Give American (U.S.) Workers a 30% Pay Raise

We should give our productive working citizens a 30% raise in pay by abolishing all taxation of production, consumption and capital savings. Even when the workers don't pay these taxes directly they are often burdened by them. These taxes cause dead-weight losses (reduced production and trade) on the economy.

If we abolish all taxes on production and trade, wages would rise and consumer prices would fall; self employment would be more attractive to tradesmen because of greatly reduced paper work; we would save a tremendous sum in compliance and enforcement costs. All told, abolishing these economically destructive forms of taxation would increase real wages of productive workers by 30% or more.

I'm not saying that we should eliminate the government … just that we should use a tax that doesn't lower wages and increase consumer prices, a tax that doesn't burden the economy but rather stimulates more production and trade.

 

What makes you think US workers deserve a 30% raise? If you abolish the taxes you mentioned, how does that translate to the labor you're selling becoming more valuable?

Let's say you sweep floors or something. Your value doesn't go up just because I pay less taxes. Your skills are too limited to command a higher wage because you aren't brining anything to the table. Anyone can do that job so there is no reason to pay a lot for it because there are millions of replacements if you go do something else.

Reduction of paperwork and compliance might act as an incentive for self starters, or it might not. Tough to say, but I'll give you this one. It is at least possible.

If you really want to increase wages you should divorce the concept of social benefits like healthcare from your employer as that is where most of your raise money goes. It is actually a huge pain in the ass to employ someone and the costs can spiral out of control because people expect their employers to be responsible for every aspect of their lives outside of work. Since that cost is already associated with employing someone, cutting that cost frees up capital already devoted to workers and seems more likely to result in raises than just cutting the employers taxes which has little or nothing to do with the workers.

 

Income taxes can make consumer prices rise. Sales taxes obviously increase consumer prices but can also lower wages. If these taxes are eliminated then the guy who sweeps the floor will benefit from lower consumer prices, and with the elimination of burden shifting (which these taxes are susceptible too) his wage would likely increase also.

 

Just so everybody's clear, Geofree believes that the government should own everything and that people should have to rent their stuff from the government.

With that out of the way, let the thread proceed.

 

That is not the truth. I fully support private ownership of the products of labor. I want labor, trade and capital to be freed from taxation. I only support government ownership of things that are necessary for government to preform its duties. I do not support expanding government ownership at all from current levels. In fact, I would make government agencies that use land pay a tax for the land which that agency holds.

"Men did not make the earth …… it is the value of the improvement only and not the earth itself, that is individual property …. Every proprietor owes to the community a ground rent for the land which he holds … from this ground rent I propose to create a National Fund, out of which there shall be paid to every person a sum." — Thomas Paine (1737 - 1809)

 

well, too much of our capital goes into the hands of the rich, and doesn't go back into the economy.

workers get paid (*)(*)(*)(*) wages to make stuff, which gets sold by Walmart, Target, Costco, most of the money goes into the hands of the rich, who invest in foreign stocks, so the capital leaves the USA or at least the hands of those who did the work.

yes, unless we reverse inflation, the lower 80% of the USA needs a 30% pay raise.

 

Yeah I think he's mistaken about the specifics, but there are hidden costs to wages that result in lower wages. All the regulatory and fee/tax costs of hiring workers detracts from worker salary, because it artifical inflates the cost of hiring. So removing taxes on production would increase worker pay

 

my fear is this:

you raise wages 30%, the "market" will simply raise prices 30%.

 

Then you might want to stop using the term "rent".

The government paying the government. Do you have any idea how ridiculous that is?

Stop trying to make it seem like every philosopher in history supported your ideas.

 

Do you understand that the burden of most of the taxes we use is paid by the middle and lower class in the form of higher prices and lower wages? If you tax the income of business it is likely that consumer prices will rise and REAL wages will drop. Any tax which burdens production and trade will result in dead-weight losses (lower production). Why would you support these taxes if a burdenless tax exists?

 

Rent is an economic term and you cannot have an honest discussion about economics without using it. The law of rent is one of the most fundamental laws of economics.

