Raising taxes in order to raise minimum wage -- reasonable solution?

Appley's picture
Rank: Gorilla | banana points 551

Moon Jae-in envisions a S. Korea whose government has a larger impact on family's lives, namely through increasing household wages and opening up more job opportunities.

And how else to do that? Raising taxes on the wealthy and corporations in order to fund an increase in minimum wage. This all seems to be done in preparation for a grander scheme to fulfill S. Korea's new left-leaning government's policy priorities, i.e promising the creation of 810k jobs. At the very least they have a game plan for S. Korea?

Under the new tax code, individual rates will increase by 2 percentage points for the two highest tax brackets, to a maximum rate of 42% for those who earn about $444,000 or more a year. Rates for individuals who earn less than $270,000 will remain unchanged.

Corporate-tax rates, meantime, will rise by 3 percentage points to 25% for companies whose net profit tops about $180 million a year. Tax rates for businesses earning less will remain the same.

Samsung Electronics Co., which paid more than $2 billion in corporate tax last year, is all but certain to pay hundreds of millions of dollars in additional taxes under Mr. Moon's plan.

Much like in the US, Moon Jae-in's approach is the left's approach in economic stimulation, in contrast to the right's favor for cutting taxes in order to stimulate business activities (which I know WSO users here also prefer!)

And so I thought it'd be interesting to note the difference between Korea's left and the US's left, namely

  1. If the government in current office were to increase taxes (realistically, temporarily for that term) in order to fund a minimum wage increase, how economically sound is that proposition?

In the US, the biggest divide comes from the fact that we can cut or increase taxes without any particular purpose in the money that would arise from raising taxes. Here, the taxed money would go towards individuals, basically. At the same time, the left also insist on raising the minimum wage without addressing the deficit that would result.

Moon Jae-in's solution seems to address both matters at once.

  1. Is S. Korea's model superior to that of the US's?

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Comments (45)

Best Response
Aug 2, 2017

I'm against any minimum wage increase that isn't in-line with "survival costs." That doesn't mean owning a 3-bedroom house and driving an Accord, as some people seem to think. I think if a person is earning minimum wage, it should earn them enough to pay transportation costs, food costs, basic utilities like a phone and maintainable clothing, and that's that. We have significant, protected freedoms in this country to learn (school, trade schools, the internet, libraries) and get better jobs, to start businesses, and frankly, to get rich. People not interested in doing any of that are okay with eroding their freedoms in the name of laziness because they have no intent to do anything about themselves, and I don't think entrepreneurial people should be penalized simply for having ambition. Sure, there are issues that need fixing, but this is a capitalist society. If people don't feel like trying, they have the option to leave. What Korea is doing is fine, but it's a different society, and you can't compare cultural systems in that way.

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Aug 2, 2017

What about shelter? Is that not part of your definition of survival?

Aug 2, 2017

The United States IS shelter. Sleeping at a homeless facility, despite what some people would have you believe, is not as dangerous as sleeping in an ISIS-run cave. There has to be a "bottom", and as difficult as it is for even working professionals to buy homes - let alone blue collar workers - how on Earth anyone can think minimum wage should allow one to buy a home is beyond me. Minimum wage should allow you to pay for the nearest out-of-town place you can afford that allows you wake up at 5AM and still make it to work on time by taking public transportation. There should be ZERO incentive for people to stay in a minimum wage job.

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Aug 3, 2017
Kassad:

Sure, there are issues that need fixing, but this is a capitalist society.

Erm... yea... and one of the pretty damn big "issues" that needs fixing in this "capitalist society" is the erosion of the American middle class workforce due to automation and outsourcing. I personally just favor moving to a universal basic income system, because that is where we are headed anyway.

We have more and more programs that are almost like a secret form of universal basic income or something, where we all agree to pretend that's not what it is so we can keep the Horatio Alger myth alive.

