Federal minimum wage is unconstitutional

[mrstickball]

Rath said:

mrstickball said:

Rath said:

I'm not saying the systems in America work very well or are efficient. I'm saying your assertion that cutting everybodies taxes equally and then cutting government funding for these systems will somehow help the poor is just plain wrong.

Cutting taxes across the board helps the rich the most while cutting welfare systems hurts the poor the most. Your suggestion that cutting the taxes and cutting the welfare is going to help the poor just doesn't

Where did I advocate cutting all welfare programs? I mentioned only entitlement programs that rip off the taxpayer, namely Medicare/Medicaid and Social Security as being the top entitlement culprits.

Poor people pay taxes. When I was making $10,000 a year as a park caretaker, I paid taxes. When I made $30,000 a year, I paid taxes. Yes, I got most or all of my FICA taxes back, but I still had to pay payroll taxes! I still paid 8.5% to social security! I still paid 3.0% to medicare/medicaid!

I believe we need to cut payroll taxes, which hurt the poor and middle class the most. Social security and medicare are capped for those that earn more than $100,000 which makes the argument that it benefits the rich the most, a false argument. If these mandatory taxes can be cut or removed, it would free up a lot of money (about 11.5%) for those in poverty to invest and get better health care.

Those entitlement programs are the welfare programs that help the poor the most. They do cost the middle class and the rich money, there is no denying that. You can't help the poor without somebody losing out somewhere along the line.

Let me ask you, for a person on an extremely low income - would the amount they pay in taxes cover their medical bills? I'm fairly certain the answer is no. They get a net benefit from these social security systems, far more than the amount that they pay in taxes.

If you want to cut the payroll taxes and replace them with taxes on higher incomes or luxury goods so welfare can still help the poor, then I would agree with you.

Would the amount of money in payroll taxes cover someone's medical insurance if they had no or reduced payroll taxes?

The answer is that it depends on what 'very low income' means. Are you talking about someone that earns minimum wage? If so, the answer is yes. You see, even if you make minimum wage, you will pay out about 20-25% of your paycheck in taxes - 11.5% in Social Security and Medicare, about 3-4% in state taxes (varies by state) and the rest being federal taxes, which you will get back at the end of the year.

For someone on minimum wage, that means that about $3,000 is taken out.

In my scenario, instead of paying out 20-25% in taxes, they would pay out about 6% between state (which still gives you general welfare, ect) and pension (much less needing invested for the same earnings due to higher compound interest rates). The savings would be around $2,000/yr for a minimum wage earner.

The average individual plan in the US costs $2,000 un-subsidized. So there is that person's private health care plan.

Primarily, my issue with payroll taxes is that they are very inefficient. You don't need to replace payroll taxes with luxury/income taxes on richer people. You simply can offer a more efficient system which requires far less money to operate.

Lets take Social Security vs. a private plan. Lets use the comparison of 7% APR in the private plan (which is low, but we'll use it) vs. 2.32% which is considered a medium rate of return for someone on social security.

Under Social Security, a person working for 30 years at $33,000 will retire with $35,237 in pension (at 8.5% of his check going into SS). Comparatively, to earn the same pension via a private plan at 7%, only 3.5% of that person's check would need to be removed for the same return! That correlates to a 5% reduction in taxes without any sort of change in benefits (assuming the current system worked, which it doesn't). Wouldn't that 5% be more helpful in a poor person's hands than in the government?