Do I really care about the minimum wage per se?  (I know, I’ve written about it before- as recently as 45 days ago or so:   Wage Follies.)   No, I worry about living wages and the middle class.

As long as the minimum wage is kept artificially low- so low that we, the citizens, who pay the bulk of the taxes, subsidize businesses who pay such wages- the ‘American Dream’ (e.g., upward mobility) and a thriving middle class are dead in the waters.  Because right now,  the top 2 to 5% are enjoying growing earnings and compensation, while the rest of us are having our wages remain stagnant- or just as likely see them dropping.

As discussed in the Journal of Economic Perspectives (this is but one of the articles- a good one- from the whole issue- Summer 2013- that covers this concept), there has been a world-wide change- the growth of the super-rich, with the US leading the way.  Part of the change can be attributed to the fact that only the super-rich could stay entrenched in the stock market when it tanked in 2008-2009, so they’ve gained the most by its recovery.  But, the tax cut extensions for the rich that were enacted in 2010 also afforded the US super-rich the ability to gain even more, at the expense of the middle class.

Think about it.  Since the end of the recession, the top 1% income earners in America have captured 22% of the total personal income in America.  And, that is 95% of the increase in income that has occurred since the recession.  That means 99% of us earned 78% of the revenue- but only 5% of any increases that occurred to those incomes.  So, it should certainly not be surprising to you to see that our incomes have declined 1% since the recession ended- because the top 10% got all the increases.

Now, I admit that the top 10% of American taxpayers pay 70% of the federal personal income taxes collected.  But, that percentage of their income (taxes/taxable income) is about the same as is true for the middle class taxpayer.  And, that does not take into account the statutory Social Security and Medicare taxes- which are greater and greater percentages of one’s income as we progress down the income scale.

But, between the Citizens’ United decision and the access the super-rich (due to their political donations [bribes]) have to our elected officials, the system is arranged to benefit only them.  They’ve skewed the tax system.  It’s also why rich farmers- many of them also  being rich Congressman- have strived to maintain farm subsidies (oh, wait, they call them payments)- while these same farms are earning record profits- and have stripped away food stamps for the working poor that always was used to balance the equation.

For those at the minimum wage to middle class level (i.e., 46 million who comprise the working poor), the federal tax bite is about 7.5% of their income (even with no income tax- and the earned income credit).   For those earning $ 75K (and owning a modest home), their federal tax bite is about 18% (with their income tax and employment taxes combined).  And, for those making $ 750K (after home deductions and everything else at their disposal), their total tax bite is 22% or less.  That 22% does not take into account any special tax planning that they can afford- which makes it even lower.  As you can see, the richer folks – those without tax planning to lower it more do not pay tax rates much higher than those clearly in the middle income levels.

As you can see from the graph above, despite what certain politicians claim, employment (payroll taxes) are a significant component of the total federal revenue.  Because our corporations are getting away with murder and not paying their fair share.  When employees pay more in payroll taxes than their employers pay in income taxes- and these companies are making record profits- there’s more than just “something” wrong- there’s everything wrong.

These are just the starting arguments….

I’ll have more to discuss tomorrow.

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