Tags: Wage | tax | health | mother

Cutting Taxes on Poor Could Increase Hourly Minimum Wage to $8.25 Right Now

By    |   Wednesday, 21 May 2014 08:15 AM

Everyone seems to agree that is impossible to raise a family on the federal minimum wage of $7.25 an hour. Rather than addressing how to help low-wage workers keep more of what they earn, the debate centers on how high the minimum wage should be. This ignores the fact that low-wage workers spend a great deal of their income on government.

Low-wage workers are subject to Social Security and Medicare taxes in the same amount that middle-class workers are. Combined, these taxes lower incomes of everyone with income below $53 an hour by 7.65 percent.

On average, state taxes reduce income by another 6.5 percent although that amount varies depending on where you live.

Obamacare subsidizes health insurance policies for low-wage workers, but the amount of the subsidy decreases as wages increase.

At $10 an hour, a single mother with two children working full time would see her income rise above the poverty line, which is $19,700 a year for a family of three. With that increase, she could lose access to Medicare and be forced to spend 2 percent or more of her income on subsidized health insurance.

There are likely to be other benefit losses, such as subsidized childcare and housing, that further reduce the discretionary income of a low-wage single mother.

Rather than debating the minimum wage, it might be better to restructure the tax code. A simplified tax code could exempt low-wage workers from all taxes and allow work to pay more without burdening small business owners with higher wages.

© 2017 Newsmax Finance. All rights reserved.

 
1Like our page
2Share
MichaelCarr
Everyone seems to agree that is impossible to raise a family on the federal minimum wage of $7.25 an hour. Rather than addressing how to help low-wage workers keep more of what they earn, the debate centers on how high the minimum wage should be.
Wage, tax, health, mother
254
2014-15-21
Wednesday, 21 May 2014 08:15 AM
Newsmax Inc.
 

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

NEWSMAX.COM
MONEYNEWS.COM
© Newsmax Media, Inc.
All Rights Reserved