ManusJustus said:
Employers do not decide how much their employees are worth, the market decides how much they are worth. Employers have to pay their employees what the market values says they are worth, otherwise they won't have as good employees or, if its too low they won't have any employees. The reason that mechanical engineers get paid $50,000 a year while fast food workers make $20,000 a year isn't because their employers just decided to pay them some arbritary number, its because thats how much their labor is worth on the market. Nor do they decide the value of goods, the market decides the value of goods. To answer your side note, the same as everybody else. Here, we are effectively deciding to limit luxury spending of the rich to promote necessity spending of the poor. Its ultimately a social and moral approach rather than purely an economic one. |
To a certain extent you're right, but you fail to see the whole picture ...
You increase taxes on high income individuals (mostly small business owners) or corporations and one of their initial reactions will be to cut costs to maintain their current income level; this will translate into layoffs and a reduction in spending across the board. The reduced revenues these companies receive due to lower employment and other companies cutting back may result in further cost cutting. When this is done there is a massive surplus in labour which results in lower income increases, and people getting hired for lower wages with fewer benefits.
By the time the employment rate returns to normal employeers are earning about as much as they ever did (after taxes) but the employees are earning less and have fewer benefits.
