Thread: How the minimum wage works

Originally Posted by ba1025

* In 2008, 2009, and 2010, the tax rate on eligible dividends and long term capital gains is 0% for those in the 10% and 15% income tax brackets.

Well, I was in the 10% and 15% bracket for the last 5 years and I didn't see this. I got taxed when I made money from stocks I held for more than a year. I can't say what 2008, 2009, and 2010 will be like until new TurboTax comes out.

Originally Posted by ba1025

* After 2010, dividends will be taxed at the taxpayer's ordinary income tax rate, regardless of his or her tax bracket.

Whoa...wait...ordinary income tax rate regardless of tax bracket? What does that mean? What will my ordinary income tax rate be if I were in the 10% bracket? How about 38% bracket?

Originally Posted by ba1025

* After 2010, the long-term capital gains tax rate will be 20% (10% for taxpayers in the 15% tax bracket).

Would that be more or less than now?

Originally Posted by ba1025

* After 2010, the qualified five-year 18% capital gains rate (8% for taxpayers in the 15% tax bracket) will be reinstated

Know the real rates. Stop repeating propoganda

I have never seen these rates before. Can you provide a source?

Here's the effective federal tax rate (i.e. what people actually paid) over the past three decades or so. The richer you are, the larger your tax buden is.

tax+rates+by+quintile.gif (image)

Originally Posted by zraver

If your operating in a vacuum yes I ceed your point, but we are not. The poor spend, so an increased minimum wage goes directly into the goods and services economy. Your business will go up, not down- and thats what the data shows.

So the poor makes minimum wage, let's say $5/hr. A meal costs $5. He works an hour and it's enough for a meal.

The minimum wage goes up to $6/hr. A meal now costs $6 because increases in minimum wage created an inflationary pressure to force everything to go up. He works an hour for a meal. But he makes 20% more now.

Did he really get more?

Originally Posted by ba1025

I haven't seen anyone posting that capitalism is evil only that it needs some regulation/moderation from Govt to prevent abuses of the people. After all we are a govt of the people for the people. I'd hate to live in Europe where it's choked. I think the U.S. has a good formula for the most part. i only argue to protect the formula that has worked the last 75 years to create the largest middle class in the world. Everyone in this country is essential for the system to work. We are a democracy and the working class and poor are a large part of the system that creates vast wealth. I don't think it's outrageous to have programs that might cause a minuscule amount of drag on capitalism but benefit many of those not lifted up by it.

Yes, but not from the government. The consumers will either sue those who run a bad business or vote with their wallet and not buy from it. It is in a business's best interest to run an honest business.

Originally Posted by ba1025

I fail to understand how lifting people in poverty a bit is a bad thing

Are you saying that the new minimum wage will lift people out of poverty? Has a minimum wage law ever done that? Has ANY government program, war on poverty, welfare, subsidised housing, rent control, or anything else ever done that?
The only thing that lifts people out of poverty is a growing economy, period.

Proof lies in the worldwide reduction in poverty in the last 20 years-unprecedented in human history.

Originally Posted by Shek

You just took away 160 dollars from the business owner. 160 dollars less to save or spend. So where's the change?

please stop arguing zero sum, the business owner does not have that 160, he has to make sales. The business owner gets his money from sales. More wages earned among consumers adds up to more spending ergo more sales.

Yes, but not from the government. The consumers will either sue those who run a bad business or vote with their wallet and not buy from it. It is in a business's best interest to run an honest business.

so you oppose tort reform, are in favor of trust busting?

I want to return to pre 1900 style capitalism. The conditions described in the Jungle won't occure because all the other factors have changed. Over 100 years of scientific progress won't go up in a puff of smoke if we relax government regulations.

a few names- Microsoft, Enron, worldcom sorry unregulated business is bad for consumers.

Did I say deficits don't matter? Instead of tax, spend, and regulate, why don't we cut government spending to reduce deficit? What does the government produce? I can't think of anything other than paper work. We're all screaming about manufacturing jobs moving away and yet the single biggest employer in the nation manufactures nothing.

great idea, lets start with tax payer funded corporate welfare.

Really? Tell that to inner city urban centers, almost all of which are run by Democrats. Tell that to the education industry at almost all levels, almost solely dominated by Democrats. Tell that to the union industry, effectively 100%-controlled by Democrats.

