Paycheck To Paycheck workers

[Z]

There are food stamps, free food banks, and many charities here - the only one starving is someone who has chosen to do so. Look at the typical "poor" in the USA; they are the fattest poor people on Earth and there is no shortage of clothes, cars, housing, or bad taste there.

You are WOEFULLY ignorant of the charity situation, at least in the U.S.

Let me give you some info about Cincinnati, for example.

Food stamps: Yes, and they are readily available - IF you are working or actively looking for work (good policy, IMHO). The catch is, if you earn too much - say, if you work 40 hours a week at current minimum wage - they reduce your food stamps. The amount they reduce it is usually significantly more than the amount you can now afford to put toward food. We ran into this problem when we were using them - my wife's job gave her a raise equalling about a dollar a month, so they reduced the food stamp amount per month by about $50. It's a broken system.

And if you can't work, for whatever reason... no food stamps.

Soup kitchens and food closets get practically no budget, and largely rely on donations. Unfortunately, that means that soup kitchens are open about once a week, and food closets on average can offer a week's worth of food, about once a month, to about fifty people - and in Cinci, there's only three that I know of. They tell you that, from the time they open to distribute food, you have about six hours before it runs dry.

Other charities are spotty, and many require you to be Christian, or at least be willing to convert, before they'll help at all.

We've been through that merry-go-round. It doesn't work.

The same may not be true in other places - I can only speak from experience about Cincinnati, OH, Lawton, OK, and Fayetteville, NC.

If someone is unable (or unwilling) to manage their money, shoveling more money their way isn't going to solve their problems. And politically mandating that they pay their utility bill, pay off their car loan, buy car insurance, or buy health insurance won't work either. Even paying those bills for them doesn't work and I really don't know why anyone would think it would.

If someone isn't getting enough money to manage - which is a common situation - it would help tremendously.

More than 50% of all minimum wage workers, to the extent that there even are any of those any more, are unskilled, young people, brand new to the work force. Very few of them remain at the pay scale for more than a year or two because they get experience, learn a few skills (like showing up), or decide they don't want to wash dishes, or chase grocery carts around a parking lot in the rain, for the rest of their lives.

While I don't doubt that figure, I'd like to see your source. However, even if 10% of the minimum wage workers aren't that, it's worth the effort to make that 10%'s life more livable.

"Are there no prisons? Are there no workhouses?"

You come across as someone who has never been in hardship; someone who's had it pretty easy your whole life. I'm guessing you've never lived on a tight budget, with only, say, $150 budgetted for electricity, only to have the company suddenly jack up rates to $300 one month? It happens all the time, and is one of the most common source of problems, not counting personal irresponsibility. Or to be working in a town without public transportation, with a job 20 miles away, to suddenly have your car need $600 in repairs to be usable?

We're not even at minimum wage any more - both women in the house are managers with fairly good pay. And we still need public assistance sometimes to get by. No bling here - my wife is driving a used car given her by her parents. My roommate takes the bus to work and home - usually after midnight. We're buying our house - thanks to her father putting up the payments and us paying him back when we can. Our budget is TIGHT, and we're constantly having to forego or stall parts of it to make end meet.

But some of you live in a white tower, and think that the only poor people want to be poor. Yeah, right.

 

[Jaggy Bunnet]

No more overtime? You say that like it is a bad thing.

More than 30 hours is overtime? Wow.

However for the benefit of anyone who thinks it is unreasonable to work more than 30 hours a week, what about an incentive to get a better paying job with the same hours? Under the proposed system unless she gets a huge rise there is absolutely zero benefit to her in doing so. All additional earnings go to pay for childcare which was previously "free".

So in addition to having no incentive to work longer, there is no incentive to work smarter. Good system.

 

[Jaggy Bunnet]

That's her choice, in that case. I see no problem with it.

You really see no possible reason why it is a bad idea for the economy for people to have no incentive to work harder, or to get better paying jobs?

