Minimum wages kill jobs, increase costs and send money overseas

workers-wages-vsA portion of President Barack Obama’s State of the Union speech discussed the creation of an economic climate that encourages businesses to open up shop in the United States and invest earned capital locally rather than overseas.  The president then addressed several policies that would accomplish precisely the opposite.

Obama proposed raising the federal minimum wage from $7.25 to $9.00 an hour, arguing that it would raise the incomes of millions of families. “It could mean the difference between groceries or the food bank; rent or eviction; scraping by or finally getting ahead. For businesses across the country, it would mean customers with more money in their pockets,” he said.

The problem?  It’s a lie.  Entry level economics courses teach the true effect of minimum wages.  Minimum wage jobs are filled by low skilled labor, many of whom are in high school and college and learning the skills necessary to succeed in the United States…skills such as working with others, taking direction from managers, being responsible with your authority and privileges.  Minimum wage jobs are teaching jobs.  When governments raise the minimum wage, businesses respond by slashing opportunities to these jobs, or increasing the price on products and services – or both.

What incentive do businesses have paying unskilled laborers more money?  I was asked a question recently: “How do you expect a person to make a living off of minimum wage?”  My answer is simple: I don’t.  Low skill jobs are not designed to support entire families.  Ask yourself a simple question – why would somebody work 60-hour weeks at a high-skilled professional job to support his or her family, when they could serve up burritos at the local Taco Bell and still support their family?  This is not realistic, and the world does not – and cannot – work this way.  There is a reason why people obtain the skills to get better jobs.  This is what makes career progression even possible.  It is why your local grocery store is clean and stocked with food, and why you are probably reading this article from the comfort of your home or building.

The net result in rising minimum wages is fewer jobs and an increase in prices for all of us.  How does this help the economy?  How does this help the very people whom our president claims to care about?  It doesn’t.  In fact, Obama’s policies demonstrably hurt the lower and middle classes by once again putting the burden of federal regulation on them.

To incentivize business, government needs to create a climate where businesses can operate without the fear of countless punitive regulations.  To encourage businesses to stay here in the United States, cut the corporate income tax rate.  Cut the personal income tax rate and cap it below 20%.  Remove the minimum wage, which is far beyond the scope of the federal government, and let states decide what is in the best interest of their residents and businesses.

More business-friendly states will, naturally, see more business – and less business-friendly states will be forced to change.  The free market is a powerful thing.  It works.  Americans see it work all the time in their local communities.  So much of what Americans spend their money on comes at the discretion of the free market.  It is enabled by a company’s ability to develop products and services that the people want and make money while doing so.  The free market builds economies, not the government.

While our government continues to willfully ignore even the most basic economic principles of incentivizing business, low and middle class Americans will be forced to continue shouldering the burden of its incompetence.

Blue Monday for a reason: Obama sworn in for second term

130120124035-07-inauguration-0120-horizontal-large-galleryThe third Monday of January is often labeled “Blue Monday” to supposedly denote the most depressing day of the year.  Although widely considered to be pseudoscience, Barack Obama’s inauguration to officially begin his second term as president might just give the phrase a new truthful meaning.

Why so depressing?  Barack Obama’s average job approval rating during his first term as president was 49% according to Gallupamong the worst of any post-World War II president.  Only Jimmy Carter and Gerald Ford saw lower approval ratings through their first terms in office.

During Obama’s first term, the national debt increased by nearly $6 trillion dollars, or $50,521 per American household according to numbers published by the Census Bureau.  This number exceeds the combined debt increases from George Washington through Bill Clinton.  Today, the national debt sits at $16.4 trillion.

During Obama’s first term, food stamp recipients skyrocketed nearly $16 million, bringing the number of Americans who receive food stamps up to more than 47.5 million.  According to the Department of Agriculture, that amounts to an additional 11,133 participants everyday.

During Obama’s first term, the number of Americans receiving disability insurance increased nearly 1.4 million, bringing the total up to 8,827,795.  Today, one out of every 13 people working full-time is on disability and receiving taxpayer funded government checks.

Unemployment went nowhere during Obama’s first term – percentage-wise, it’s exactly the same (7.9%).  654 new bills were signed into law.  The president spent 72 days at Camp David, went golfing 113 times and addressed the nation on 8 different occasions.  The president made 22 pardons, visited 44 states and held 58 town hall meetings.

