Minimum Wage, Taxation and a solution to the income inequality divide...

[Cuda1447]

Admittedly, I'm not the foremost authority on the subject. I do like to think I have a basic understanding of economics, business and society in general. I've read a lot about the proposed minimum wage increase and subsequently why it will fail. I think it's obvious we have a 'middle-class' problem. To many people are living below or near the poverty line, while the ultra-rich become even more rich. It doesn't take an expert in economics to understand the relationship between the two.

So, let me propose a possible solution. Feel free to explain to me why it will not work.

The key is through taxation, simpliefied taxation, and fair taxation. In other words, the tax code needs to work like we intend it, without loopholes and special privilages for a select few.


It's really very simple. If you raise the minimum wage, small businesses will go out of business as they can't afford the increase in wages. Large businesses will likely just increase their costs to consumers to pay for the extra payroll and in the end will we have the same result. Businesses will continue to make record profits and we will have higher unemployment.


Instead, we tax profits. I don't know exactly where the line is, but we need to determine what is a healthy profit. Perhaps this is determined by company size. We have a progressive tax where (hypothetical numbers) the first million of PROFIT is taxed at 15%, 10million is taxed at 25% and so on and so forth. Once you reach a certain point, taxes should be high enough to really limit the effectiveness of driving up profits beyond that point. I'm alright with having a conversation regarding larger companies tolerating larger profits. Almost like a profit per employee calculation. But, there needs to be an upper limit to where companies cannot make obscene profits.


I know, its really very simple, but why shouldn't it work effectively?

The small businesses it won't affect much. The struggling businesses it won't affect (or maybe it will help them). The super profitable businesses won't be able to grow to gargantuam sizes. They can maintain a healthy profitability going forward. If they have extra profits, they can spend that money on employee wage increases to entice better talent to work for you. Thus, the company can still 'profit' in a way.

The downside. Company stock will go down. Stocks will not be worth as much as they once were, because once they reach a certain point of profitibility, they will have severely diminishing returns. If employers continue to push profits (only to pay more taxes) without increasing the wages of their workers (think Walmart) than the money they pay in taxes will just get spent on Welfare etc.. to benefit those workers that aren't making a fair wage. One way or the other, a fair share of those profits will go towards the employees/citizens of the country. But it would be in the best interest of the businesses to pay it themselves, rather than it being siphoned through taxation, as it will allow that business to recruit better talent and be more competitive in the labor market.


Now, I understand this is somewhat anti-capitalism. Hell, some of you might call if a form of communism. Such a dirty word. But let's be honest, the system we have now is going to shit. It isn't sustainable. Something has to change. The world has to embrace new ideas as we don't live in the same world we did in 1900.


I don't see why this system, if enforced fairly, would not work. I look forward to having a discussion with all of you.

 

[JMapleton]

Progressive taxation for businesses, interesting. But you need to think about this. Instead of coming up ways to generate government revenue, think ways to generate freedom and liberty for citizens. Money is power. When government has money, they have power.

You have to decide what path we're headed to. Socialism or freedom.

Freedom does not always equal prosperity or safety.

But I'd rather be tyrannized by corporations and terrorists than politicians.

 

[HumblePie]

Or we can go back to how taxes were originally promised and sold to the people. That only corporations and the filthy rich would b required to be taxed. Not that I'm saying I completely agree with that statement, but that was how the original tax amendment was passed.

So corporations get taxed on income, sales, and property. Those making a crap ton of money get a bit of an income tax. Super luxury items get sales taxes added to them. Taxes drop for everything else. Voila! the original idea for wealth redistribution through taxation as promised by those back in the early part of the 1900's and ratified by Woodrow Wilson is now back to what at least they envisioned back then.

Again that was the original promise of what was only suppose to be taxed when the original amendment was ratified. Not the current version of taxation around the country we have now.

 

[JMapleton]

Or we can go back to how taxes were originally promised and sold to the people. That only corporations and the filthy rich would b required to be taxed. Not that I'm saying I completely agree with that statement, but that was how the original tax amendment was passed.

Or we could go back to when the United States truly was "Land of the Free," before bankers and politicians illegally passed the 16th Amendment, which led to a new era of tax revenue and big government and then subsequently into American military adventurism and international political meddling and the nanny state.

