. If the Australian were to be making the same wage as a US worker, they would be pulling in $15,312 AUD. According to the table and source I posted, the Australian government doesn't tax any income an individual pulls in below $18,201 AUD. That doesn't stop when you move into the next tax bracket, only the amount you make over $18,200 AUD is taxable by 19c on the dollar up until $37,000 AUD, then it continues at a higher rate and so on. So let's do the math.

$31,430.40 - $18,200 = $13,230.40

$13,230.40 * 0.19 = 2,513.77

(2,513.77 / 31,430.40) * 100 = 7.99%

U.S. fixed bracket tax (minimum wage bracket) = 15%
AUS variable bracket tax (minimum wage) = 7.99%

So no, Einstein, Australians making minimum wage do not pay more taxes than their U.S. counterparts.





Relative minimum income does not equal average income overall. There is a big difference.



Do you even follow your own conversations properly? Point and case, minimum wage does not heavily effect the cost of goods and services unless they're in the extreme lows like China, which I added to my previous conclusions. Minimum wage is higher in Canada compared to the U.S. but our goods still cost the same.



And have you looked at the average Indian's living conditions in comparison to Canada and the U.S.? The majority of them cannot afford any kind of advanced good like a computer or a T.V. or refrigerator or washing machine. They have some of the largest slums in the world and the quality of living is fucking awful, their dollar isn't valuable, their labour is cheap, they get paid shit and they live like shit. Why? Because their people have no purchasing power.

Local Purchasing Power in Canada is 71.11% higher than in India
Local Purchasing Power in Canada is 141.91% higher than in China

It doesn't matter if our goods or products are more expensive than they are India? Why? Because we get paid an exponentially higher amount than they do. We have purchasing power.



$89 USD is shit, that's only $1,068 per year. So as you can clearly surmise, it doesn't fucking matter if our goods cost even 500% more, because we're making 1300% the amount! We can afford better goods and services, we can afford not to live like shit, packed into slums without any kind of education being taught whatsoever.



This is a fucking forum, discussions and debates are completely open to anyone, anyone can intervene in any debate or conversation. If you want to have a private conversation, use the fucking PM system. And no, my information is entirely relevant to your post, it doesn't matter whether you were directing your conversation with ecchi, I laid legitimate, sourced facts on the table and regardless of whether or not you want to accept them they are there and contradict your argument that minimum wage has a heavy effect on the cost of goods.

You do not understand how economics work, stop pulling shit out of your ass and at least read a table properly so I don't have to walk you step by step through it like you're seven and learning how to multiply and divide for the first time.

If only it were simple as saying it...

God, if we don't watch out, China is gonna roll right over us. Have you seen how they have spread into Africa? China scares the shit out of me as to just how powerful they have become.

That will eventually happen, whether you're looking or not, they simply have more people and a better capability for industrial production. India is up and coming too however, so we'll see where that goes, but with a major ally like Russia on China's side I think it's safe to say America's superpower days are soon to be over, if they aren't already.

I agree, India and China are taking over as the new world superpowers. In China though, I have seen more and more politicians being arrested for corruption. It may be communisim on the surface but capitolism is burbling just under the surface. India, once they figure out labor laws and human rights issues, they are going to really take off.

I was comparing an Australian making minimum wage Vs. an American making minimum wage.



So you start out making more but don't average a higher income? If starting out higher was supposed to help then why don't you also average higher as well?



Yes I do the question is did you follow mine? ecchigaijin suggested that they needed to raise taxes to cover the cost of free health care which is why I was talking about taxes.



What exactly is your reasoning for this? If you raise the cost of labor artificially then that cost must be born somewhere else.



I don't think I would call a 10% difference the same. Certainly in the short run its not much but the longer you go the more money an American saves and thus can spend else where that a Canadian can't.



What exactly do their living conditions have to do with the cost of their goods? Also how exactly do they get more purchasing power? Are you suggesting that if the minimum wage was higher that would make everything better?

I know? I just explained to you that Australian's making minimum wage don't pay more in taxes than Americans making minimum wage. Australian's making minimum wage pay %7.99 in income tax, Americans pay 15%. If the Australian was making the same amount on minimum wage in USD as an American they wouldn't even be taxed on it, because it's not above Australia's taxable income margin.



The cost will be put onto the companies hiring the labour of course, and their profits will see a loss because of it. You could argue that they would simply raise their product's prices but then they would lose out in competitive markets which would lead to an even greater loss in profit. It helps distribute monetary resources more evenly rather than allowing it to be hoarded to specific points, this increases the quality of living and generates activity within the economy, leading to greater prosperity.