As Obamacare slowly becomes enforced during Obama’s second term, taxes for nearly all productive Americans will increase.  January 1st of 2013 ushered in the first set of increases, mainly for more wealthy Americans and the healthcare industry in general (read: increasing the cost of healthcare for everybody).  New taxes on medical devices and the elimination of several health-related deductions will hit companies beginning this year.

The maximum income tax rate is set to go up on Americans, bringing the new percentage to 39.6% (up from 35% in 2012).  Capital gains tax rates will increase from 15% to 20% along with a new Medicare wage tax of 0.9%.  A slew of other tax increases will hit all Americans during Obama’s second term, such as the payroll tax, gift tax, estate tax and GST (Generation-skipping Transfer) tax.

There is good reason to be blue.

A nation of taxation: How to socially engineer a population

When you think about taxation in the United States of America, you typically will think about the government taking money from its citizens to fund expenses that the government incurs. Nowadays, we argue a lot about how much we are taxes and in what ways government taxes us — but have you considered the question of why we are taxed?

Even Dictionary.com’s definition of a ‘tax’ adheres to the common denotation of fund raising:

Tax: a sum of money demanded by a government for its support or for specific facilities or services, levied upon incomes, property, sales, etc.

But the truth is that not all taxes are levied on the citizenry for the purposes of raising funds to pay for its expenses. In fact, many taxes are designed to, in some fashion, modify the collective behavior of the citizens.

These are typically ‘excise’ taxes, and their cost is hidden from the end consumer at the time of purchase. A common excise tax we routinely pay is in gasoline; the federal tax currently is 18.4 cents per gallon, and states will attach their own taxes on top of it (i.e.: New York’s is 51.3 cents per gallon). You don’t know it’s there, but next time you think gas is expensive at the pump — just remember that up to 70 cents of that is in taxes alone, and your gas could be $2.30 a gallon instead of $3+. But, there’s a more sinister question at hand: why is gas taxed? You already pay income tax, sales tax, property tax, etc. as previously discussed in the first part of this taxation series. Do we really need to raise more money?

The answer is, unsurprisingly, no. In fact, in 2010 the federal fuel excise tax amounted to $38 billion dollars — hardly a drop in the bucket given our trillion dollar budget. The original intent of this tax was to have people who drive more pay more for road maintenance and those who didn’t drive as much/drive lighter vehicles paid less. This tax is to modify behavior by encouraging you through financial penalty to drive more fuel efficient vehicles and/or drive less. By raising the cost of driving, the government is incentivizing you to modify your behavior by artificially inflating the true cost.

It doesn’t just stop at gasoline, either. There’s an alcohol and tobacco excise tax that you pay that’s hidden into the cost of those products – upwards of a dollar for a single pack of cigarettes at the federal level and usually more at the state. This is to discourage people from using alcohol and tobacco for ‘the greater good’ of society. This is an example of when the government attempts to play parent and deprive individuals of their cognitive liberty. The government is altering the conditions of common situations because it believes it is smarter than you and knows how you should live your life.

Taxes, by in large, aren’t always about the amount the money, but government sure will use the concept of money against you. Just as you are penalized for the actions the government doesn’t want you to take, it subsidizes you through tax breaks and credits in order to encourage you to do something.  The income tax code encourages people to get married by taxing you less, it encourages you to buy a house (tax free mortgage interest), it gives you credits for going to school (college tax breaks), and it even gives credits for buying hybrid cars that would otherwise be an unwise economic choice. These taxation policies, while seemingly innocuous, are designed to strip away decision-making capabilities and substitute the government’s judgement for your own — and they do it using other people’s money, to boot.

Anything you do with taxes, other than to raise funds, is a corruption of taxation and a gross abuse of freedom. Without your financial liberty, your freedom of speech is greatly hampered, and by making it so the people are dependent on these credits and to avoid penalties, you will behave the way the government wants you to behave in order to maintain your standard of living. These actions taken against the single individual might not seem like much, but when considered at the aggregate scale of the entire population of the  United States, they make tremendous impacts on our society.

How can you truly claim to be free when so many Americans are unaware of how the everyday choices they make (spending hard earned money) are being manipulated by the tax code? And it doesn’t just stop with you, the citizen; the government also subsidizes industries (farming) and penalizes others (tobacco) so you are never truly sure of anything.

cigarettes.  Cost of a bad habit.

If you needed further proof that our taxes have gone completely insane, you need look no further than the soft drink tax/bans. The government taxes you to raise money to subsidize corn farming dramatically, which leads to the cheap production of high-fructose corn syrup as a low-cost replacement for sugar in soft drinks — now, the government is attempting to enact taxes and bans (http://www.cnn.com/2012/09/13/health/new-york-soda-ban/index.html) on the very drinks it is already taxing you on to produce cheaply.  That is right, the government is taxing you in order to tax you again.  All this to ‘improve health’ and ‘deter soft drink habits’.

