Senate Rejects Minimum Wage Hike

[Iriemon]

The wealthiest people employ thousands of people, meaning they are matching dollar for dollar for thousands of people's SS tax. You are clearly missing the big picture here.

No, corporate employers pay that matching tax. And it is a complex economic question as whether that tax is simply taken out of extra salary the employee would make, or passed along as any other cost, arguable a little of both.

Nope. No news is just that, no news.
http://www.washtimes.com/national/20030619-120558-9253r.htm

Typical conservative media which focuses on the income tax while ignoring the SS tax. Since 2000, the income tax as a percentage of all tax revenue has dropped from 50% to 43%, while the SS tax as a percentage of all tax revenue has risen from 32% to 37%. As a percentage of all revenues, the tax the rich pay has decreased, while the tax the working poor/middle classes pay has increased.

 

[zymurgy]

No, corporate employers pay that matching tax. And it is a complex economic question as whether that tax is simply taken out of extra salary the employee would make, or passed along as any other cost, arguable a little of both.

Employers pay it. The little corporate mumbo-jumbo is just that. It doesn't matter if you are a corporation, LLC, or just some rich dude.

If SS tax is reduced, the rich benefit as much and likely more.

I'll tell you though, sometimes the irony just hits me like a freight train.

Here I am, arguing in a thread about the merits of a minimum wage, and all of a sudden my opponent decides that the issue of the employers portion of social security is too complex an eqation to determine who actually pays it.

Now tell me, if I am paying minimum wage, how do I pass this expense on to my employee?

Or if I pass this along as some other cost to consumers, how does it not effect my overall profitibility?

:spin:

 

[Iriemon]

Employers pay it. The little corporate mumbo-jumbo is just that. It doesn't matter if you are a corporation, LLC, or just some rich dude.

If SS tax is reduced, the rich benefit as much and likely more.

How do you figure? The effective SS rate is 12.4%. The employee pays 6.2% and the employer the same. If the rate was reduced by 4 points, the employee would pay 4.2%, a savings of 2% of his salary, plus the potential of a salary increase because the cost to the employer is 2% less as well.

The SS tax is capped at 90k. Someone making 90k or less pays the full tax. Someone making $9 million pays the same taxes. Except instead of 6.2% of his salary, it is .062%. The reduction in SS taxes would increase his salary only .02%, versus 2% for the under 90k employees. It would benefit those in the lower classes much more.

I'll tell you though, sometimes the irony just hits me like a freight train.

Here I am, arguing in a thread about the merits of a minimum wage, and all of a sudden my opponent decides that the issue of the employers portion of social security is too complex an eqation to determine who actually pays it.

Now tell me, if I am paying minimum wage, how do I pass this expense on to my employee?

Paying a lower salary. If the employer didn't have to pay the 6.2% SS, (or some portion thereof), the difference could be paid as a higher wage to the employee.

Or if I pass this along as some other cost to consumers, how does it not effect my overall profitibility?

It does, I never denied that labor costs do not effect profitability. Profitability would be greatest if you had slave labor. However, like any other costs, it may be that the business can pass the costs to its customers in the form of higher prices, it depends upon the elasticity of demand and the competitiveness of the market.

:spin:

??

 

[zymurgy]

How do you figure? The effective SS rate is 12.4%. The employee pays 6.2% and the employer the same. If the rate was reduced by 4 points, the employee would pay 4.2%, a savings of 2% of his salary, plus the potential of a salary increase because the cost to the employer is 2% less as well.

The SS tax is capped at 90k. Someone making 90k or less pays the full tax. Someone making $9 million pays the same taxes. Except instead of 6.2% of his salary, it is .062%. The reduction in SS taxes would increase his salary only .02%, versus 2% for the under 90k employees. It would benefit those in the lower classes much more.

Sure, if you ignore that the guy making 9 million has 10-12 LLC's on the side and hires 40-50 employees.

Paying a lower salary. If the employer didn't have to pay the 6.2% SS, (or some portion thereof), the difference could be paid as a higher wage to the employee.

umm...you failed to properly address the question:

Now tell me, if I am paying minimum wage, how do I pass this expense on to my employee?

 

[Stinger]

How do you figure? The effective SS rate is 12.4%. The employee pays 6.2% and the employer the same.

A falicy, the employee pays it all, half is just cut from his pay before it shows up on the check.

If the rate was reduced by 4 points, the employee would pay 4.2%, a savings of 2% of his salary, plus the potential of a salary increase because the cost to the employer is 2% less as well.

And will you cut the benifit as much? If I cut my contribution to my 401k by that much I certainly expect to see my benifit from it cut.

