The latest legislative session in our state and national government offered a new minimum wage. The president's idea is to raise the minimum wage to $9 over three years, about a 24 percent increase.
Virtually every economist says it's a bad idea since raising the minimum wage always has negative consequences. Most unbiased economists would say the best solution to raise wages for the poorest is to pass the Fair Tax Act (HR 25/S 122) and repeal the 16th Amendment.
Today's minimum wage is $15,080 per year -- less $1,154 for FICA and $533 federal tax. After federal taxes, it is $13,393 take home pay -- and this doesn't include state taxes.
When we pass the Fair Tax, the take home pay is $15,080 because there would be no income tax. Also, the Fair Tax has a built-in prebate for a single-wage earner of $2,569, which is given to offset the taxes on staples, and boosts the take-home pay to $17,649 for an increase of more than 31 percent in one year.
The prebate for a family of four is $6,960 and gives the minimum wage family a take home pay of $22,040.
The tax paid in the corporate income tax adds about 18 percent at the wholesale level, which the consumer pays. The only way corporations can pay their income tax is to collect it from the consumer. The Fair Tax adds 23 percent at retail for new goods made in the U.S. for an increase of only 5 percent to 8 percent.
The consumer benefits from the Fair Tax and it would benefit companies who create new jobs by the millions nationwide.
Any voter or legislator who disagrees with my reasoning on this tax problem and wants to retain the income tax should try to publicly defend the income tax as the best system available.