What more can be said about a tax code designed to modify the behavior of the population? This corruption of taxation has occurred, and worsened, with both Democrats and Republicans in full control of the congress and presidency.

There is no ‘lesser’ evil.

More than 100 federal government workers hired each day

Although many in the private sector continue to struggle their way through economic uncertainty, the federal government appears to be thriving.  Since Barack Obama’s inauguration, the federal government has hired an average of 101 workers each and every day, totaling 143,000 additional workers drawing taxpayer money as salaries.

This makes for the largest ever federal payroll in history.

According to a report published by the Cato Institute, not only are the number of federal workers increasing, but their compensation is, too, faster – much faster – than their average counterparts working for organizations in the private sector.  “The federal workforce has become an elite island of secure and high-paid workers, separated from the ocean of average American workers competing in the global economy. It is time for some restraint,” the Cato report said.

But that is not all.  Let’s take into account health care packages that are provided to federal workers.  The report also stated: “When benefits such as health care and pensions are included, the federal compensation advantage over private workers is even larger, according to the BEA data. In 2010, federal worker compensation averaged $126,141, or double the private-sector average of $62,757.”

Embarrassingly enough, earlier in the year it was revealed that more than 30 of Obama’s own highly paid executive aids had over $833,000  in back taxes, and it is estimated that thousands of federal workers are “behind” in their taxes.

In summary, we have a taxpayer-supported public sector that is growing beyond what the economy can demonstrably allow, compensation that blows the private sector out of the water, and top-level government employees who apparently have a hard time paying their taxes.

How about that “fair share” debate again, eh?

Leahy would give government unrestricted access to emails

In yet another rampant example of federal hatred of the Constitution and the basic right to privacy, a re-written bill by Democratic Senator Patrick Leahy would give a slew of government agencies (22 to be exact) virtually unrestricted access to emails, Facebook posts and Twitter messages of the American people.

According to a report by CNET, Leahy’s original version of the bill actually protected Americans from warrantless searches of personal information.  After complaints from law enforcement and government entities arguing that obtaining warrants would have an “adverse impact” on investigations, the senator re-wrote the bill and added provisions that destroy personal privacy and allows government agencies access to information without warrants or oversight.

The bill would give the Federal Bureau of Investigation complete access to American’s personal information through their Internet Service Provider without notification of the account holder – or even a judge.  The bill essentially eliminates privacy and personal security and recklessly gives unrestrained access to federal agencies – a power that is ripe for abuse.

Under the bill, agencies like the Federal Reserve, OSHA, the Federal Trade Commission and the National Labor Relations Board would gain easy access to American’s information.  It is puzzling why any of these organizations need access to personal information of the American people, especially without basic due process of obtaining a warrant.

A vote on the bill is scheduled for next week.  However, after public outcry over the blatant and transparent destruction of the privacy of all Americans, Leahy backed off of his support of his own bill, a damage control move by the senator in an attempt to save any shred of credibility he may still have with the American people.

Leahy’s attempt at damage control is meaningless, however.  The bill remains scheduled for a vote next week.  American’s privacy remains at stake, and the career Vermont politician is doing his best to skirt the line between getting the bill passed in the Senate and dodging responsibility for the continued destruction of privacy in the United States.

After such a public outcry, it is unclear how many in the Senate are in support of this bill, although one would hope a bill this transparently destructive to the privacy of all Americans would garner very little support – with or without negative publicity.

French gov’t to suffer consequences of socialism

According to British newspaper The Telegraph, socialist-lead France is fast approaching a “full-blown hurricane” as punishing tax rates and disastrous government policies are forcing French businesses and investors scrambling to avoid the legalized confiscation of their wealth.

French bankruptcies have skyrocketed over the summer and, according to Laurence Parisot of the MEDEF group in France, consumer confidence in the economy is quickly dwindling.  Worse, the French government does not appear concerned, or even aware, of the gravity of the looming crisis.

A message to the U.S. government: learn from the mistakes of other nations.  Big government destroys incentives to invest and succeed and punishing taxes provide little in the way of long-term economic success for virtually any economy, especially one built  upon the principles of capitalism.

http://www.telegraph.co.uk/finance/financialcrisis/9610717/French-business-erupts-in-fury-against-disastrous-Francois-Hollande.html