LogFAQs > #881910914

wolfy42 posted...

Pumping min wage puts more people in a higher tax bracket and gives them more income to be taxed. It directly increases the amount of taxes the government gets every year as a whole.

It boosts base prices of products and services in the area though, which hurts those with the least amount of income the most proportionally. This doesn't just stop at food being more expensive, or other products you buy (or services you pay for), but can spread to rent and other costs as well. Even without factoring in companies cutting back on hours, not offering as many benefits, and not offering raises (or invalidating previous raises by making the new min wage higher then the employee was getting after working somewhere 10 years), large bumps in minimum wage create chaos/havok in the job market. I've seen this personally, and it's not getting better anytime soon.

I seriously doubt that small of an increase in minimum wage is going to throw someone into a higher tax bracket. Even if that is the case you don't go home with less money, as only the amount above the bracket is taxed at the higher percentage. For example (currently) from your 1st to 9,325th dollar you pay 10%. From your 9,326th to 37,950th, 15%. You don't pay 15% on the whole amount, just that latter portion.

As far as companies raising prices to compensate, that will be solved overtime by competition. If one grocery store raises their prices, and the one across the street does not, the 1st will lose a significant chunk of its business to the 2nd. Further, if everyone of a companies customers had more disposable income, that is simply more money for that business to attract to offset loses from increased wages. Also, companies are always looking for an excuse to increase prices, such as when gas prices spiked under Bush. But historically wage increases have always netted in long term economic growth. There is an equilibrium though (as with most things), and the closer you get to it, the more diminishing returns on the above. But right now I would argue we are pretty far below it.

But yes, most peoples wages should go up, as they have been stagnant across the board for almost 30 years, despite increases in workload, productivity, and profits. Well, except for a very small group of people.