How long would you work if the tax rate was 100%? That is what you are proposing as a marginal rate for poor people - if they get better qualifications and a better job, they are no better off. If they work longer hours, they are no better off.

But what if by working 40 instead of 30 hours, she makes living wage, all childcare cost expense, plus 10% again. She's profitted.

She has. However she has had to put in a massively increased effort for a very minor increase in disposable income. This is one of the problems with the UK system - it is not uncommon for poorly paid people to be paying a far higher marginal tax rate (70%+) than those earning much more (top UK income tax rate is effectively 41%). Funnily enough this tends to result in a strong disincentive effect to working harder or getting a better paid job. Result is a poverty trap.

And eventually, if raises are steady (and employees who aren't absolutely incompetent SHOULD get raises, the longer they work), she can't help but profit.

Completely disagree. Seniority should have absolutely no impact on wages. If you are doing the same job to the same standard that you did five years ago, then there is absolutely no reason to expect higher wages just because you have been doing it for five years.

Of course if in that time you have gained experience that means you do the job better, that is a different matter.

Besides all that, why SHOULD she have to work 40 hrs instead of 30 hrs?

I didn't say she should.

I do however think that a system that imposes a 100% tax rate (at any level, but especially low levels of earnings) and therefore means there is absolutely zero benefit in working harder or getting a better job is a bad system.

Presumably there is some minimum number of hours that would need to be worked to get the living wage?

 

[Z]

You really see no possible reason why it is a bad idea for the economy for people to have no incentive to work harder, or to get better paying jobs?

Strawman ignored.

How long would you work if the tax rate was 100%? That is what you are proposing as a marginal rate for poor people - if they get better qualifications and a better job, they are no better off. If they work longer hours, they are no better off.

Again, ignored.

She has. However she has had to put in a massively increased effort for a very minor increase in disposable income. This is one of the problems with the UK system - it is not uncommon for poorly paid people to be paying a far higher marginal tax rate (70%+) than those earning much more (top UK income tax rate is effectively 41%). Funnily enough this tends to result in a strong disincentive effect to working harder or getting a better paid job. Result is a poverty trap.

But that sounds like it's across the board. We're talking here about someone who needs child care. For someone who doesn't need that care, there's no problem.

Consider this: she pays, say, $500 a month in child care expenses, either way. Assuming a minimum number of hours (which, no, I didn't state earlier - sorry) to work to qualify, let's say that working at McStudMuffinKing 40 hrs a week at minimum wage qualifies her to receive a full day care voucher - because without that voucher, she can't afford day care, and her kid stays at home all day without ANY adult supervision.

Then she gets a raise to Junior Assistant Crew Manager, and she's now earning an extra $100 - so the state covers the $400 difference. The child still gets cared for, and the state pays less. And she's taking on 1/5 of that responsibility herself.

But what's the alternative? That she now earns 1/5 of what's needed for day care, so little Johnny can go to day care every Wednesday? How is this better?

But let's say that, as far as she's concerned, there's no incentive to work harder to earn more money. That means you're assuming that all she wants is the bare minimum for housing, food, electricity, public transportation, health care, etc. If she doesn't work harder, she NEVER gets to a level of being able to afford a TV, or to eat out, or to own a car or a home.

There's your incentive, right there.

Completely disagree. Seniority should have absolutely no impact on wages. If you are doing the same job to the same standard that you did five years ago, then there is absolutely no reason to expect higher wages just because you have been doing it for five years.

We'll just have to agree to disagree on this one. Company loyalty SHOULD be rewarded. And as long as you're working to the standard the company says is acceptable, then yes, you should expect higher wages for doing what you're asked to do.

Of course, we're now in an age where companies refuse to be loyal to their employees, so why should we expect the reverse to be true? It's sad, but that's how things have changed. Companies want disposable employees. They'd prefer slaves, but we have those pesky law-thingies.

Of course if in that time you have gained experience that means you do the job better, that is a different matter.

OTOH, if you're NOT doing your job better after a number of years, you should be fired.

I didn't say she should.

