In the net effect on the economy it does not matter whether you funnel the 150 billion through the government or force employers to pay it. It has the same chilling effect either way and is actually MORE damaging when you presume to tell an employer how much he HAS to pay his employees. Such a policy will cause more people to need government assistance than already do.
Labor is worth only as much as labor is worth. Force an employer to pay more than the labor is worth, and the employer won't hire at all or will lay off workers he otherwise would keep on.
What continues to confuse me is where the employer has any place in this event as it relates to cost
he gets dollar for dallor tax break on a W-2 backed event as I have described, he pays no taxes any way
His/Her bottom line does not change
In fact the employer if anything will get a better employee, thats it
The consumer pages all wages and all taxes
The biggest problem here is every-one who is debating this with me has no understanding as to how this works
Companies base there price on everything including tax cost
That cost goes down, labor cost goes up the exact same amount, it is a wash
1) do you let Obama spend it?
2) do you let John Doe spend it?
3) do you increase the GDP or allow it to keep it where it is?
4) do you lower entitlement or do you allow it to remain running away?
This is the debate
No that is NOT the debate. The debate is your flawed notion that raising the minimum wage would somehow end welfare. And I am running out of illustrations, ideas, and concepts to explain to you why that notion is flawed.
And you again said you helped budget for billion dollar projects and you have no better understanding of how profits and taxes work than is illustrated in your words that I highlighted in red? You must have been budgeting for one of those 'too big to fail' things that we all had to bail out if you had no better judgment on budgeting than that.
Nobody is taxed at 100%. So yes, paying the people at a higher wage will increase the cost of doing business and will decrease the business profits which will decrease the taxes owed on the profit, but it is NOT a dollar for dollar exchange. If the business is paying near the highest corporate tax rate or 35% he will pay 35% of his profits.
So do the math:
If he pays the employee $300/week and makes a $500 profit on that employee's labor, he will pay 35% of $500 or $175 in taxes leaving him with $325 for his own use or to reinvest in the business.
If he pays the same employee $400/week he now only makes a $400 profit of which he will pay 35% or $140 leaving him with $260 for his own use or to reinvest in the business.
And that doesn't even figure his increased costs for FICA, medicare, liability insurance, unemployment insurance, and work comp insurance.
Okay, you say, the businessman should just raise his prices so he is making the same profit. That is well and good but that raises everybody's prices so inflation steadily erodes the buying power of the employee's new $400 wage. And thus the government raises the poverty threshhold and we're no better off than before but just everybody has to pay a lot more for what they buy.
Okay we go back to your original plan that the government reduces the businessman's taxes so he is making the same profit because the employee won't need the government subsidies with the higher wage. So let's do the math on that:
The employee is raised to $400 and the busines profit is $400 but the taxes are lowered to 25%. Now the businessman pays $100 in taxes leaving him with $300 for his own use or to reinvest in the business which is still less than he made before. Less money to expand and grow the business. Less money to use to bid on new contracts that will require hiring more employees.
Meanwhile he has fired the low skilled worker who was worth only the $300 and hires a more highly skilled worker for the $400. And so the guy who was making low wages before now needs total assistance.
HOWEVER......if you get the government out of it altogether, drastically reduce or eliminate business taxes altogether, you would free up so much venture capital and so stimulate the economy that probably everybody who wants a job would have a job that would support him/her and that would eliminate the need for a whole lot of welfare.
Of course then the politicians couldn't control and manipulate the system and enrich themselves. What a pity that would be, huh.