New tax system is better solution than raising minimum wage
Feb 25, 2013 | 712 views | 0 0 comments | 5 5 recommendations | email to a friend | print
President Obama wants to raise the minimum wage from $7.25 to $9.00 over the next three years. That's a 24% increase.   A better solution is to pass the FairTax (HR25/S122).   Today' s minimum wage earns $15,080 a year.  Subtract $1,154 for FICA (Social Security and Medicare at 7.65%) and $533 of Federal tax due.  Ignoring state income tax, the take home pay is $13,393.



Pass the FairTax and the minimum wage earner brings home the full $15,080.  They get an additional $2,505 as a reimbursement for the tax paid on the basic necessities.  That's $17,585 take home - a 31% raise in one year!   Yes, the FairTax is a 23% national retail sales tax on new goods and services. According to the experts, the price of every US produced product we buy is ~ 22% more expensive because companies embed the cost of the tax they pay in the price of their products - thereby passing the cost of corporate tax on to the consumer.   Under the FairTax, the prices for products produced in the U.S. should drop an average of 15%-18% at the wholesale level because the embedded tax is removed.  Add back in the 23% national retail sales tax and retail prices only go up 5% to 8%.



So, increase the minimum wage 24% over the next three years and hurt small businesses or pass the FairTax and create millions of new jobs.



Which would you choose?



James R. Donnell

Cameron Park, Calif.
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