I do however think that a system that imposes a 100% tax rate (at any level, but especially low levels of earnings) and therefore means there is absolutely zero benefit in working harder or getting a better job is a bad system.

Presumably there is some minimum number of hours that would need to be worked to get the living wage?

Yeah, in case you didn't see my other posts, I was working under the general assumption that a full-time job was 40 hours minimum, not maximum.

But like I said, if the living wage is covering your basic necessities costs, with an additional supplement for day-care expenses, and you don't work to improve your position, you'll NEVER afford to eat out, buy a new wig, get your own coach-and-four, or any of the other things people want out of life. The incentive is more long-term - but it doesn't take long for people to tire of having nothing and working to earn more.

Besides - that doesn't affect those without children; but it DOES place a burden on those who decided to have children before being financially ready to deal with them, which I think is a good idea. There SHOULD be a price to pay for having a child.

 

[balrog666]

The surest way to stay broke is to live beyond your means.

"Are there no prisons? Are there no workhouses?"

As they say about those poor starving people in Africa, why don't they move to where there is food?

Or jobs.

 

[Jaggy Bunnet]

Strawman ignored.



Again, ignored.

I have no idea why you are ignoring these. They are simple statements of the consequences of having a 100% marginal tax rate - you remove a very significant part (possibly all) of the incentive for people to work harder/smarter.

But that sounds like it's across the board. We're talking here about someone who needs child care. For someone who doesn't need that care, there's no problem.

Because for someone who doesn't need childcare, there is no 100% marginal tax rate. Perhaps the problem is due to the 100% marginal tax rate for those with children?

Consider this: she pays, say, $500 a month in child care expenses, either way. Assuming a minimum number of hours (which, no, I didn't state earlier - sorry) to work to qualify, let's say that working at McStudMuffinKing 40 hrs a week at minimum wage qualifies her to receive a full day care voucher - because without that voucher, she can't afford day care, and her kid stays at home all day without ANY adult supervision.

Then she gets a raise to Junior Assistant Crew Manager, and she's now earning an extra $100 - so the state covers the $400 difference. The child still gets cared for, and the state pays less. And she's taking on 1/5 of that responsibility herself.

But what's the alternative? That she now earns 1/5 of what's needed for day care, so little Johnny can go to day care every Wednesday? How is this better?

I clearly have not explained my position very clearly. I am absolutely NOT suggesting that she should lose all support as soon as she exceeds the living wage. That would amount to a marginal tax rate in excess of 100% which is stupid (although apparently still possible in the UK when the impact of tax and benefits is combined).

However what if in the above scenario, she continued to receive state assistance not of $400 but of, say $450? In other words she gets to keep part of her additional earnings. The extra duties/responsibilities that she takes on as part of her new, higher paid, job result in her having more cash to spend.

If all of her raise is taken off her in reduced childcare contributions, why not just stay in the easier job rather than accept the new one? Or if you want to take the new job, why not ask to reduce your hours so that you earn the same salary?

But let's say that, as far as she's concerned, there's no incentive to work harder to earn more money. That means you're assuming that all she wants is the bare minimum for housing, food, electricity, public transportation, health care, etc. If she doesn't work harder, she NEVER gets to a level of being able to afford a TV, or to eat out, or to own a car or a home.

There's your incentive, right there.

Nope, it means that for the next X years, when she is going to have a need for childcare, she knows that there is no realistic prospect of her having an income above the living wage, no matter how many hours she works or how many promotions she gets. Sure in 10 years time she might be in a better position because she will no longer need childcare, but funnily enough most people are not hugely incentived by the prospect of a benefit that may arise after that timescale.

We'll just have to agree to disagree on this one. Company loyalty SHOULD be rewarded. And as long as you're working to the standard the company says is acceptable, then yes, you should expect higher wages for doing what you're asked to do.

You have been with the company five years. I start today. We both do exactly the same job, to the same standard. I see no reason whatsoever why you should be paid more - you are not producing any additional value for the company.

OTOH, if you're NOT doing your job better after a number of years, you should be fired.

