Tuesday, July 22, 2014

The Bad Boss Tax and Yes Corporations Do Lobby for Entitlements and Yes it's a Form of Corporate Welfare

Image source: http://commons.wikimedia.org/wiki/File:At_an_eastern_aircraft_factory,_Philip_Leung,_Chinese,_Marcell_Webb,_Negro,_and_an_unidentified_White_worker_adjust..._-_NARA_-_196335.tif

The liberal leaning  Nation of Change had an interesting article titled The Bad Boss Tax.  Effectively it smacked corporations who pay low wages and then shifts the social cost to the taxpayers who are forced to pay for Medicaid, food stamps and other entitlements for the working poor.  The article even advocates for taxing these low wage paying corporations to reimburse the public for having to pony up with tax dollars to subsidize the working poor.

While I don't endorse increasing corporate taxation and would simply prefer that the corporate tax be totally abolished, the rational response is: what would happen if entitlements for the workers were also abolished?  What if corporations were forced to compete in the labor market as they once did before they figured out that they could bribe politicians to pass entitlement legislation for workers and shift the social costs of labor to the taxpayers?

Anyway, The Bad Boss Tax article does indeed raise some very interesting and valid points.

Vampire businesses

Just how much money are low-wage businesses draining from local, state and federal coffers? A study released in April by Americans for Tax Fairness, a coalition of more than 400 organizations that advocate progressive tax reform, estimated that Wal-Mart alone costs taxpayers $6.2 billion annually in public assistance. That report draws from a 2013 study by the Democratic staff of the US House Committee on Education and the Workforce, which estimated that Wal-Mart cost taxpayers, on average, between $3,015 and $5,815 per worker.

Americans for Tax Fairness used the House Democrats’ study to extrapolate Wal-Mart’s public-assistance burden on each state. In Minnesota, for example, where Wal-Mart has 20,997 employees, the public burden totaled $92.7 million per year. That’s $92.7 million Wal-Mart isn’t paying in wages or benefits, but that instead is being borne by taxpayers — taxpayers who, of course, include Wal-Mart workers.

The study also notes that Wal-Mart profits from food stamps on the consumer end. According to the company’s own estimates, Wal-Mart captures 18 percent of the SNAP market, some $13.5 billion annually...

Wal-Mart isn’t alone; there are thousands of other low-wage employers...

Most of those minimum-wage workers are in the service industry, particularly in food service. And not coincidentally, taxpayers are also shelling out to prop up food industry wages. Studies last year from the National Employment Law Project and the University of California, Berkeley, showed that fast-food companies cost taxpayers an additional $7 billion per year in public assistance, with McDonald’s accounting for $1.2 billion. The Berkeley study notes that fast-food companies pay cashiers and other frontline workers a median wage of $8.69 an hour, and more than half of those workers rely on one or more public programs, compared to 25 percent of the workforce as a whole.

It's a damn poor reflection on our economic system that folks who work full time need public assistance.  Libertarians and free market proponents may scream about increasing the minimum wage as an assault on the poor and businesses but until they can convince Americans that free labor markets can and do deliver a level of non-entitlement dependent workers then all the sympathy will indeed be with statist solutions to mandate wages.

A long time ago I was a minimum wage worker and survived quite nicely - had enough money to fund a modest lifestyle complete with an apartment, a car, food on the table and even enough money left over for booze, clothes and entertainment.  But the dollar bought a whole lot more when I earned the minimum wage.

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