Yes if that 10% figure was any kind of accurate,

The source you provided

Contributors (past 18 months) Canada - 2911 US - 6976

Out of the 34.88 million people in Canada and the 313.9 million people in the U.S., those are extremely small data pools and I highly doubt the information given is an accurate representation. If you can find something more legitimate I'd be willing to concede on this matter. It's not like you aren't right, that 10% would make a difference over time, but I honestly don't think everything is more expensive out here, any good I've purchased in stores checks out at about the same price in the U.S., anecdotal evidence it may be, but I'm sticking with it unless I can be proven wrong.

Also, I looked into the GDP per capita, it seems the U.S. doesn't have a higher income on average so wherever you got those statistics from is feeding you a load of bullshit.


Canadian GDP Per Capita - $52,218.99 USD (2012)

US GDP Per Capita - $49,965.27 USD (2012)

Source:

World Bank



No, I never even came close to suggesting that, there are far more variables at play and you can't put the blame on minimum wage as the sole reason for anything, the point is that raising the minimum wage will help, it is not a detriment to an economy, a wage too low only servers to hurt the people and puts more money in the pockets of corporate fat cats. This means less small business and less money in the pockets of consumers which is overall bad for any country's economy. America, India and China are all good examples of how an increase in minimum wage would benefit their economic prosperity.

I see you think that companies have unlimited money that they can just afford to bear the cost. There are plenty of large companies that may be able to but small business can't.



Whats legitimate enough for you?



you do realize that GDP includes government money right? that's like counting a portion of your money twice.

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You can't legislate people into prosperity. Also I to never suggested that minimum wage was the sole reason. If raising the minimum wage is such a great idea then why don't we raise it to 30 dollars an hour? how bout 100 dollars an hour?

I see you think that companies have unlimited money that they can just afford to bear the cost. There are plenty of large companies that may be able to but small business can't.



Whats legitimate enough for you?





GDP = C + G + I + NX

where:

"C" is equal to all private consumption, or consumer spending, in a nation's economy
"G" is the sum of government spending
"I" is the sum of all the country's businesses spending on capital
"NX" is the nation's total net exports, calculated as total exports minus total imports. (NX = Exports - Imports)

Show me where you count a portion of your money twice? You can't, because that doesn't happen, all of those are individual sources of income.

"Per capita income, also known as income per person, is the mean income of the people in an economic unit such as a country or city. It is calculated by taking a measure of all sources of income in the aggregate (such as GDP or Gross national income) and dividing it by the total population."

I grabbed this from Wikipedia but I don't even need to find a scholarly source for this definition, this is economic basics. Anywhere you look will provide the same or similar definition.

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Did I ever say that we should raise minimum wages to the extremes? No, that would be extremely bad for an economy, like almost any economic reform it has to happen slowly and over time. Raising minimum wage benefits your economy in the right situation, and at the current moment in time, China, India and the U.S. would all benefit from this. It's exactly why each of them are planning to do so again within the next few years.



I never suggested that you suggested minimum wage is the sole reason, you implied that I was suggesting it. Here's a reference from your own post:

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You have no idea what you're talking about and you're not following the debate properly, you're providing illegitimate sources and you're falling back on stupid gimmicks instead of providing any real evidence to support your side of the argument. You didn't even know how to calculate PCI and GDP yet you think you know what's best for the economy of a country.

I'm done with this, I don't even know why I tried to have an intellectual debate in SD. I'll only leave you this; the world economy and that of a country is not black and white, a drastic change in either direction of any economic influence will lead a country's economy to downfall. At certain times, lowering minimum wage may be a good option but right now in the U.S., it's not.

The best way to improve the economy of any Country is to subsidize the industrial and services sectors that are high in demand so you can export those resources to the rest of world. That's exactly what Canada is doing right now with it's energy sector, subsidizing it and making export deals with China, that's why provinces like Alberta and Saskatchewan are booming and our economy is seeing a major upturn.

As for the U.S., minimum wage is the least of it's problems. The military budget should be looked at and reduced first and foremost.

Why we adding up spending when where talking about income?



Governments only get there money from the people or creating money out of thin air. So we are adding the money that the government created out of thin air here. A lot of the taxes by witch governments get their money are taxes on things people spend money on.



Now were adding the money company's spend. Yet companies can only get that money through either consumer spending or government subsidies.



Ok imports can only come in if people spend money on them. Exports are more like income than spending so maybe these cancel each other out.

Also why divide by the population of the country? not everyone in the country works. in fact a large portion of any country do not work. your counting children, retired people, stay at home moms, the unemployed.



I'm curious how do the people in government know whats in high demand? Also you realize that subsidizing anything is just taking money from someone and giving to whoever the government favors at the time.