The SS tax is capped at 90k. Someone making 90k or less pays the full tax. Someone making $9 million pays the same taxes.

And gets the same benifit. So what?

Except instead of 6.2% of his salary, it is .062%.

So?

Paying a lower salary. If the employer didn't have to pay the 6.2% SS, (or some portion thereof), the difference could be paid as a higher wage to the employee.

I think you are starting to see the falicy that the employer pays half and the empoyee pays half.

It does, I never denied that labor costs do not effect profitability. Profitability would be greatest if you had slave labor.

Not necessarily, you still have to provide for the slave and his productivity would probably be less. But it is a red herring arguement anyway.

 

[zymurgy]

A falicy, the employee pays it all, half is just cut from his pay before it shows up on the check.

ridiculous.

The employer pays half.

 

[Iriemon]

Sure, if you ignore that the guy making 9 million has 10-12 LLC's on the side and hires 40-50 employees.

What does that have to do with whether he would benefit from a SS cut?

umm...you failed to properly address the question:

Now tell me, if I am paying minimum wage, how do I pass this expense on to my employee?

umm...Sorry, then you will have to properly clarify your question. What expense are you talking about?

 

[Iriemon]

A falicy, the employee pays it all, half is just cut from his pay before it shows up on the check.

Depends upon how you look at it, I suppose.

And will you cut the benifit as much? If I cut my contribution to my 401k by that much I certainly expect to see my benifit from it cut.

I don't know. We were talking about whether a cut in the SS taxes would benefit the wealthiest or lower classes.

And gets the same benifit. So what?

Err, so nothing.

So?

He receives less benefit from a SS tax cut, certainly as a percentage of his income.

I think you are starting to see the falicy that the employer pays half and the empoyee pays half.

The employer in fact, does pay half. Whether the employer's contribution is an effective tax on the employee's income is something I don't necessary disagree with.

Not necessarily, you still have to provide for the slave and his productivity would probably be less. But it is a red herring arguement anyway.

It is not; it is relevant to the point as to whether labor costs affect profitability. I was agreeing with Zymurgy.

 

[zymurgy]

What does that have to do with whether he would benefit from a SS cut?

Its the bigger picture that you miss. The guy making millions of dollars is also an employer for other people. Any reduction of SS reduces the 50% match he is making for all of his employees.

umm...Sorry, then you will have to properly clarify your question. What expense are you talking about?

Ya, I did that already. We are talking about SS expenses.

you stated: it is a complex economic question as whether that tax is simply taken out of extra salary the employee would make

I asked how I could possibly take it out of the salary of a guy making minimum age?

 

[Stinger]

ridiculous.

The employer pays half.

I take it you've never been an employer or budgeted for an employee. It ALL comes out of the salary/wages/benifits of the employee. You have been duped by your government into thinking that YOU only pay half of it. It was a scheme from the very beginning.

 

[Iriemon]

I take it you've never been an employer or budgeted for an employee. It ALL comes out of the salary/wages/benifits of the employee. You have been duped by your government into thinking that YOU only pay half of it. It was a scheme from the very beginning.

I agree with you to a point, but you are assuming that if the SS tax was eliminated, the employer would pay the portion of its tax to the employee as a higher salary. I don't think that is necessarily correct. It might try to keep some as additional profit, or lower prices to improve (or maintain) competitiveness.

 

[zymurgy]

I take it you've never been an employer or budgeted for an employee. It ALL comes out of the salary/wages/benifits of the employee. You have been duped by your government into thinking that YOU only pay half of it. It was a scheme from the very beginning.

I'm an independent consultant/computer programmer that specializes in payroll applications for employers.

I also file taxes for my wife who owns a hair salon.

 

[Stinger]

Depends upon how you look at it, I suppose.

If you look at it from reality the employee pays it all, if you look at it through the scheme the government, and especially the liberal crowd, wants you to look at it you think your employer is being forced to pay for half your SS.

I don't know. We were talking about whether a cut in the SS taxes would benefit the wealthiest or lower classes.

It was your proposal, if you cut the guys SS contribution by 2 points will you also reduce his benifit?

You>> The SS tax is capped at 90k. Someone making 90k or less pays the full tax. Someone making $9 million pays the same taxes.

Me>> And gets the same benifit. So what?

Err, so nothing.

So your point was what?

He receives less benefit from a SS tax cut, certainly as a percentage of his income.

He recieves the same benifit because his taxes were cut just as much. The value of a dollar is not income dependent. If they both recieve an annual $100 cut in SS they both get the same $100, it buys the same amount of goods.

