Monday, 31 July 2006
Minimum Wage Increase Passes House
Unfortunately, the minimum wage increase passed the House of Representatives.
Republicans muscled the first minimum wage increase in a decade through the House of Representatives early Saturday after pairing it with a cut in inheritance taxes on multimillion-dollar estates.
In the Republican plan, the minimum wage would increase over the next three years 40% from $5.15 to $7.25 an hour. A bill that will damage poor families that it claims to help. How? By having an inflationary effect on the economy which will lower the purchasing power of the poor.
But how will it have an inflationary effect if no one is making minimum wage currently? First off, not every is making 40% over the current minimum wage. So the increase to wages for these people will cause the cost of labor to go upward. In addition the minimum wage will increase pressure to raise the wages of those making just over $7.25 an hour. Again raising the cost of labor. Finally, many of the unions wages are tied to the minimum wage. Thus any increase in the minimum wage will automatically cause union wages to rise. Once again adding to the cost of labor.
This new cost to labor will be passed on to the consumer creating a dampening effect to everyone's purchasing power.
The only good news from the bill is that Democrats in the Senate are planning to kill the bill because the rate increase was tied to cuts in the hated death tax. The rate at which government taxes wealth at a person's death is appalling. Wealth that was already taxed when it was first created. Any tax like that death tax which creates double taxation on wealth should be repealed all together. Unfortunately the Republicans weren't able to win the day on that , but were able to make a dent in it.
Of course the Democrats love taxation. Especially double taxation aimed at those who work hard to create wealth in this county. Their love of taxation is so great that they prefer keeping the death tax rather than helping the "working poor". I wonder how that will play on the campaign trail when the Republicans can honestly say they voted for a minimum wage increase and the Democrats voted against it.
Of course my favorite part of the story is how the media editorializes the death tax. The call it a "cut in inheritance taxes on multimillion-dollar estates." Nice try!