 

[JTsyo]

The super profitable businesses won't be able to grow to gargantuam sizes.

I think the opposite would happen. Companies would grow so they could increase their absolute income. Most likely by buying other companies. Also they would increase their spending on lobbying. Better to spend the money on politicians than give it away for free in taxes in their eyes.

 

[Cuda1447]

Progressive taxation for businesses, interesting. But you need to think about this. Instead of coming up ways to generate government revenue, think ways to generate freedom and liberty for citizens. Money is power. When government has money, they have power.

You have to decide what path we're headed to. Socialism or freedom.

Freedom does not always equal prosperity or safety.

But I'd rather be tyrannized by corporations and terrorists than politicians.

I'd much prefer the money be given straight to the citizens rather than through taxation and then passed through the government. Which is why I think my method encourages businesses to pay higher wages. However, if they choose not to. The money going through the government is a better option than it being given to ultra rich through mega-profits.

 

[HumblePie]

Or we could go back to when the United States truly was "Land of the Free," before bankers and politicians illegally passed the 16th Amendment, which led to a new era of tax revenue and big government and then subsequently into American military adventurism and international political meddling and the nanny state.

I'm for that, but baby steps backwards could work towards that goal.

 

[Matt1970]

No, that is very much communism. Ask Russia how well it works.

 

[Cuda1447]

I think the opposite would happen. Companies would grow so they could increase their absolute income. Most likely by buying other companies. Also they would increase their spending on lobbying. Better to spend the money on politicians than give it away for free in taxes in their eyes.

Companies can no longer contribute money to politics parties/lobbying. Problem solved. Or.... maybe even better yet.... The money spent on lobbying is not taken off their balance sheet and still counts as profit. That will severely discourage that behavior.

As for buying other companies, they will incur the payroll costs of those new companies. And if they aren't paying enough in payroll (creating jobs, paying fair wages) than they get taxed at high rates. Either way, the money will come back to the people.

 

[Cuda1447]

No, that is very much communism. Ask Russia how well it works.

Let's throw around dirty words, rather than have a conversation.


Please, just explain to me how it won't work. Let's have a back and forth... a conversation, if you will. I don't want this to be Fox News vs CNN. We won't get any solutions playing that game.

 

[glenn1]

Companies generally get big and profitable because they're doing things right - good planning, having a well-defined mission, being scalable, and providing value to their clients. Your proposal subsidizes those who fail at getting big and profitable, often because they don't do those things. I don't know about you, but I want the companies and individuals with *best* products and services in the marketplace, not just to the greatest number of providers. If the company with the best is a big company, so be it.

 

[Cuda1447]

Or we could go back to when the United States truly was "Land of the Free," before bankers and politicians illegally passed the 16th Amendment, which led to a new era of tax revenue and big government and then subsequently into American military adventurism and international political meddling and the nanny state.

I feel like going down this road is going to get us off track from the key to this conversation, which is solving the inequality gap. Your suggestion brings in a lot of other politicsl elements like military size, foreign relations etc...

I'd prefer if we steered clear of those topics for now. They will dilute the conversation here.

 

[JMapleton]

I feel like going down this road is going to get us off track from the key to this conversation, which is solving the inequality gap. Your suggestion brings in a lot of other politicsl elements like military size, foreign relations etc...

I'd prefer if we steered clear of those topics for now. They will dilute the conversation here.

My point is, it's a useless discussion. You're trying to come up ways to bring in tax revenue. I'm saying the tax revenue itself will be the reason for our demise.

 

[Cuda1447]

Companies generally get big and profitable because they're doing things right - good planning, having a well-defined mission, being scalable, and providing value to their clients. Your proposal subsidizes those who fail at getting big and profitable, often because they don't do those things. I don't know about you, but I want the companies and individuals with *best* products and services in the marketplace, not just to the greatest number of providers. If the company with the best is a big company, so be it.

Some businesses become big and profitable because they do things right. Often times though, they lose their way once they are big and profitable. But because they are big, profitable.... and now powerful, they can maintain their position in the market, while not providing good services, value etc...

