Hidden Taxes and Minimum Wage

Annie Lowry, staff writer at The Atlantic calls it the “Great Affordability Crisis”
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These are what I call hidden private taxes and other expenses that either didn’t exist before or which cost a fraction of what they do now like
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healthcare
childcare
drinking water
telephone
telephone service
internet
bail
cars
Cable TV
Interest expense on debt
etc.
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If you add those up it takes a big chunk out of the budget for the average household. None of that would be a problem if we had stuck with the minimum wage passed long ago. Back then minimum wage was a living wage.
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The public and the politicians have been sold a bill of goods by the banks who have now replaced earnings with debt. That is nuts. It hurts both the companies that “save” money on lower cost of employment and the employees. Henry Ford invented the middle class by simply doubling the rate of pay for all his employees. Although heavily criticized by his competitors he was right — sales of cars exploded and a whole new class of consumers was born. It’s all true. Look it up.
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They all made more money, not less. Tax revenue soared without any increase in the rate of taxation.
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Minimum wage serves as the baseline for all wages. If the minimum wage had been allowed to keep pace with inflation it would be around $23 hour. So somebody working a typical 50 hour week would be earning $1150 per week, $4945 per month, and around $60,000 per year, which would mean the average worker would be making around twice that. This would result in far greater tax revenue without increasing taxes — sales taxes, income taxes, social security etc. There would be no deficit.
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And with everyone earning more money it would be easier for professionals who currently find it difficult to bring in clientele able to pay fees not covered (i.e. controlled) by insurance companies.
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And it doesn’t take a genius to realize that had wages kept up with inflation it would have been easier for one parent to stay at home reducing both the urgency of the need for childcare and the insurgence of “low cost” childcare that failed to provide minimum needed services.
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Viewing the economy through a cost-of-living paradigm helps explain why roughly two in five American adults would struggle to come up with $400 in an emergency so many years after the Great Recession ended. It helps explain why one in five adults is unable to pay the current month’s bills in full. [Thus steering them further into debt] It demonstrates why a surprise furnace-repair bill, parking ticket, court fee, or medical expense remains ruinous for so many American families, despite all the wealth this country has generated. Fully one in three households is classified as “financially fragile.” Lowry, The Atlantic in

“The Great Affordability Crisis Breaking America”

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So the biggest tax of all — which is both public and private — is that failure of government to keep up its promise of a fair wage for an honest day’s work. It’s killing the country. We might as well eat our young.
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If workers were paid money to work instead of being loaned money that had to be repaid we would not be in this mess.
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For one thing borrowers could have hired competent advisors before buying into residential loan products based upon false appraisals and near certain doom for their largest, most important and often only investment.
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Push back from competent licensed people representing borrowers who knew what they were talking about would have severely curtailed or virtually eliminated the way the banks played securitization with residential loans.
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Rising false appraisals couldn’t have happened but for the lack of accessibility to information vital for the borrower to know about the way their property was being valued — i.e., temporarily for the sole purpose of getting the borrower to sign on the dotted line.
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Doomed loan terms could not have happened either. Nobody representing the borrower would allow them to enter into a loan agreement where the reset payments were greater than total household income.
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In short, the 2008 Great Recession could not have occurred in a way that was perceived by many as threatening all of government all over the world.
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It all happened because we let the banks sell the false idea that credit was just as good as money in the bank. It isn’t. It never was. Your savings account is far more important than your FICO score.
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Whatever your political preference, if your candidate doesn’t understand these basic thoughts, then find someone else in whom to trust your vote — someone who does understand basic arithmetic and cause and effect.  Make no mistake about it — there are Republicans and Democrats who are worth your vote. And there are others who are not.

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One Response

  1. Great point as to cost increases, Neil. I have to say many small businesses struggle with wage increases and medical insurance increases. It can often crush a small business, and jobs could be lost..

    Yet we have, in this country, a great inequality issue. When we see multi-billionaires associated with large companies paying minimum wages it is appalling and has a crushing effect.

    I think that that there should be demands for increases in minimum wage, but that there should be some exception for small businesses. However, that would not allow small businesses to recruit. It a huge problem.

    Thanks

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