Part of the payment would go the citizens of the community. Having government agencies pay a tax for the land which that agency uses will result in that agency economizing on the land which it chooses to use to conduct its business. It is actually very logical, and prevents government from taking better land from private use then is needed. .

How about an economist?

"In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago." — Milton Friedman, Nobel laureate in Economics (1976)

 

Labor doesn't produce anything. Nothing is created out of thin air. Every product of labor is composed of nature-provided elements. What right does the owner of these nature-provided elements have to prevent others from making use of what has been provided by nature? You single out land, but land is not different than gold, or tin, or iron, or wheat, or wool. None of these things were produced by man. They all were produced by nature.

 

Rent - "a tenant's regular payment to a landlord for the use of property or land."

End of story.

Nothing about Georgism is logical.

The fact that Milton Friedman supported a negative income tax makes me dismiss his economic views.

 

How does income tax cause a rise in consumer prices? What is the proposed mechanism at work here? Sales tax does increase consumer costs, but not production costs necessarily. If I own a service based business then abolition of sales tax does not mean I am going to pay someone more for answering a phone for example because my costs have not changed really and their labor hasn't changed. When I put an ad out looking for someone I don't consider what my tax obligations are, I consider the skills involved and look at the median income for that kind of job in my area, and then I try to lowball as much as possible to keep costs low.

The guy who sweeps floors is not really better off because he still isn't bringing any skills to the table and he's highly replaceable. Explain to me how this would translate to him being paid a different wage.
His dollar might go a little further (approx 7-10% depending) but sales taxes generally fund schools and roads and things people like having in their communities, and poor people benefit from them too. Where will that money come from otherwise?

 

The 30% increase in wages comes from gains in production. All else being equal, more production of goods means lower prices.

 

or reducing corporate salaries and stock dividends.

 

Regulations and fees associated with hiring definitely influence worker salary, as I mentioned in my first post things like health care and retirement etc soak up a lot of money that could have been a persons raise in take home. However that money is already allocated for workers just not in a take home sense so some feel cheated by wage stagnation. If you drop those costs it could easily translate to a raise.
Simply lowering taxes will not translate into a raise because nothing has changed in the employers incentive to pay more.

 

why do people think reducing taxes in any form will be a pay raise for anyone...

I understand the concepts behind why people think it will, but I often don't see a lot of reality in it... now I won't say its completely outrageous to suggest and that there aren't some benefits, but its not a dollar for dollar difference... its much much less...

its essentially trickle down economics... you're hoping the tax cut trickles down eventually... but there is nothing to force it...

a labor shortage is the most efficient way to increase wages and ultimately worker income... this will get the money to the people you are targeting...

when we reduce the "behind the scenes" taxes, the business owner benefits directly and the most dollar for dollar... they skim the most off the top, increasing the upper wealth of society... they have less incentive to pass that along to the employee or consumers, its not that some money won't go into lower prices or increased wages, but most of it will stay at the top... its just been the reality...

so you balloon the top and hope it trickles down... but dollar for dollar its the least effective...

now I hate the idea of forced high minimum wages, because a lot of companies simply can't exist with it... and a lot of jobs just don't need it... but the best way to get the money into the low wage persons hand is a labor shortage... take north dakota for instance... walmart and mcdonalds are paying around $18 an hour currently... to start... why... because they need bodies and simply can't get them at $10, at $12, at $14, at $16... only when they hit $18 are they able to get and keep employees in that market currently... over time this will level off and slowly fall as the supply catches up with demand... but this might take quite a while...

meanwhile, housing costs are skyrocketing in that area, so its keeping people from moving in to fill the labor shortage... those who already live there will reap the rewards and benefits, and those willing to make long commutes from surrounding areas will also reap the benefits as they are the only ones with housing already established so they are not paying the new higher rates... now some retail prices are of course rising to offset the increased labor cost, but not as much as the increased wages (excluding housing)... so while people make almost double, they are also paying 10-20% more... so in this scenario, higher wages work...

now had we simply cut taxes without a labor shortage, the balloon of money would have started at the top, instead of the bottom, where a labor shortage works best...

ultimately what I am getting at... the best way to fix america... is to create a labor shortage... and really thats only going to be done with deportation of illegals... to force the shortage to increase the demand and inflate base wages in markets so people can afford the retail increases... if we do this from behind the scenes, they will be the least likely to benefit dollar for dollar... but when they are the most likely to gain dollar for dollar, we see cost increases stay below wage increases...