Why? If it was worth the company paying you to do that job when you started, there is no reason to assume it is not worth them paying you to do it now.

But like I said, if the living wage is covering your basic necessities costs, with an additional supplement for day-care expenses, and you don't work to improve your position, you'll NEVER afford to eat out, buy a new wig, get your own coach-and-four, or any of the other things people want out of life. The incentive is more long-term - but it doesn't take long for people to tire of having nothing and working to earn more.

Besides - that doesn't affect those without children; but it DOES place a burden on those who decided to have children before being financially ready to deal with them, which I think is a good idea. There SHOULD be a price to pay for having a child.

I agree, I just think it is counterproductive at any earnings level to have penally high levels of tax. I think it is unfair to have low paid workers suffering the highest marginal tax rates.

However I think it DOES apply to those without children, just at a lower level - if they currently earn less than the living wage and get a top up, then a salary increase that does not take them above the living wage on its own will be taxed at 100%.

 

[ImaginalDisc]

As they say about those poor starving people in Africa, why don't they move to where there is food?

Or jobs.

I wish there was a thread to nominate posts in a "Most Manifestly Stupid and Cruel" contest.

 

[Geek Goddess]

Let's say you make $120,000 - your federal withholding taxes (non social security) will likely be in the range of $25-35,000 per year, unless you have a large number of dependents.

My son made about $12,000 last year. When he filed his income tax, he received back everything but about $135 of the tax that had been withheld in his paycheck. He lives at home and had no dependents, no child care, etc.

I went to the IRS tax calculator and made the following assumptions: $7 per hour, for 40 hours per week, no overtime, worked all year, no other income source including alimony (child support is not reportable). That is $14,560. Assumed one child in day care at a monthly cost of $500. I assumed that my withholding tax was 15%, which is the minimum marginal tax rate. The calculator came back and said that NO TAXES would be due for that year, and that my W-4 needed to be adjusted to show more dependents so that no taxes would be withheld. I did the same calculation with $10 per hour ($20,800 per year), and then again for $14 ($29,120). Same thing. The site recommended that I increased my number of withholding allowances to *8* to avoid having to wait for my refund. Here is the display for the last case.
______________________________________

Based on the information you previously entered, your anticipated income tax for 2007 is $0. If you do not change your current withholding arrangement, you will have $5,460 withheld for 2007, resulting in an overpayment of $5,460 when you file your return. If you want your withholding to more closely match your anticipated tax, adjust your withholding on a new Form W-4 as follows:
For the only job you entered (which has a projected salary of $29,120): 8 allowances.
Check the “Single” box on your Form W-4.
Assuming these recommended allowance(s) are in effect for the rest of 2007, your expected refund should be about $3,275. Following this recommendation will ensure that the amount withheld from your wages will cover all of your projected tax liability while minimizing your refund.

Caution! The recommended number of allowances will result in no income tax being withheld from your pay (because your year-to-date withholding is already sufficient to meet your anticipated tax). Therefore, you should analyze your withholding again at the beginning of 2008 (or anytime there is a change to your tax situation). If you do not check your withholding at the beginning of next year, you will likely be underwithheld for 2008.
--------------------------------------------------------------------------------
Following is a recap of information you entered on the preceding pages on which the above advice is based. Review this information for accuracy. You may want to print this page for your records. Note: some spaces in the recap table were left blank intentionally. Prepared September 28, 2007.Filing Status: Head of household Someone else can claim you as a dependent: No
Number of jobs: 1 Number of dependents: 1
Will you be 65 or older 1/1/2008: No Are you blind: No
Child & dependent care credit qualifying persons: 1 Child & dependent care credit expenses: 6,000
Eligible children for child tax credit: 1
Other credits:
Total salary: 29,120 Total retirement plans: 0
Tax withheld to date: 3,276 Projected withholding for rest of year: 2,184
Total earned income other than salary: 0 Other nonwage income: 0
Adjustments to income: Total itemized deductions: 0


ETA: Here is the link so you can check it for yourself. IRS tax calculator

 

[JoeEllison]

I wish there was a thread to nominate posts in a "Most Manifestly Stupid and Cruel" contest.