I can provide many examples of this. In many industries.


Banking. Would you argue that large banks (Bank of America, Wells Fargo etc) provide better value to consumers than a credit union or small local bank, generally?


Cable companies, cell phone companies etc... Verizon, AT&T, Comcast. Again, do they provide better value than small municipalities or companies that aren't chasing record profits?


Big Box Retailers. Walmart etc... Do they provide better value/service?


I could go on and on. Now certainly, some businesses that become large do so for the right reason and stay a strong, quality business. And that's fine. All I'm asking is that if they achieve that status, once they reach a certain point of profitability, to share those profits with their employees.


You mentioned we would be subsidizing the small busineses that aren't run well. That's no the case, at all! They will still be taxed. We aren't GIVING them money. We are just taking less. We aren't encouraging inefficiency, because paying higher taxes will still mean larger profits. It just scales and gives diminishing returns. There is a point where the extra efficiency cost for more profits (or paying of lower wages) will NOT be worth the extra taxes on those hefty profits, but that won't be till you reach the higher end of the profitability scale.

 

[Cuda1447]

My point is, it's a useless discussion. You're trying to come up ways to bring in tax revenue. I'm saying the tax revenue itself will be the reason for our demise.

Understood. It may well be a useless discussion. I don't necessarily agree with your poitn of view regarding taxation and large government, but I do understand it. In any case, we still need to come up with a solution to this inequality gap. I'm not opposed to working on the the solution to our corrupt, overly large government either.... just in another thread .

 

[Matt1970]

Let's throw around dirty words, rather than have a conversation.


Please, just explain to me how it won't work. Let's have a back and forth... a conversation, if you will. I don't want this to be Fox News vs CNN. We won't get any solutions playing that game.

Because you want to choke off the very thing that makes a company great. And you already have examples of it failing. So now tell me why you think "this" time it will work?

 

[Londo_Jowo]

The downside. Company stock will go down. Stocks will not be worth as much as they once were, because once they reach a certain point of profitibility, they will have severely diminishing returns. If employers continue to push profits (only to pay more taxes) without increasing the wages of their workers (think Walmart) than the money they pay in taxes will just get spent on Welfare etc.. to benefit those workers that aren't making a fair wage. One way or the other, a fair share of those profits will go towards the employees/citizens of the country. But it would be in the best interest of the businesses to pay it themselves, rather than it being siphoned through taxation, as it will allow that business to recruit better talent and be more competitive in the labor market.

I'm sure that people who own stock (including those via mutual funds in their 401k) will not be in favor of your utopia good feeling pipedream.

 

[JMapleton]

Understood. It may well be a useless discussion. I don't necessarily agree with your poitn of view regarding taxation and large government, but I do understand it. In any case, we still need to come up with a solution to this inequality gap. I'm not opposed to working on the the solution to our corrupt, overly large government either.... just in another thread .

The citizens have an equal share in the inequality gap as the corporations do. Citizens, even working class and poor citizens need to create better working and spending habits.

What's not seen in those numbers is the reason people do not have jobs. Many do not want jobs. Many cannot keep jobs because of lack of life/social skills. Most do not save any money when they do make it.

We have a crisis in this country of people not caring about their own futures and people not taking responsibility for themselves.

I made an entire huge thread about it:
http://forums.anandtech.com/showthread.php?t=2255309&highlight=

When asked why don't more people save and invest, the answer was basically...."yolo!"

People don't care. Then they complain they don't have anything.

 

[Cuda1447]

I'm sure that people who own stock (including those via mutual funds in their 401k) will not be in favor of your utopia good feeling pipedream.

I own stock and a 401k. I would be in favor of my 'pipedream' if I got paid more money. The stock I own is measely compared to the ultra-rich in this world though. They certainly won't be in favor of what I propose. Because it hurts them and helps everyone else.

 

[Matt1970]

Some businesses become big and profitable because they do things right. Often times though, they lose their way once they are big and profitable. But because they are big, profitable.... and now powerful, they can maintain their position in the market, while not providing good services, value etc...
.

The same thing happens with Governments with too much control. I don't understand why you think our government will be fair at taxing and distributing wealth. Have you seen how our government spends money?

