The Chairman’s Report February 5, 2021

  • by:
  • Source: FAIRtax
  • 04/09/2021
WANT TO INCREASE THE MINIMUM WAGE THE BEST WAY—ENACT THE FAIRTAX

Taken From Bureau of Labor Statistics Report

The national minimum wage was first mandated by the Fair Labor Standards Act in 1938.  This federal law provided for not only the minimum wage but also overtime pay.  One of the stated reasons for the legislation was that jobs that didn’t require specialized skills could be filled by just about anybody.  With the number of workers exceeding the number of available jobs, wages for these low-skill jobs were quite low, and the workers who held them had very little ability to negotiate for better pay.

Just about every American worker started their working career in one of these low-skill, entry level jobs, and all of them wished that they could earn more money.  In fact, just about all of us at some time in our working lives have wished that we could earn more money so that we could provide a better life for ourselves and our families.

A March 2018 report by the U.S Bureau of Labor Statistics shed some light on the people age 16 and over who were receiving an hourly wage in 2017.
 
  • 80.4 million workers were paid at hourly rates, representing 58.3 percent of all workers. 
  • 542,000 workers earned exactly the prevailing federal minimum wage of $7.25 per hour.
  • About 1.3 million workers were paid less than the federal minimum. (Tipped employees for example.)
  • 1.8 million workers with wages at or below the federal minimum made up 2.3 percent of all hourly paid workers.
  • The percentage of hourly paid workers earning the prevailing federal minimum wage or less declined from 2.7 percent in 2016 to 2.3 percent in 2017.
  • Workers under age 25 represented only about one-fifth of hourly paid workers, but they made up about half of those paid the federal minimum wage or less. Among employed teenagers (ages 16 to 19) paid by the hour, about 8 percent earned the minimum wage or less, compared with about 1 percent of workers age 25 and older.
  • Among workers who were paid an hourly wage in 2017, about 3 percent of women and about 2 percent of men had wages at or below the prevailing federal minimum.

A July 2019 report from the Congressional Budget Office looked at what would happen if the minimum wage were increased to $15 an hour.  The study found that:
 
  • In an average week in 2025, the $15 option would boost the wages of 17 million workers who would otherwise earn less than $15 per hour.
  • Another 10 million workers otherwise earning slightly more than $15 per hour might see their wages rise as well.
  • However, another 1.3 million workers would lose their jobs, according to CBO’s median estimate.
  • The number of people with an annual income below the poverty threshold in 2025 would rise by 1.3 million.

THE FAIRTAX SOLUTION

The information above shows that not only would the 1.8 million workers see their pay increased, but 15.2 million more workers who are now making more than the minimum wage but less than $15/hour will see their wages increased as well.  The additional 10 million workers earning slightly more than $15/hour will likely demand higher wages.  So, a $15 per hour minimum wage could increase wages of 27 million workers.

When a business boosts its employees’ wages as a reward for increased productivity, the business is making more money and everyone profits.

When higher wages are mandated by the government and not based on the actual business reality, this results in higher expenses with no corresponding increase in income.  In that case, businesses are forced to raise prices to the degree that the market will allow.  In many cases, that’s not enough to make up the difference, so they are also forced to cut benefits, reduce the number of workers on their payroll or reduce the amount of money paid to owners and shareholders.  Unlike the federal government, they cannot just print more money.

Bureaucrats and Members of Congress, many of whom have never worked a day in the private sector, are appalled that business owners don’t just reduce their own income by enough to pay for the government mandated wage increases and not lay off employees or increase prices.  When these business owners try to deal with their higher expenses in other ways, they’re often labeled selfish and greedy.

It is time for a more sensible solution.  There has to be a system that will help wage earners without making it more expensive for their employers to do business.  Fortunately, there IS such a system—the FAIRtax.

Once the FAIRtax is enacted, workers at all wage levels will see more money in their pockets as the FAIRtax eliminates federal withholding and payroll taxes allowing all workers to bring home their entire paychecks.

Even low wage workers who don’t pay any income tax would see an immediate 7.65% pay increase.  That’s how much federal payroll taxes take from every worker’s paycheck.  The FAIRtax also eliminates the employer’s share of Social Security and Medicare taxes, and many economists believe that most employers will likely increase employee wages by some of that 7.65% that they no longer have to pay.

They’ll need to do that in order to keep their good employees from being hired away by other companies that can suddenly afford to offer 7.65% more in wages.

In addition to all of these benefits flowing directly to wage earners, economists agree that the economy will grow much faster under the FAIRtax than under the income tax.  As the economy grows, the demand for workers of all skill levels will increase putting upward pressure on wages across the board.  With the FAIRtax, everybody wins.

CONCLUSION

Increasing the minimum wage through government edict might sound good to some, but why help just some of the people when the FAIRtax helps everybody?

Unfortunately, many politicians in both parties believe that the only way to maintain their power is to make people believe that they can’t survive without the government’s help.  And the income tax is a perfect vehicle for making people believe that the government is helping them by giving them tax breaks.

Pope Francis has been criticized by some as being very radical but his statement about why people seek to make others dependent seems very true.  The Pope said:

In Europe first, and now in America, elected men have taken it upon themselves to indebt their people to create an atmosphere of dependency. And why? For their own selfish need to increase their own personal power.

Few will argue that people who can support themselves and their families feel a certain amount of self-respect.  Most of us have had to deal with difficult financial times at some point in our lives.  Many have had to reach out for help.  When that help came, be it from family, friends or government, we were grateful in the moment, but for many, having to ask for financial help is a profoundly humbling experience that can bring with it a sense of failure and loss of self-respect.  Recovering from a financial crisis and regaining one’s self-respect is always an immensely satisfying experience.

We are in control of our own self-respect, not the government.  As Mahatma Gandhi said, They cannot take away our self-respect if we do not give it to them.

If you have friends who don’t know about the FAIRtax, send them to FAIRtax.org.  Have them watch the white boards under “How It Works” and, if they agree, ask them to please join us.

Then contact your Members of Congress and the President and demand that Congress pass -the FAIRtax—the only fair tax.

Remember, if we don't continue to tell the truth and demand a change, then this quote from George Orwell's 1984 may foretell our children's future:

“If you want a picture of the future, imagine a boot stamping on a human face—forever.”

Is it hopeless?  When confronted with a seemingly impossible problem, remember the statement attributed to the author George Bernard Shaw who wrote, You see things; and you say “Why?”  But I dream things that never were; and I say “Why not?”

Isn’t it time for us to ask, “Why not?”
 
CR Article cover by PMI is licensed under N/A

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