Why bother... it would probably be a 100-winner tie, led by the post you quoted as "first among equals"...

 

[Z]

The surest way to stay broke is to live beyond your means.

"Are there no prisons? Are there no workhouses?"

As they say about those poor starving people in Africa, why don't they move to where there is food?

Or jobs.

Which only goes to demonstrate your startling ignorance on the subject. So unless you have something pertinent, useful, intelligent, and educated to say on the subject, I guess we're at an end here.

 

[Z]

I have no idea why you are ignoring these. They are simple statements of the consequences of having a 100% marginal tax rate - you remove a very significant part (possibly all) of the incentive for people to work harder/smarter.

Because I wasn't talking about that - I was talking about child care costs being paid for by the state, until the worker can pay for it themselves. This is how it currently is in Cincinnati - you can receive day care vouchers until such time as they determine you can afford to pay for day care yourself - which, as it turns out, means being able to afford about 70% of what's on the voucher. There's that 100%+ marginal tax rate... and people do work to move beyond that income level.

Because for someone who doesn't need childcare, there is no 100% marginal tax rate. Perhaps the problem is due to the 100% marginal tax rate for those with children?

I guess they shouldn't have had children until they were financially prepared.

I clearly have not explained my position very clearly. I am absolutely NOT suggesting that she should lose all support as soon as she exceeds the living wage. That would amount to a marginal tax rate in excess of 100% which is stupid (although apparently still possible in the UK when the impact of tax and benefits is combined).

However what if in the above scenario, she continued to receive state assistance not of $400 but of, say $450? In other words she gets to keep part of her additional earnings. The extra duties/responsibilities that she takes on as part of her new, higher paid, job result in her having more cash to spend.

Yes, I could see that as a reasonable adjustment - say, 50% of your raise value is reduced from your child care assistance amount. Some might find that too generous, but I could agree that would be a better treatment.

If all of her raise is taken off her in reduced childcare contributions, why not just stay in the easier job rather than accept the new one? Or if you want to take the new job, why not ask to reduce your hours so that you earn the same salary?

Easier job? Unless they're being promoted straight into upper management, minimum wage jobs are harder, the less you get paid. Unless you think increased responsibility is 'harder' - in which case, they probably shouldn't be having kids anyway.

And a minimum hour standard settles your second question.

Nope, it means that for the next X years, when she is going to have a need for childcare, she knows that there is no realistic prospect of her having an income above the living wage, no matter how many hours she works or how many promotions she gets. Sure in 10 years time she might be in a better position because she will no longer need childcare, but funnily enough most people are not hugely incentived by the prospect of a benefit that may arise after that timescale.

Enough are that this is what they do already...

You have been with the company five years. I start today. We both do exactly the same job, to the same standard. I see no reason whatsoever why you should be paid more - you are not producing any additional value for the company.

If so - you're fired.

Why? If it was worth the company paying you to do that job when you started, there is no reason to assume it is not worth them paying you to do it now.

Because it is worth more for a worker to innovate, to become more experienced and efficient, and to remain with the company instead of jumping ship at every perceived opportunity, than for a worker to remain stagnant or quit every chance they get.

I agree, I just think it is counterproductive at any earnings level to have penally high levels of tax. I think it is unfair to have low paid workers suffering the highest marginal tax rates.

I agree there... then again, I'm personally for a flat, no-exception tax rate for all working people. I think it's unfair of anyone to have to pay a higher percentage of their income than anyone else.

I can already hear the corporate headjobs whining... "But I'll have to pay a million bucks in taxes if we do that!"

Big friggin' deal - if the tax rate is a flat, say, 10%, that means you only lost 10% of your income to taxes. What's a million bucks if you make 10 million a year? It's not like you HAVE to have every single penny of it...

However I think it DOES apply to those without children, just at a lower level - if they currently earn less than the living wage and get a top up, then a salary increase that does not take them above the living wage on its own will be taxed at 100%.

