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According to the BLS, in 2022 there were only 141,000 people in the USA earning the Federal Minimum Wage.
Far too much effort is expended worrying about such a tiny cohort, most of whom will earn more as they achieve adulthood.
Moguldreamer and TaxPhd, the federal minimum wage rate*makes it more feasible for states to establish and enforce their own minimum rate. If there were no federal minimum, I doubt if any meaningful state minimum could be sustained and enforced. It reduces low-wage states extents of undermining wage rates within higher wage states' labor markets. and proportional to jobs' rates', it's of greatest benefit to those employed within lower wage rate states.
The federal and the state's minimum rates reduce the numbers and extents of poverty incidences in the USA; they directly and indirectly affect the wage rates of almost all USA employees; proportional to job's rates, they're of greater benefit to employees earning lower, and of lesser benefit to employees earning higher wage rates, and they're of benefit to employees and those employees' dependents.
Minimum wage rates direct and indirect effects are critical to the financial conditions of 20% of USA employees earning rates within the lowest brackets of wage rates, and to their dependents. (I suppose that to be much more than the 141,000 employees you believe to be the only people who directly benefit from the federal minimum rate.
Moguldreamer and TaxPhd, the federal minimum wage rate*makes it more feasible for states to establish and enforce their own minimum rate. If there were no federal minimum, I doubt if any meaningful state minimum could be sustained and enforced. It reduces low-wage states extents of undermining wage rates within higher wage states' labor markets. and proportional to jobs' rates', it's of greatest benefit to those employed within lower wage rate states.
The federal and the state's minimum rates reduce the numbers and extents of poverty incidences in the USA; they directly and indirectly affect the wage rates of almost all USA employees; proportional to job's rates, they're of greater benefit to employees earning lower, and of lesser benefit to employees earning higher wage rates, and they're of benefit to employees and those employees' dependents.
Minimum wage rates direct and indirect effects are critical to the financial conditions of 20% of USA employees earning rates within the lowest brackets of wage rates, and to their dependents. (I suppose that to be much more than the 141,000 employees you believe to be the only people who directly benefit from the federal minimum rate.
Please tell that to the folks whose places of employment recently closed or laid off due to increases.
Gwynedd1, changes of tax laws often change the way enterprises conduct their business. If labor's not taxable, parking lot owners cease operating as parking lots. You're no longer billed $50 for parking a ½ hour in my mid-town Manhattan lot because I don't want to pay income tax for renting you a parking space.
You'll now pay me a nominal fee for the space. That fee will barely cover my tax-deductible expenses.
80% or more of whatever I charge you will be attributed to some service I provide on your behalf while your car's parked in my lot. After I've reduced the income tax on the parking space fee by my deductible business expenses to net zero taxable income, you'll be paying for some consulting, or fortune telling, or some personal service I ostensibly provide you.
My labor for providing you service is nontaxable. If $50 per half hour is still the competitive rate in my lot's location, you'll still be paying my enterprise no less than $50 per half hour, but my books will show no taxable income.
There's no free lunch and it's not rocket science.
I honestly have no idea how you have come to this conclusion. Why would someone not pay for a parking spot with no income taxes? The parking lot should pay taxes because its directly linked to the government with a claim on the empty space and ground rent beneath it. Where you decide to park does affect a third party. How does someone's income affect a 3rd party? I am not sure why people thing land ownership is not an externality like smog? Trying to walk a across the grass and being arrested for trespassing does not affect me but someone making money saving lives in surgery should be taxed heavily or they are a freeloader?
I honestly have no idea how you have come to this conclusion. Why would someone not pay for a parking spot with no income taxes? The parking lot should pay taxes because its directly linked to the government with a claim on the empty space and ground rent beneath it. Where you decide to park does affect a third party. How does someone's income affect a 3rd party? I am not sure why people thing land ownership is not an externality like smog? Trying to walk a across the grass and being arrested for trespassing does not affect me but someone making money saving lives in surgery should be taxed heavily or they are a freeloader?
Gwynedd1, you posted the question,” I would just like someone to tell me why we have taxes on labor, and if they could tell me which economist in history thought it was a good idea. I thought people should pay for things when they consume them. Where am I going wrong”?
In the USA, people and enterprises such as corporation that owns or lease parking lots pay income taxes. A parking lot doesn't have a tax obligation and doesn't pay any taxes. We're discussing an enterprise's or the enterprise's owner's income taxes.
The enterprise declares their sales revenues as income. Among their tax-deductible expenses is labor. If there were no taxes on labor, enterprises would attempt to attribute no more of their charges than necessary, for parking fees. They would want their parking fee revenue to be entirely covered by their enterprise's tax-deductible expenses so that parking is their enterprises “loss-leader”. Just as supermarkets may set sales prices of “loss leader items” at little or no greater cost proportional to their tax-deductible expenditures, in order to attract sales traffic into their stores.
Primarily, the enterprise is not ostensibly in the parking lot business. They operate their parking lot as an accommodation to drivers who are clients for some other expensive service. That revenue is almost entirely covered by their tax-deductible expenses for labor. Those labor expenses are the wages paid to the businesses owners and other employees. (Currently, business partners or shareholders can and often do declare themselves to also legally be employees of their enterprises). If There's no taxes on labor, the enterprises and their owners and their employees will pay little or no net income taxes to the government.