I'm kinda randomly babbling several things into one long odd message... I do that sometimes...

 

So what are you picturing, a bunch of prospectors panning for gold and shooting each other over claim jumping and such? A modern economy needs some level of uniform consistency and commercial scale acquisition to function. Also, wheat and wool are completely different from mineral resources because there is an input of labor and resources to create them.

 

exactly...

the supply and demand still remain the same after the tax cut... so until the supply changes, the demand will remain the same and not create any wage increases as the market is balanced with current needs... all we do is flood a bunch of money to the ownership structures, and hope it trickles down... when what we really need to do is affect supply so demand dramatically increases and forces competition for warm bodies through more pay or benefits...

deport illegals, decreasing supply, increasing demand, raising wages for americans... until we all accept this, we're only going to make it worse making more legal... and increasing supply which will lower demand... and no tax cut, will undo or change that... supply and demand works for employees just like commodities...

 

The burden of taxes on production and trade fall all over the place. Income taxes reduce the incentive to work. Less productive work means fewer goods and higher prices. If you increase the income tax to 95% of all earned income, prices would skyrocket as the supply of goods collapsed … this should be obvious. Likewise, if you increase sales tax high enough then McDonald's will fire all of its employees (if it cannot lower their wages). High sales taxes suppress trade; which suppresses production; which suppresses wages.

Anything that makes the people you trade with poorer (be it income taxes, sales taxes or business taxes) will result in you being poorer too. I don't care what your skills are. If taxation makes the people you trade with poor, then you will be poor too.

I advocate using a land value tax. Land value tax is the only tax which does not burden the economy, nor does it create dead-weight losses, nor does it make producers or consumers poorer.

 

No, rent is a specific type of income. The significance of rent income is that it can be taxed at a 100% rate without reducing production or trade. In fact, the more you tax rent the more the economy will expand.

There are a lot of great economists who disagree with you.

Doesn't matter because there is a long line of Nobel Prize winning economists behind him who also support land value taxation over the alternatives.

http://wealthandwant.com/themes/quotable_nobels.htm

 

Both excellent points. I mentioned in another thread recently that globalization and women joining the workforce en masse has created a huge glut in the labor market, so looking back to the good old days of labor value is pointless. Labor is worth very little unless it is highly specialized. If American workers want to be worth more they will need skills or to find a way to exclude the third world from the labor market.

Owners don't "skim off the top", it's their money to begin with. I don't know if you've ever been in business for yourself, but if you have I'm pretty sure you didn't start the business for the benefit of the workers or the community. If you went to law school, took out loans to start a practice, and got really badass at your job and I write down when people called and tell you about it, we are not equal partners in business. Just because you make more money this year doesn't necessarily mean that my skills are worth more now.

 

The way I propose to increase the purchasing power of wages is by replacing the current tax systems with a land value tax. Land value taxation cannot be passed from the landowner and therefore the tax makes the land less valuable in trade. So the only effect that a land value tax has on the economy is to make land cheaper to buy. Cheaper land prices bring more competitors into the productive realm, and competition is the mortal enemy of large established business.

Increased competition – not taxation – is the efficient way of knocking the legs out from under the billionaire elites we have today; this would also require changing our intellectual property laws, as well as other privileges, to allow greater competition throughout the economy.

 

I don't have time to explain all the details … perhaps if you watch this it will answer some of your questions.

[video=youtube;sTxyNQ0ea-k]https://www.youtube.com/watch?v=sTxyNQ0ea-k[/video]