The employer in fact, does pay half. Whether the employer's contribution is an effective tax on the employee's income is something I don't necessary disagree with.

He takes part of your pay and gives it to the government before you see it, the he takes another part of your pay and shows it deducted off your check and sends that to the government also. I know you're too smart to fall for this government scheme. If you have ever hired anyone or budget with a company for employees then you would know that the total pay for that employee includes the part of SS he never sees. Imagine if we just paid it all, imagine the outcry when people actually saw the return of what is being "invested" in their name.

 

[Stinger]

I'm an independent consultant/computer programmer that specializes in payroll applications for employers.

I also file taxes for my wife who owns a hair salon.

Not what I asked. Have you ever budgeted for an employee or hired one yourself and paid them. The employer side of the SS tax is not differentiated when the cost of that employee is factored. If you or your company can afford to pay $60,000 for the employee you then deduct all the taxes and benifits etc and then you end up with what the employee will take home. Not the other way around.

 

[zymurgy]

He takes part of your pay and gives it to the government before you see it, the he takes another part of your pay and shows it deducted off your check and sends that to the government also.

how does this work for the minimum wage worker?

Or more importantly, can you admit when you are dead wrong?

 

[zymurgy]

Not what I asked. Have you ever budgeted for an employee or hired one yourself and paid them. The employer side of the SS tax is not differentiated when the cost of that employee is factored. If you or your company can afford to pay $60,000 for the employee you then deduct all the taxes and benifits etc and then you end up with what the employee will take home. Not the other way around.

I stated it in a way that anybody with common sense would realize I have more insight on this topic then you do.

 

[Iriemon]

Its the bigger picture that you miss. The guy making millions of dollars is also an employer for other people. Any reduction of SS reduces the 50% match he is making for all of his employees.

So your point is for guys in that category, they pay less matching SS tax for his employees, therefore can make more profit. OK. That has some merit. There is a lot of presumptions to that, and many folks making lots of money are not quite in that category, but fair point, such a person could get some benefit.

Ya, I did that already. We are talking about SS expenses.

you stated: it is a complex economic question as whether that tax is simply taken out of extra salary the employee would make

I asked how I could possibly take it out of the salary of a guy making minimum age?

If the employers SS contribution were eliminated, presumably some portion of it would be paid to employees in the form of higher wages.

If a guys was making minimum wage, and the SS tax was eliminated, some portion of the tax decrease might go to the employee in the form of increased wages. Again, whether it does or not depends upon several factors, the supply and demand for labor and elasticity of demand for products and services and competiveness of the market.

In a very competitive market, where their was a large supply of labor, you would expect that the difference would go to a cut in prices to maintain competitiveness.

In a less competitive market, were there was no large supply of labor, a portion might go (eventually) to employees as higher salary.

 

[zymurgy]

So your point is for guys in that category, they pay less matching SS tax for his employees, therefore can make more profit. OK. That has some merit. There is a lot of presumptions to that, and many folks making lots of money are not quite in that category, but fair point, such a person could get some benefit.

On an individual basis it takes presumptions, but not on the class as a whole.

If the employers SS contribution were eliminated, presumably some portion of it would be paid to employees in the form of higher wages.

Dealing with minimum wage workers, I don't see much merit in this counter argument

Isn't the reason for minimum wage laws because the employers weren't paying a decent wage and the free market wasn't "righting the ship"? So why would they voluntarily pay more now?

 

[Iriemon]

It was your proposal, if you cut the guys SS contribution by 2 points will you also reduce his benifit?

You>> The SS tax is capped at 90k. Someone making 90k or less pays the full tax. Someone making $9 million pays the same taxes.

Me>> And gets the same benifit. So what?

True from absolute dollars. Not true from a percentage of salary. The guy making <90k in my example saves 2%, 4% if you include the employer's portion. The guy making 9 million saves .02%, .04% if you include the employer's portion.

So your point was what?

See above

He recieves the same benifit because his taxes were cut just as much. The value of a dollar is not income dependent. If they both recieve an annual $100 cut in SS they both get the same $100, it buys the same amount of goods.

OK, but not on a percentage of income basis. But fine, if the SS tax cut would benefit the wealthy just as much, they should have eliminated the SS tax and not cut the income tax, and everyone would have benefitted equally. Instead of mostly the wealthiest.

He takes part of your pay and gives it to the government before you see it, the he takes another part of your pay and shows it deducted off your check and sends that to the government also. I know you're too smart to fall for this government scheme. If you have ever hired anyone or budget with a company for employees then you would know that the total pay for that employee includes the part of SS he never sees. Imagine if we just paid it all, imagine the outcry when people actually saw the return of what is being "invested" in their name.

