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To: lowbridge

So now, those tips the waiters were getting will be a matter of record for the IRS.

Hahahahahahahaha!

Oh, wait until they do their taxes next year.

“Where’s my big refund? I’m in a higher tax bracket? So, the government is the real winner?”

Welcome to socialism, boys and girls.


25 posted on 04/04/2015 11:37:05 AM PDT by blueunicorn6 ("A crack shot and a good dancer")
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To: blueunicorn6
You're right: government is the real winner -- but, you don't go far enough.

A lot of people will discover that they have a lower net income, after their minimum wage is increased. This phenomenon is known as the "welfare trap" (think of the trap under a sink, and you'll get the idea.

Taxes are not the only claw-back for low-income wage earners. A host of social-welfare programs have claw backs too (e.g. you pay more for Obamacare, if your gross income increases). The "effective marginal tax rate"* for low income workers, varies from over 50%, to over 150%. That's right -- take home pay can decrease as wages increase.

* If the government takes something back, that's "effectively" the same as a tax.

There's quite a bit about the "welfare trap" (aka "poverty trap") on-line. Here's a link to a good article: http://www.heritage.org/research/testimony/2013/06/what-is-minimum-wage-its-history-and-effects-on-the-economy

That article lacks good graphics. Here's a graphic that shows how net income decreases sharply, as lower wages pass a certain threshold:


63 posted on 04/04/2015 3:28:36 PM PDT by USFRIENDINVICTORIA
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