That's how it is now, yes. But if the living wage were the minimum wage, that wouldn't happen.

But that's really the core of this issue - so many people are working below the living wage, and are suffering this 100%+ marginal tax rate, that there doesn't seem much reason to try very hard to improve. Like you're saying, if I'm earning 20% less than the cost of living, and I get a raise so that I'm earning 18% less than the COL, I'm still earning less than the cost of living. The only way to survive is through public assistance, which then gives you an incentive to NOT perform any better, since before you actually reach the cost of living level, they're going to yank all that assistance and leave you stranded again.

 

[quixotecoyote]

I can already hear the corporate headjobs whining... "But I'll have to pay a million bucks in taxes if we do that!"

Big friggin' deal - if the tax rate is a flat, say, 10%, that means you only lost 10% of your income to taxes. What's a million bucks if you make 10 million a year? It's not like you HAVE to have every single penny of it...

You should go look up 'progressive income tax' before you say things like this.

 

[plumjam]

The surest way to stay broke is to live beyond your means.

"Are there no prisons? Are there no workhouses?"

As they say about those poor starving people in Africa, why don't they move to where there is food?

Or jobs.

I'm starting to think your avatar is a photograph.

 

[dudalb]

I am not against raising the minimum wage,but I am against limiting the amount of money an individual can make.That smacks to me more of jealousy and hatred of anybody who has some cash rather then concern for the poor.
I am not against the Goverement acting to prevent abuses by coporate powers,but I get a feeling that some people want to use this as a backdoor,underhanded route to classic,Big Brother Socialism,which I strongly oppose.

 

[Geek Goddess]

Because I wasn't talking about that - I was talking about child care costs being paid for by the state, until the worker can pay for it themselves. This is how it currently is in Cincinnati - you can receive day care vouchers until such time as they determine you can afford to pay for day care yourself - which, as it turns out, means being able to afford about 70% of what's on the voucher. There's that 100%+ marginal tax rate... and people do work to move beyond that income level.

Z, I enjoy reading your posts but I'm not following here. You are talking about government assistance on one hand, and then you are talking about income tax rates. I'm not sure I follow.

Are you saying that NOT receiving vouchers is equivalent to being taxed?

 

[balrog666]

I'm starting to think your avatar is a photograph.

This isn't exactly rocket science here.

But, hey, I can post this instead:

 

[drkitten]

Z, I enjoy reading your posts but I'm not following here. You are talking about government assistance on one hand, and then you are talking about income tax rates. I'm not sure I follow.

Are you saying that NOT receiving vouchers is equivalent to being taxed?

The effect is the same in terms of economic incentives.

To put simple, if imaginary, numbers on it: As mayor of Springfield, I decide that everyone who makes less than $500 a month will receive a city-funded voucher for $500 in child-care support and $500 in food vouchers. And the program is successful, in that child poverty and malnutrition is drastically reduced in Springfield --- and more importantly, I get elected to the Senate on the basis of all the headlines i get.

But now, you're working in Springfield, and you make $495 a month. A friend tells you about a new job that opened up that pays $600 a month. Do you apply for it?

If so, you run a grave risk of substantially reducing your standard of living. You'll make an extra $105 per month that you can spend how you like, but you'll also lose $500 in "free" food. What's your incentive to try to better yourself?

The amount you have on which to support yourself will be reduced by at least $500 if you take a job that pays $105 more -- by making an extra $105, you cost yourself $500 out of pocket. You lose nearly five times the value of your raise. Whether you call it "taxation" or not is largely irrelevant.

 

[Z]

The effect is the same in terms of economic incentives.

To put simple, if imaginary, numbers on it: As mayor of Springfield, I decide that everyone who makes less than $500 a month will receive a city-funded voucher for $500 in child-care support and $500 in food vouchers. And the program is successful, in that child poverty and malnutrition is drastically reduced in Springfield --- and more importantly, I get elected to the Senate on the basis of all the headlines i get.