Restraining negative effects indeed.

-dale

when was the last typhus outbreak in a major US city? Did you know that in 1930 16.5 % of the country could not read 98.4% can now. National Assessment of Adult Literacy (NAAL) - 120 Years of Literacy

Originally Posted by zraver

please stop arguing zero sum, the business owner does not have that 160, he has to make sales. The business owner gets his money from sales. More wages earned among consumers adds up to more spending ergo more sales.

You're right, as I'd argue that it could actually be negative sum, not zero sum.

Let's say that the evil gunnut owns a hot dog stand. He pays his employees $8/hr. However, the DRK passes a law that the min wage is now $10. Instead of paying himself, as the owner of the stand, those two dollars, he must now pay the employee those two dollars. Without changing anything else, all we've seen is a transfer of who gets revenue.

However, because this will affect a small percentage of the workforce (only a few percent) because the minimum wage is rarely binding, the hot dog stand will see little revenue increase. Additionally, because evil gunnut is only willing to run his hotdog stand at a certain level of accounting profit (to maintain positive or zero economic profit), he will raise his prices. This will decrease business, which means that he will have less use for labor. He either fires employees, decreases their hours, or he shuts down (another possibility is to find a way to use machines to save labor - how many elevator operators do you see around these days?).

That's the impact on the hot dog stand. What about the macroeconomic effect? The question is between the use of those $2/hour by evil gunnut or by Joe Minimum Wage working at his hot dog stand. Those $2 are probably more productive in evil gunnut's hand. If either spends it, there probably isn't much difference between the impact. However, if evil gunnut saves it, because he has more wealth, he will probably put the funds into higher interest bearing accounts, such as a money market, or CD, etc.. On the other hand, Joe Minimum Wage will probably have the funds in lower interest rate accounts, such as a checking account. The difference? The bank can turn around and find more productive, longer-term projects with evil gunnut's accounts (which is why they pay him more in interest).

Now, this is just using a simple story to illustrate what can happen. The basic point is that a minimum wage law doesn't create new money - it is simply a tax on employers that is transferred directly to employers without going through Uncle Sam's hands. It isn't a wealth creating endeavor.

Originally Posted by zraver

so you oppose tort reform, are in favor of trust busting?

What exactly is "tort reform?" I hear it very often but no one ever has any specifics.

Originally Posted by zraver

a few names- Microsoft, Enron, worldcom sorry unregulated business is bad for consumers.

I love Microsoft. It has given us more innovations than the next 10 companies/individuals combined. Think about the computing world before MS took over the computer industry.

Enron happened despite government regulations. Or are you telling me there were no regulations back then so technically everything Enron did was legal. If everything Enron did was legal, why are those guys in jail?

Same with Worldcom.

Originally Posted by zraver

great idea, lets start with tax payer funded corporate welfare.

What is this "corporate welfare" I hear so much about? Do you know what the average corporate tax rate is in the US? How about the average for the industrialized world?

Our corporate tax rate is close to 40%, 2nd highest in the world, in fact. If anything, we should cut corporate taxes and decrease regulation so they'll move jobs back here instead of moving them to places with low corporate tax rate and fewer regulations. Are you against moving jobs back here?

Originally Posted by Shek

However, because this will affect a small percentage of the workforce (only a few percent) because the minimum wage is rarely binding, the hot dog stand will see little revenue increase. Additionally, because evil gunnut is only willing to run his hotdog stand at a certain level of accounting profit (to maintain positive or zero economic profit), he will raise his prices.

Or cut his prices to boost sales generating more revenue, move to a better street coner, fight harder to get vending rights to events etc. After all if GNT will only operate at a profit then he has more than just the option of raising prices or shutting down.

What exactly is "tort reform?" I hear it very often but no one ever has any specifics.

Limiting the amount a jury can award some one damaged by a corporation and or jury punishment of a business/ business owner.

I love Microsoft. It has given us more innovations than the next 10 companies/individuals combined. Think about the computing world before MS took over the computer industry.

M$ is klunky unreliable, uses users as beta testers and has tried for years to stifle innovations they did not control. Imagine where we would be if M$ had not slowed us down?

