Yep, it is the holidays. The day you get to spend time with family that you normally avoid by having a life and activities to attend to. I'm sure every family has that person who parrots everything they hear on the yell-radio as if it was truth handed down on stone tablets.
For me it is my Uncle who happens to be six months older than I. We grew up doing most of the same things in the same place for several years and most summers. But somehow we are vastly different.
I've given up on trying to counter every stupid thing he says. And limit myself to just one or two each season. This is to keep the peace in the home over dinner and more to give him things to think about.
So this year it turned out to be the idea of raising the minimum wage.
More, long, after the squiggle. (I think it is worth the read)
I did not take the bait with his ranting about how evil the Dem's were for gutting military pensions and ending the militaries single payer health system. (because other family members pointed out that this was a GOP idea backed by his hero Ryan. And that since he never served a day in his life - unlike half the family there: all but one male over 18 and three of the women - he really had no clue what he was talking about.)
I did not take the bait about how "obamacare" is a failure because a website crashed…and because I find the idea of no-bid/single bid contracts to be wrong and Obama got what he deserved for doing that. (but really, all the complaints about how the ACA wouldn't work when the bill was passed, I can't think once anyone saying 'oh, and the web page will crash so no one will be able to sign up.')
But I did step up when he said "Squawk! Raising the minimum wage to $15 an hour won't work. Squawk! They would lose their 'tax exempt status' and end up paying more in taxes than they would make at $15 an hour! Squawk!"
[Ok, maybe not the Squawk's] But that was pretty much what he parroted. He even claimed that he had heard it on Rush last week.
Now i'm an union member, who is not happy with his current union, but one of the few things they are doing right over all is supporting an increase in the minimum wage locally. (not to $15 but to $10.75, which just happens to be $2 less than our starting wage)
So I pulled out the iPad and said: "Uncle GOP, that makes no sense, the math can't work out that way. Lets look this up." and he dropped in the seat next to me with his tablet.
Here is what we worked out: people earning minimum wage are not "tax exempt". From federal taxes. In his state, some qualified part time workers are exempt from state income tax if they stay under 20 hours a week. Mostly dealing with "welfare to work" programs while they are in training/school.
We found by going to the IRS's web page and some on poverty that every dollar you earn is taxed at 7.45%. The next $6,200 (for single) is not taxed as it is the "standard deduction" you take off your income before Fed income taxes start, then you pay 10% on income between $6,101 and $8,965, 15% on income from $8,966 to $36,000.
So currently a person working full time at minimum wage is earning $15,080 which they pay $1,123 in FICA/Medicare taxes. They then pay 10% on 2,864 of income ($286), then 15% on $6,114 of income ($917). So a minimum wage earner pays $2,326 a year on $15,080 of income under the current system.
IF the person has a family they are trying to support their standard deduction is higher, ($8,950 single parent/ $12,200 married joint file) which will lower the Income tax bill but not the FICA (Social Security) tax. (Tax rates are the same 10%, 15% just shifted higher)
IF they also have kids, they can get the Earned Income Tax Credit. If they earn less than $36,760 and have one kid they can receive a credit of $3,250. This is applied to their income tax due. As you can see, this credit is more than what they paid in a year as a single person. ($2,326 vs $3,250 = +$924) They get a refund of $924. (If they don't have a kid the tax credit is $487) (giving them an effective wage of $16,004 a year and leading to the claim that 47% don't pay taxes.)
If minimum wage was increased to, say $12 an hour, or $24,960 a year (40 hours a week, 52 weeks a year, no vacation or sick time). They would still get the same standard deduction, same tax rates. $1859 FICA, $286 for the 10% rate, $1,483 on $9893 of income at 15%. (again a single person.) Total taxes of $3628.
The Earned Income Tax Credit would still cover $3,250 if it was a single parent. So a tax of $379 would not be refunded. Giving them an effective wage of $24,581. Which also means that by increasing the minimum wage, you would increase the total amount of taxes collected by a net amount. Instead of "paying out" $924 a year through the EITC, you would collect an additional $379 a year on the same person who was getting a credit. (So increasing the minimum wage means lower welfare payments and increased tax revenue with out raising rates)
This is only for Fed taxes, state and local taxes, sales taxes, property taxes, etc are not looked at.
They are not tax exempt, the current minimum wage worker pays taxes, but can get a tax credit. Higher wages would increase the actual taxes collected and at $24,000 a year for a single parent, reduces what welfare programs they qualify for. (lower food stamps, less utility assistances and cash support. won't change medicaid and Section 8 aid)
So they will "pay more" in taxes, $400 but take home $8,000 more a year.
The EITC for a married family with three or more kids is $6,044 up to an income of $51,567. (a $24 an hour job).
Some want to reduce or end the EITC now, not even if the minimum wage goes up. To get the EITC you have to earn some income, i.e. have a job. This is not "giving money to lazy people", but is a way to reduce the taxes of people at the lower income range.
Even still, changing or getting rid of the EITC but increasing the minimum wage to $12 would still benefit the worker. They would pay $1,302 more in taxes than at $7.25 but would have an increase in their total income: $21,332 vs $12,754. I don't see anyone saying "it is not worth working because they will just take it all in taxes."
When he saw the numbers that he worked out, he was quite for a bit. But then he said, "yeah, but these people flipping burgers are not worth $15 an hour when our Soldiers and Firefighters/EMS are getting $12 an hour."
Sigh. So close, but he can't see that if you raise the minimum wage, everyone else will see their wages go up.