But now, you're working in Springfield, and you make $495 a month. A friend tells you about a new job that opened up that pays $600 a month. Do you apply for it?

If so, you run a grave risk of substantially reducing your standard of living. You'll make an extra $105 per month that you can spend how you like, but you'll also lose $500 in "free" food. What's your incentive to try to better yourself?

The amount you have on which to support yourself will be reduced by at least $500 if you take a job that pays $105 more -- by making an extra $105, you cost yourself $500 out of pocket. You lose nearly five times the value of your raise. Whether you call it "taxation" or not is largely irrelevant.

And that, in more or less complex terms, is exactly what happens with public assistance in parts of the U.S. If you earn, say, $500 or less, you get a thousand or more in public assistance; but earn more than that, even one dollar more, and you just lost all that assistance (or at least a significant part of it).

It's a completely broken system that ends up making it worth more to you to NOT improve yourself, in the short term.

I was getting a bit confused by the use of the term 'marginal tax rate' myself, GG - but the way the term is being used is analogous, not exact. In essence, what they're saying is that it would be like having a 100% income tax on their raise for those who need child care, and receive a raise.

In other words, in the situation I originally proposed, if you earn $500, and the state pays for your child care $500... and then you earn $510 and the state only pays $490, you owe that extra $10 to your child care people. So you didn't get a raise that you can spend - you got a raise to pay part of the child care the state had been paying for you previously. It's the same effect as a taxation on your raise.

Under the situation as it currently stands, if you earn $500, and the state pays $500 for child care - and then you earn $510, the state then drops child care to $250. In other words, you end up having to spend $240 that you weren't spending prior to the $10 raise, which is basically equal to having your raise amount taxed 2400%.

However, I think under the system JB and I were just considering, if you earn that extra $10, the state cuts your child care benefit to $495 - so now you have to pay $5 from your wallet for child care, and still have an extra $5 to do with as you please, meaning your raise is effectively $5.

The whole reason we're discussing this aspect is the fact that, to simplify the minimum-living wage, you'd have to consider the living costs of a single adult; the extra costs of day care/dependents would have to be worked out some other way, so that single adults weren't getting paid for kids they didn't have. And at the same time, you wouldn't want to have the state pay for all day care, period; so you have to have some means of reducing or cutting off that support. But if you just take it all back at the point where someone is earning CoL + DC amount, then you've just neutralized a HUGE part of their wages at once. I was originally suggesting the same thing, but in increments instead (unless you get that amazing $500 raise...), but I think now a percent incremental decrease would make more sense.

 

[Z]

You should go look up 'progressive income tax' before you say things like this.

OK, I looked it up - I'm saying I prefer a proportional income tax, not a progressive one. Are you saying you would prefer a higher tax percentage for wealthier citizens? How is that fair? Or are you suggesting that this is what I was suggesting? Because it wasn't.

I don't want the tax rate so high that people making 200x the cost of living are still only getting the CoL back after taxes, for example; but I also don't think it's fair if the same person only pays 1% tax as opposed to 10% for the person earning CoL either. I just think a flat, unexempted income tax rate is more fair. I think flat, unexempted taxes are fair across the board - from property tax, to sales tax, to whatever tax.

Yes, this means that the wealthy supply the largest proportion of tax money in the system; but shouldn't they? The wealthy already own half the country, can buy and sell politicians like atheletes, and control most of the voting - they can darn well pay the taxes for it as well.

 

[GreNME]

Interesting discussion, regarding the tax stuff.

OK, I looked it up - I'm saying I prefer a proportional income tax, not a progressive one. Are you saying you would prefer a higher tax percentage for wealthier citizens? How is that fair? Or are you suggesting that this is what I was suggesting? Because it wasn't.

I don't want the tax rate so high that people making 200x the cost of living are still only getting the CoL back after taxes, for example; but I also don't think it's fair if the same person only pays 1% tax as opposed to 10% for the person earning CoL either. I just think a flat, unexempted income tax rate is more fair. I think flat, unexempted taxes are fair across the board - from property tax, to sales tax, to whatever tax.