What is this "corporate welfare" I hear so much about? Do you know what the average corporate tax rate is in the US? How about the average for the industrialized world?

farm subsidies to Archers Daniels Midland, tax payers footing the bill for new drug development and then paying the highest rates, funding a secondary engine for the F-22 that will never be bought or used, oil companies annually deducting 15% from thier before tax profits that kind of stuff.

Originally Posted by zraver

Limiting the amount a jury can award some one damaged by a corporation and or jury punishment of a business/ business owner.

If that is it, then I'm against it. Especially if we lessen regulations. It is a form of punishment for bad business.

Originally Posted by zraver

M$ is klunky unreliable, uses users as beta testers and has tried for years to stifle innovations they did not control. Imagine where we would be if M$ had not slowed us down?

Fine. Don't use it. Use Linux. It's free. Let the market decide which is better.

I can imagine very well a world without Microsoft. We'd be using dozens of different flavors of Linux and people need to relearn the OS whenever they change a job. Worse yet, we'd be on Macs and under even worse monopolistic control. Apple is a true stifler of 3rd party innovations.

Originally Posted by zraver

farm subsidies to Archers Daniels Midland, tax payers footing the bill for new drug development and then paying the highest rates, funding a secondary engine for the F-22 that will never be bought or used, oil companies annually deducting 15% from thier before tax profits that kind of stuff.

I'm against farm subsidies.

Tax payers footing the bill for new drug development? I don't understand. Isn't that what you want? Government funded research projects? Or are you saying we should end government handouts to researches?

I've heard about the F-22 engine thing. I think it's a waste. We should cut it and use the money to pay down the debt.

Oil company deducting 15% from their before tax profit? How about this, let's lower the corporate tax rate from 40% to 20% and we end the 15% deducton?

Originally Posted by gunnut

If that is it, then I'm against it. Especially if we lessen regulations. It is a form of punishment for bad business.

here we agree, yet the Republicans are pushing for tort reform.

Fine. Don't use it. Use Linux. It's free. Let the market decide which is better.

I can imagine very well a world without Microsoft. We'd be using dozens of different flavors of Linux and people need to relearn the OS whenever they change a job. Worse yet, we'd be on Macs and under even worse monopolistic control. Apple is a true stifler of 3rd party innovations.

without M$ trying to block innovations we would be further along the technology road.

Tax payers footing the bill for new drug development? I don't understand. Isn't that what you want? Government funded research projects? Or are you saying we should end government handouts to researches?

if tax payers foot the bill for development they should get a break at the counter. No break at the counter- no subsidies. yet as it stand nows we fund the research and get the highest prices.

Oil company deducting 15% from their before tax profit? How about this, let's lower the corporate tax rate from 40% to 20% and we end the 15% deducton?

How about this, with oil companies turning in record profits lets just remove the deductions and increase federal revenue to pay down the debt or force them to re-invest it in non-fossil energy sources.

Originally Posted by zraver

Or cut his prices to boost sales generating more revenue, move to a better street coner, fight harder to get vending rights to events etc. After all if GNT will only operate at a profit then he has more than just the option of raising prices or shutting down.

Why wouldn't evil gunnut had done these things already? The hot dog stand industry is typically pretty competitive and you don't see large margins (and this is fairly representative of the minimum wage sector).

Originally Posted by Shek

Why wouldn't evil gunnut had done these things already? The hot dog stand industry is typically pretty competitive and you don't see large margins (and this is fairly representative of the minimum wage sector).

I was just pointing out that the margin between profit and insolvency is not just minimum wage. is there any proof raising the minimum wage depresses small businesses in the real world? Minimum Wage and Small Business shows that it has not hurt small businesses and in fact such employers enjoyed better growth in higher wage states than those in federal minimum wage states.

Originally Posted by zraver

a few names- Microsoft, Enron, worldcom sorry unregulated business is bad for consumers.

How is Microsoft bad for consumers? $500 personal computers getting more powerful every day are bad? And Worldcom's problems weren't due to inadequate regulation, my lad, they were due to cheating, cheating by Scott Sullivan and Bernie Ebbers. When you cheat at accounting it's called fraud, and it's already illegal.

Hell's bells, the account I worked on was responsible for bringing in approximately 1 billion dollars in revenue per year. That's billion with a "b". And Bernie still managed to crock it all up. Thanks Bernie.

Anyway, again, regulations were in place already, they were just ignored. Same with Enron.

-dale