Gwynedd1, you posted the question,” I would just like someone to tell me why we have taxes on labor, and if they could tell me which economist in history thought it was a good idea. I thought people should pay for things when they consume them. Where am I going wrong”?
In the USA, people and enterprises such as corporation that owns or lease parking lots pay income taxes. A parking lot doesn't have a tax obligation and doesn't pay any taxes. We're discussing an enterprise's or the enterprise's owner's income taxes.
The enterprise declares their sales revenues as income. Among their tax-deductible expenses is labor. If there were no taxes on labor, enterprises would attempt to attribute no more of their charges than necessary, for parking fees. They would want their parking fee revenue to be entirely covered by their enterprise's tax-deductible expenses so that parking is their enterprises “loss-leader”. Just as supermarkets may set sales prices of “loss leader items” at little or no greater cost proportional to their tax-deductible expenditures, in order to attract sales traffic into their stores.
Primarily, the enterprise is not ostensibly in the parking lot business. They operate their parking lot as an accommodation to drivers who are clients for some other expensive service. That revenue is almost entirely covered by their tax-deductible expenses for labor. Those labor expenses are the wages paid to the businesses owners and other employees. (Currently, business partners or shareholders can and often do declare themselves to also legally be employees of their enterprises). If There's no taxes on labor, the enterprises and their owners and their employees will pay little or no net income taxes to the government.
TaxPhd, Moguldreamer, Gwynedd1, Gwynedd1, posted the question,” I would just like someone to tell me why we have taxes on labor, and if they could tell me which economist in history thought it was a good idea. I thought people should pay for things when they consume them. Where am I going wrong”?
The accounting principle's simple. Firms' books would never show a net profit. Income revenue not otherwise offset by other tax-deductible expenses are labeled as labor compensation paid to the firm's owners or shareholders for some or any ostensible services to the company or the company's clients. All of a firm's partners or shareholders will also be employed consultants or in some other capacity.
Banks rates for loans, will of course continue to offset expenditures for the administration and accumulating money that's lent out, and additionally the consulting services provided to their lenders. (Applicants who don't purchase the entire package, are denied loans). Banks will simply attribute less of their costs for other purposes and attribute more for labor expenditures. Banks and all other firms will not show any taxable profits.
Firms will never show taxable net income, because the portion of their revenue that's passed on to the firm's owners and shareholders is commingled with all other of the firm's tax-deductible expenditures.
If labor derived income cannot be taxed, it would effectively be unfeasible to collect any income taxes. Is that what's wanted? If so, then simply advocate the elimination of income taxes.
TaxPhd, Moguldreamer, Gwynedd1, Gwynedd1, posted the question,” I would just like someone to tell me why we have taxes on labor, ...
We have income taxes.
We have capital gains taxes.
We have excise taxes (e.g. gasoline)
We have sin taxes (e.g. cigarettes & alcohol)
We have payroll taxes.
We have gift taxes.
We have estate/inheritance taxes.
We have sales taxes.
We have use taxes.
We have property taxes (a specialized form of a wealth tax)
We have duties & tariffs.
We have permit fees.
We have violation fees.
We have income taxes.
We have capital gains taxes.
We have excise taxes (e.g. gasoline)
We have sin taxes (e.g. cigarettes & alcohol)
We have payroll taxes.
We have gift taxes.
We have estate/inheritance taxes.
We have sales taxes.
We have use taxes.
We have property taxes (a specialized form of a wealth tax)
We have duties & tariffs.
We have permit fees.
We have violation fees.
I've probably forgotten a few.
Next question?
Moguldreamer, I've read federal income taxes levied upon individuals and enterprises contribute about half of our federal tax revenues. (I would have thought it contributed a greater portion of our revenue).
People and enterprises seek to arrange their affairs in a manner they consider to be most convenient or beneficial to themselves and possibly to their families. If individual persons income derived as compensation for their services, (i.e. their labor) were not subject to taxation, Individuals and enterprises would arrange their affairs in a manner to increase their proportion of income not subject to taxes, and reduce the proportions subject to taxation.
Consequentially, we'd lose a great major portion of our income tax revenues, and we'd need to increase our revenues from other taxes.
I agree with fair tax proponents contending that sales taxes rather than income taxes are superior indications of taxpayers' actual incomes and wealth. But for various reasons, I do not agree with “Fair Tax” proponents advocating entirely replacing taxation of income with taxation based upon consumption. I further disagree with Fair-tax proponents advocating such radical transformations of our tax revenue sources be accomplished in a single year.
I would prefer we incrementally in annual steps, reduce the rates and simplify our income tax regulations while we simultaneously establish and incrementally increase our federal sales tax. I expect after some year's transformation of tax revenue sources, congress will find the federal sales tax to be approaching an unacceptable rate. Congress will then choose to interrupt, if not terminate further annual transformations.
Of course I may be mistaken, and the annual transformations could continue until there's no longer federal taxes upon incomes.
(Note that capital gains are incomes subject to federal income taxes, all payroll taxes paid by employees are taxes upon incomes, and some portions of them are actually part of their income taxes. All employers portions of payroll taxes, (which are based upon their payrolls), could be considered to be indirect taxes upon their incomes. Inheritances are a form of income).
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