Yes, this means that the wealthy supply the largest proportion of tax money in the system; but shouldn't they? The wealthy already own half the country, can buy and sell politicians like atheletes, and control most of the voting - they can darn well pay the taxes for it as well.

The thing is, you say you want one thing (proportional tax) but then you go on to explain, in essence, the need for progressive tax.

Then again, I support progressive taxation, even as someone who is likely a week or so away from jumping another tax bracket for the second time in three years. The reason I support it is-- and this is tied to the original posting of this thread-- I have learned the value of living an adjusted lifestyle to meet my financial needs while still moving up in salary and not facing a heavier tax burden. When I say "not facing" a heavier burden I don't mean I'm not paying more taxes, it means I've already been adjusting to the slight increase-- US taxes only tax the wages at a higher rate that are above the previous bracket anyway-- so my behaviors, saving, and spending do not significantly change in such a way that I would actually feel any heavier a burden. If anything, the more money I make the easier it gets, despite incurring heavier taxes for the higher salary.

I use myself as an example because I am a high target for taxation: I am a single, childless male who makes almost completely a taxable salary-- very little in terms of non-taxable accounts (I have a couple) and no capital gains to speak of. However, I live with someone and pay a mortgage, help pay for food, care for the three dogs (450 lb of combined dog-ness), and all the normal living expenses and regular household maintanence costs.

But there are ways to avoid tax hits and make the most of money coming in.

A reason (not the reason) "the mrs." and I aren't married, for instance, is because it avoids a tax hit. We make too close an income to take advantage of a tax break a couple with a significant income difference would make (IOW, we'd be filing separately anyway). For each incremental increase of income we make, we only adjust spending a certain percentage compared to the difference in money we will be bringing in (the percentage varies, but remains lower than 75-100%). When we have the opportunity, extra money goes into a non-taxable or lower-taxed account (like a 401k or some IRAs). Once sufficient extra income is flowing, it will go into other investments, with the eventual goal being able to have significant money flowing from capital investments, allowing our eventual retirement funds to handle the cost of living. Since we're not rich and will probably never become completely independently wealthy, this is the best plan we have so far to ensure that we will not have problems going into retirement, even if we eventually choose to do so early.

It's probably not the greatest plan, but it's a solid one and is spread out enough that it covers possible problems that could occur (say, a market 'correction' around the time of investment). It damned sure doesn't count on Social Security or any other government assistance, because as far as we (the mrs. and I) are concerned every generation after and including Gen-X is pretty much going to have to take care of themselves.

And therein is the problem with wages today: there isn't enough income for the median average wage earners for everyone to be able to plan like that. There is a possibility that there could be enough if more people were financially educated, which would allegedly increase the money flowing in the economy, which would allegedly increase the chances to earn more income, but I remain skeptical. The current US government is on its second term of 'infusions' of money in the form of tax breaks to promote more economic activity, and it's the second time a top-down method during a time of deficit spending has turned out to not show significant signs of working. The recession at the end of 2001 was blamed primarily on 9/11, but I tend to think that it being nearly the 3rd or 4th year in a row with no minimum wage adjustments for cost of living that brought about freezes in spending in the face of national crisis. The tax breaks have only served to help a little, and the economy is still nowhere near the condition it was prior to 9/11 despite the monthly and quarterly announcements of how things are getting better/worse.

This is why I think progressive taxes are currently the best course of action. Significantly higher discretionary funds for those in the extremely higher brackets are not going to be adversely affected, and those with such funds above a certain level pay a large portion of their taxes as capital gains anyway (which is 15%). As a fiscal conservative myself, I don't see what the whining about the progressive tax is all about except for the verbiage which sounds (in theory) harsher but in reality is not that bad. The real hefty taxes don't even begin until well into the six-figure mark (above $300k) anyway, and by the time you're there you either have someone who knows where to put your money or you learn to put it there yourself. I have zero sympathy for seven figures or more who complain.