I agree that is how it works. I disagree whether it is part of your pay in the sense that if the tax was eliminated, the employer would necessarily credit the 6.2% to your salary as an increase. In many cases the employer would keep the difference. It is not part of "your pay" in the sense of it is called your salary in the common usage of the word. If someone makes $40k working for an employer, that usually does not include the employer's prortion of SS. Or to look at it another way, if you are hired at 40k, the employer does not deduct his 6.2% contribution from your $40k salary.

 

[Iriemon]

I stated it in a way that anybody with common sense would realize I have more insight on this topic then you do.

For the record I don't realize that either of you have a heck of a lot of insight on this topic.

 

[Navy Pride]

Just curious, you liberals want the minimum wage raised to a living wage.......What should that be? $10., $15., $20., and hour.....That is what it at least costs to support a family................

 

[Stinger]

I agree with you to a point, but you are assuming that if the SS tax was eliminated, the employer would pay the portion of its tax to the employee as a higher salary.

Well you are assuming they won't. The cost of the employee to the employer won't change, nor will his having to compete with that labor with other employers. It frees up more money. It matters not a twit to him who he has to pay it too, you or the government.

The fact is when one is considering how much the business can afford to pay for a new employee the figure starts with the total cost including SS and everything else, that is figured out and the remaining is what the employee can take home and what can be offered.

I don't think that is necessarily correct.

I think it is necessarily correct in most cases.

Quite frankly we'd be better off if everyone had nothing witheld including the employer portion of SS and income tax and we all had to write a check just like to the electric company every month but to the government. THEN people would have a better idea of how much money the government took from them every month in taxes and "contributions".

 

[Navy Pride]

Navy, 7 dolars an hour would not effect anyone, anyone other then the person who is working here, I have done the math, and this is reasonable, nation wide.

So have I, Where do you think the money is going to come from to raise the pay? From business profits....Are you naive enough to believe that employers won't pass that on to the consumer?

 

[Stinger]

True from absolute dollars.

Well that's what we get paid in and that's what the government takes from us isn't it. And my dollar buys the same amount of goods and services as Bill Gates. A dollar is a dollar.

Not true from a percentage of salary.

And a specious point.

The guy making <90k in my example saves.................

The same amount of money as the guy who makes more, and he gets the same benifit as the guy who makes more. Should the guy who makes more also get more benifit because that $2000 each month each would get wouldn't be the same percentage of what he made or paid in? When he goes to Wal-Mart does he pay more for food because as a percentage of his salary he can afford more?

OK, but not on a percentage of income basis. But fine, if the SS tax cut would benefit the wealthy just as much, they should have eliminated the SS tax and not cut the income tax, and everyone would have benefitted equally. Instead of mostly the wealthiest.

And the EITC which already offsets the SS taxes the poor pay?

http://www.senate.gov/comm/finance/general/030701mbtest.pdf

The "poor" don't pay. Everyone else had a fair income tax credit. And in mine as I imagine in most cases more than if they cut my SS taxes by 2 points.

And of course you say nothing about how you would reform SS to make up for the lost revenues. You can't just take money out of general revenues and plug them into SS, you'd have to raise SS taxes back to where that are and higher or else reform the program or get rid of it all together.

I agree that is how it works. I disagree whether it is part of your pay in the sense that if the tax was eliminated, the employer would necessarily credit the 6.2% to your salary as an increase.

See my response to your other post.

 

[Iriemon]

Well that's what we get paid in and that's what the government takes from us isn't it. And my dollar buys the same amount of goods and services as Bill Gates. A dollar is a dollar.

And a specious point.

The same amount of money as the guy who makes more, and he gets the same benifit as the guy who makes more. Should the guy who makes more also get more benifit because that $2000 each month each would get wouldn't be the same percentage of what he made or paid in? When he goes to Wal-Mart does he pay more for food because as a percentage of his salary he can afford more?

The percentage effect relative to income is specious point?

Your argument that $100 dollars is the same thing to Bill Gates as it is to a guy making $12k is what is specious.

And the EITC which already offsets the SS taxes the poor pay?

http://www.senate.gov/comm/finance/general/030701mbtest.pdf

The "poor" don't pay. Everyone else had a fair income tax credit. And in mine as I imagine in most cases more than if they cut my SS taxes by 2 points.

And of course you say nothing about how you would reform SS to make up for the lost revenues. You can't just take money out of general revenues and plug them into SS, you'd have to raise SS taxes back to where that are and higher or else reform the program or get rid of it all together.

Can't be any worse than the way they made up for lost revenues from the income taxcuts.