 

[Cuda1447]

Because you want to choke off the very thing that makes a company great. And you already have examples of it failing. So now tell me why you think "this" time it will work?

What am I choking off that makes a company great? Profits? My plan clearly illustrates that healthy profits are acceptable and encouraged. Obscene profits are the ones I have a problem with. Exploiting profits. Profits that are so large the company has more power than the population that works for that company. Profits that make a company think they are above the law (see banking). Profits that encourage customers to not give a rats ass about customer service or providing a good product (telecom and cable companies).


And what examples did I provide of it failing? You provided Russia as an example. But Russia had a LOT of other factors that went into its failing than just progressive taxation on businesses. You are simplifying a very complex problem with regards to Russia and communisism.


So again, I ask you in a very respecful manner, can you provide me with some specific reasons, logic or conversation as to why it would not be a better system than we currently have?

 

[Londo_Jowo]

I own stock and a 401k. I would be in favor of my 'pipedream' if I got paid more money. The stock I own is measely compared to the ultra-rich in this world though. They certainly won't be in favor of what I propose. Because it hurts them and helps everyone else.

Ahhhhh now we know the whole problem, you feel you deserve to have a bigger chunk of the profits the company you work for makes.

 

[Cuda1447]

The citizens have an equal share in the inequality gap as the corporations do. Citizens, even working class and poor citizens need to create better working and spending habits.

What's not seen in those numbers is the reason people do not have jobs. Many do not want jobs. Many cannot keep jobs because of lack of life/social skills. Most do not save any money when they do make it.

We have a crisis in this country of people not caring about their own futures and people not taking responsibility for themselves.

I made an entire huge thread about it:
http://forums.anandtech.com/showthread.php?t=2255309&highlight=

When asked why don't more people save and invest, the answer was basically...."yolo!"

People don't care. Then they complain they don't have anything.

People don't save and invest more because of education. They are ignorant, for the most part. Go have a conversation with your friends on Facebook, or your relatives. It becomes obvious that most people don't grasp. Allowing companies to exploit the work force and earn obscene profits does nothing to fix this. Neither does paying employees more money. This is a completely, unrelated issue that has an easy fix. Better monetary education at a young age.

 

[Cuda1447]

Ahhhhh now we know the whole problem, you feel you deserve to have a bigger chunk of the profits the company you work for makes.

Not at all. The 'whole problem' is the income inequality gap in this country. I stated that in my original post. Did you think I was excluded from that gap? Of course not. Using the pronoun "I" was simply a way of showing that there would be people in favor of this 'pipedream' even at the cost of stocks not performing as well.


*edit* And not that I feel it is necessary to humour you, but I will anyway. I am financially comfortable. I am not concerned with my own well being (at least not currently). I am concerned with the well being of our entire country. I see the road we are headed down. Eventually, a large portion of our society will be in this boat, not just the ~30% that we have now.

In addition, I have owned small businesses (and run one now) work for a large corporation with obscene profits and am working n a Masters program, which when finished I will most likely be working for myself. So as you can see, I'm firmly entangled with all elements of the discussion. And long term, I should be just fine, as I will not be working for a super-corporation. That doesn't mean I don't want the rest of our country to suffer though.

 

[BUnit1701]

Not at all. The 'whole problem' is the income inequality gap in this country. I stated that in my original post. Did you think I was excluded from that gap? Of course not. Using the pronoun "I" was simply a way of showing that there would be people in favor of this 'pipedream' even at the cost of stocks not performing as well.


*edit* And not that I feel it is necessary to humour you, but I will anyway. I am financially comfortable. I am not concerned with my own well being (at least not currently). I am concerned with the well being of our entire country. I see the road we are headed down. Eventually, a large portion of our society will be in this boat, not just the ~30% that we have now.

In addition, I have owned small businesses (and run one now) work for a large corporation with obscene profits and am working n a Masters program, which when finished I will most likely be working for myself. So as you can see, I'm firmly entangled with all elements of the discussion. And long term, I should be just fine, as I will not be working for a super-corporation. That doesn't mean I don't want the rest of our country to suffer though.

Please explain how this 'gap' is a problem? Why do you view success as a failure?