If you're an overeducated liberal arts grad, this secret subsidy is called IBR/gradPLUS. If you're an uneducated laid off factory worker living in the middle of nowhere, it's called disability. If you work sporadically and for low wages while supporting kids, then it's called EITC.

Regardless, these programs exist to take people for whom the economy no longer has much use and sweep them under the rug. Off the unemployment rolls, out of the homeless shelters, and out of sight.

We need to just stop pretending that we live in a world where every able bodied adult will be engaged in paid labor at least 40 hours per week. There's just not enough to do. We don't need that many people to keep things running. Forget the whole minimum wage debate and just go to UBI.

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Aug 2, 2017

Or maybe we don't need to fix it? Maybe you're not smart enough to know that? I mean hey, top economists admit to not knowing the answers to modern problems as they arise, and it's even taught that economics is the science of hindsight, but DetRustCohle seems to have a pretty well-written liberal agenda on hand so fuck those economists, this has to be correct. Who needs a PhD when you have business experience?

Wait a second, isn't this how Trump got into office?

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Aug 2, 2017

This is a capitalist society. If you want higher minimum wages limit immigration. You are not supposed to be able to support a family off of a minimum wage. Those jobs are for teenagers and those with no other options. Right now they are only going to immigrants(mostly illegal). There has been such a large surge in the number of people willing to work for that amount of money so it drives the number down. Unless you would rather settle for being socialist, then by all means give your money to someone who illegally came her and is sending their money back to Mexico.

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Aug 2, 2017

solution to what? people who can't figure out how to add value to society?

heister:

Look at all these wannabe richies hating on an expensive salad.

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Aug 2, 2017

South Korea is also a much smaller country with a less diverse demographic. 96% of South Korea is made up of South Koreans. You can't compare the U.S. policy and South Korean policy because it is apples and oranges.

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Aug 2, 2017

Wtf? Why should I pay more taxes to subsidize, on a completely unrelated note, the lowest paying and lowest value jobs in society? On what level and on what planet does that make sense?

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Aug 3, 2017

You're doing it to keep the mob happy. Unless you have an island and priveg army, you want them complacent.

On a large note, these are your fellow citizens. Neighbors, coworkers, friends.

Aug 3, 2017

Well said, there is little to be lost by expanding your circle of concern- except, perhaps the vestiges of narcissism. The view from the top loses some of its luster when it looks out over nothing but rabble and rancor.

Aug 2, 2017

This will implode.

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Aug 2, 2017

Raising the minimum wage is putting a bandaid on a gunshot wound, especially if it's arbitrarily $15/hour and ignores cost of living differences among states and cities.

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Aug 2, 2017

Moon was a mistake. They should've elected Yoo. He was the only candidate who actually fully understood relations with North Korea and had a handle on how an economy is run. Sadly he couldn't get past even 5% in polls and voting. Good job SK, way to elect a commie sympathizer, that certainly hasn't fucked over your peninsula in the past 70 years or so, having a commie leader.

Hoping for hedge life.

Aug 2, 2017

Whether or not that's true, I think the real problem the world faces is that people, as a whole, are just too stupid to deal with the problems we're facing. That exists here in the US, it's in SK - anywhere democracy exists, it's being actively sabotaged by wave after unceasing wave of dumbass.

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Aug 3, 2017

This won't hurt or help.

Only an overhaul of the status quo - in which networks of patronage run deep between government and the private sector - will allow S. Korea to maintain its competitiveness in trade.

Structural improvements, not "pull a lever" policy decisions like raise or lower taxes, matter above all else.

Aug 3, 2017

Ethos aside, I think there is a valid economic argument for considering minimum wage hikes--If done effectively, it can rightfully shift the burden of compensation in many cases off the tax-payer and back on to corporations.

The idea that those working in jobs and industries that tread near the minimum wage are suburban teenagers is only true in Surburbia and completely neglects the wider reality. 70% of fast food workers are 21 or over and many have families--which is important because it increases the household income threshold for the federal poverty line.

