The Economy

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Minimum Wage


Income tax is a form of wage slavery. It creates and solidifies the concept of a “class war” by separating people financially under law based on how much they make. It also takes your money before you even have a chance to hold it in your hands. This is wrong. Tax should be a choice, and based on the choices you make in your life, not forced upon you. Furthermore, taxes should be equal for all people based on what those people choose to do. However, we must pay for what we buy.

Therefore, I support a modified version of the FairTax, where the rate will be an annually automatically adjusted rate that will match the cost of running government. The tax will be put on all “non-essential” goods and services, to be determined by Congress line by line. Example: all groceries, but not prepared foods such as pizza. Automobiles costing less than $X,XXX.00 will be tax free, and so on. By making the national tax into a single tax that costs the same percentage on all goods, but with a single binary “on/off” switch that you can set on any specific class of item, you can transition the “class warfare” debate into a debate about what is really necessary for people to have, and what is a luxury.

The tax will include an additional cost of 4% of the balance of the national debt plus the cost of interest on that debt for that year. Currently, this will mean that we pay back roughly 560 billion dollars every year for the next 25 years. In this way, America will be free from debt within our lifetimes.

This will resolve multiple issues. First of all, it will allow the budget to be balanced by making revenue match spending. My modified version of the FairTax will not be voted upon or changed based on political whims, but on the reality of the cost to run the country. The percentage will be based on calculated projected national sales expenditures on all non-essential goods and services. The slack (i.e. the difference between projected revenue vs. actual revenue collected) will be made up by a Capital Gains Tax. In this case, I am defining Capital Gains as any money that is derived from investments of any sort, essentially money that was not earned through direct labor. The Capital Gains Tax will be determined at the end of the fiscal year based on the deficit between the money pulled in by the modified FairTax compared to the existing national budget. If there is a deficit, the yearly Capital Gains Tax will be spread evenly to all people that acquire Capital Gains on stock and other investments. Savings accounts that have a fixed publicized rate will be excluded from this, as will government bonds. I consider Capital Gains to be “free money” that people gain, not by labor and toil, but by investing in possibly risky ventures. Therefore, it is recommended that all persons who earn Capital Gains hold onto their earned monies until the end of the fiscal year, until they know how much they will be taxed on it, for it will be variable. This will cause spending on investments to be conservative for most of the year until it is determined how accurate the National Sales tax has been.

These taxes are not “unfair”, because they treat all people equally based on what they choose to do with their money. Investments for the sole purpose of increasing the amount of money that you have will be taxed, while labor and toil will not be. Spending will be taxed, but saving will not. This will lead to a financially sound nation, and the character of the nation to change from a “spend now, pay later” mentality to a financially responsible character. We must pay for what we want to spend, this is the only reasonable and responsible way for America to move forward.
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Minimum Wage

The minimum wage, if it exists at all, should not be set to a specific, unchanging number that has to be voted upon every decade or two to be altered. It should also be representative of the bare minimum needed to live. It should be a fluid number, changed on a yearly basis automatically, and based on the determinations of a simple calculation: [(Previous year’s Average annual expenditures and characteristics – all consumer units/Average number in consumer unit – persons)*(Previous year’s average CPI/100)]/(28 Hour workweek * 52 weeks in a year) = Annual National Minimum Wage. For 2012 this would be [(19882/2.5)*2.24939/(28*52) = $12.29. This will allow the minimum wage to automatically rise over time to match the current cost of living, assuming a 28 hour workweek. Why 28 hours? The reality of the situation is that the majority of Americans cannot obtain or keep full time (read 40 hour workweek) jobs due to corporate cutbacks and employment decisions over the last few decades. I consider the “bare minimum” that someone should have to work “to survive” to be working 3 and a half “full” (read 8 hour) work days out of a 7 day week. Meaning that simply that half the week, they are working just for bare minimum survival. This is my current expectation for the average American.

“But, three and a half workdays? That’s ridiculously low to use as a standard for how much people need to work! It should be 40 hours a week!”

No, I’m afraid that is where you are wrong. Because the value of a dollar isn’t what it used to be. Learn about the CPI to see what I’m talking about. The current unadjusted index as of November 2011 for all items is 226.230. If you take that and the National Average Wage in 2011 of $42,979.61, you will find that that person’s actual income and buying power is actually only WORTH $18,998.19 compared to what it was in 1982-84!

Here is where it gets really sad. The average cost of living nationwide is $19,882 ($49,705 per household/2.5 persons per household). Let’s take the current federal minimum wage of $7.25 an hour. Let’s say that you work that for 40 hours a week, 52 weeks out of the year. In that year, you will be making $15,080. With the average cost of living being $19,882, it means every year, even working a FULL 40 hour workweek, you will still be in the hole by $4,802 a year! How does anyone make it on the current minimum wage? The answer is – they can’t.

Now keep in mind that this number is only a single snapshot, what I propose is a constantly adjusting number that keeps moving up with the cost of living. Cost of living goes up? Minimum wage should go up. Cost of living goes down? Minimum wage goes down. Simple as that.

However, the biggest mistake that politicians have made is by trying to control the floor without also controlling the ceiling. I will get into that another time, but I do have a plan.

Still think this number is too high? Here is my compromise then: make the current minimum wage AT LEAST match that of 1968’s minimum wage, adjusted for inflation using the Bureau of Labor Statistic’s Inflation Calculator. Why 1968? Because that was when the “minimum wage was the highest” compared to the cost of living. That was when Americans were, statistically, living the best, most reasonable lives.

Looking at Department of Labor’s page on Minimum Wage History it looks like we start with $1.60. Throw that into the BLS’s calculator. Go ahead, do it, you should.

Last time I checked it, I got $10.58. That should be the BARE MINIMUM WAGE right now. But it isn’t. That needs to change.

More information:

(2011 CPI)

Annual US City Average CPI 1913-2012

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