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678 sats \ 1 reply \ @grayruby 4 Dec 2023 \ on: Meta Econ Takeover Day 48 meta
When people talk about increasing the minimum wage here are two solutions I usually suggest as a better option.
a) In Canada we have a basic personal amount tax credit that is currently around 12,500, so you don't pay any tax on your first 12,500 in income. My suggestion is to make that amount whatever the poverty line is. If the poverty line is 25k in Canada then double the basic personal amount. Why should people in poverty be paying income taxes to the government. Someone making say 32k a year (approx yearly income of full time minimum wage worker in Canada) would save $4244 in taxes a year compared to earning only an additional $950 a year after tax if the minimum wage went up by $1 per hour. That's a 250/month difference for them. Not insignificant.
b) every private sector worker should be able to opt into being paid as an employee or a contractor with an employment contract. Opting to be a contractor gives them more flexibility in negotiating salary, benefits etc but also under tax law allows them to offset some of their income with expenses. You can lower your effective tax rate drastically by lowering your taxable income through write offs, even if you are very conservative about it.. It has benefits to the employer as well because you get to decide if you want to renew the contract every year, 2 years, 5 years whatever the term, so if you have a crap employee that's been around a long time, you don't have to pay them a fortune to get rid of them or feel compelled to keep dead weight around because it is too expensive to terminate them.
These ideas have the added benefit of starving the government of income.
Your second point reminds of when I realized that functionally employers and customers are the same. It's interesting that the employee-employer relationship has so much more baggage than customer-contractor.
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