The shortfall in wages and benefits rampant in fast food, retail, and other low wage industries is being directly subsidized by the tax-payer in the form of SNAP, TANF, tax-credits, and Medicaid. Fast food as an industry generates about $7-10 billion per year in welfare recipients--it's a blatant commonization of the costs onto the general public.

In my opinion, a system that allows and incentivizes tax-payers to provide for the workers of private corporations is just as economically perverse as a system that incentivizes low-wage workers to become complacent with their station in life.

To each their own.

Aug 2, 2017

Amen

Aug 2, 2017

Did you know half of Italy's economy is black market? And not even fun shit. Their taxes are so high that people buy bread and shit illegally.

heister:

Look at all these wannabe richies hating on an expensive salad.

Aug 6, 2017

Hi TheBestMan, whoops, looks like nobody chimed in here.... maybe one of these discussions below is relevant:

Or maybe the following pros can chime in... @Juank09 @Thomas-Wong12 @cameron1692

I hope those threads give you a bit more insight.

Aug 3, 2017

I don't see how the two are even remotely related.

Raising taxes wouldn't 'fund' a minimum wage hike unless the funds were reallocated to those businesses facing higher wage rates. But this is precisely who the tax is aimed at. In other words, raising taxes on corporations and increasing their cost of low skilled labor would compound the effect; not subdue it. The whole thing is entirely incoherent. Typical left wing mysticism.

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Aug 6, 2017

it's that time of year for democrats to bring up minimum wage, civil rights, equal pay for women, etc.

They know full well that all these topics are complete bullshit, but it wins votes.

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Aug 6, 2017
BTbanker:

it's that time of year for democrats to bring up minimum wage, civil rights, equal pay for women, etc.

They know full well that all these topics are complete bullshit, but it wins votes.

Mid-term elections = manipulated data/facts about income inequality, civil rights, and equal pay for women. Sponsored by your favorite libtards.

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Aug 3, 2017

I support increasing the minimum wage, but simply because it will allow art history majors to work at Cosi and make my sandwich instead of the people who don't give a fuck and mess up my order all the time.

+minimum wage = less workers. You'll see McDonald's automate (ala WaWa).

Aug 6, 2017

This would crush the smallest of businesses, but any company with decent scale should be fine.

Will it hurt the bottom line? Definitely. Should something be done about growing income inequality? Definitely. Is this the right thing to do? Good question.

Aug 6, 2017

We'll probably will see small manufacturing companies adopt piecework pay where you can pay far below min wage.

Aug 6, 2017

The real minimum wage a wage that supports a one room aprtment with food utilities and a car is $11.00 per hour. That wage doesn't support health insurance, savngs or retirement.

Aug 6, 2017

Raising the minimum wage is just an excuse for lazy people to consider working at a minimum wage job a career.
Minimum wage, being as low as it is, initiates competition which drives our society.

Aug 6, 2017

Yeah, mimimum wage can end poverty tomorrow and even makes us all rich, they just need to set it at $ 200 an hour. If 10 is better than 7, why stop there?

Nothing personal, just business.

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Aug 6, 2017
korlanok:

Yeah, mimimum wage can end poverty tomorrow and even makes us all rich, they just need to set it at $ 200 an hour. If 10 is better than 7, why stop there?

http://en.wikipedia.org/wiki/Slippery_slope

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Aug 6, 2017

Sorry for the gravedig, but this really grinds my gears. It's very easy to understand that raising the minimum wages will force higher unemployment and/or raise the prices of the products those businesses sell because they need to make up for their lost money somehow. If every bottom-of-the-barrel slacker made 10 dollars an hour instead of 7, NOTHING CHANGES because 10 dollars will have the same purchasing power that the 7 dollars did. Seeing all these ignorant 'occupy' protests are a sample of the way the majority of this country thinks and that is frightening. I would say that Democrat politicians use these topics as an underhanded way to steal votes, but then again, the Republican party would lose a lot of voters if they took a different stance on gun control, so I guess that's the tradeoff.