Minimum Wage V: Taxes & Wages

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Money cash (Photo credit: @Doug88888)

In the United States, there is considerable intersection between the class of people who oppose minimum wage and the class that opposes taxes. In some cases, both of these views can be grounded on a consistently applied principle. For example, those who favor a minimal (or non-existent) state will note that both views are well grounded on the idea that the state should not impose on the citizens. In other cases, though, the reasons presented for these views seem to be at odds. In this short essay I will consider this matter. For simplicity’s sake, I will just stick to discussing earned wages and stay away from such things as inheritances, lottery winnings, and such.

I have conservative friends on Facebook and, when the issues of taxes heats up, I get to see various postings that claim taxes as a form of theft. When the issue is more specifically about taxes being used (or increased) to pay for government services such as welfare, the stock line is that such taxes are wrongfully taking money from the rightful owner and giving it to people who do not deserve the money because they have not earned it. Interestingly, many of the quoted sources are wealthy people who are dismayed at being compelled to pay taxes. This view seems to rest on two important assumptions. The first is that the people who are being taxed have earned (in the moral sense) their money and thus are entitled to keep it. The second is that the people who are imposing the taxes and the people who get the money have not earned it and thus are not entitled to it.

The basic principle at work here does, on the face of it, seems reasonable enough: people are justly entitled to what they have earned and not entitled to what they have not earned. This, in turn, seems to rest on what appears to be a principle that people are entitled to the value they create. After all, there has to be some foundation for the claim that an income is earned and thus justly belongs to a person. The mere fact that a person gets the money is, obviously, not automatic justification that it is earned in the moral sense and that they are thus morally entitled to the income.

In the case of taxes, the folks in question obviously get that principle: they believe it is their right to keep their money and it is not right for other people to get, via taxes, what they have earned. This is, as noted above, apparently based on a principle that people are entitled to the value they create. This is certainly appealing—if I have created the value, then that value is justly owed to me. However, it would also seem to follow that I owe payment for value received. Such, when I receive the goods and services of the state, then I am obligated to pay for their value—otherwise I am stealing from others and violating my own principle. But if my taxes are simply being taken from me and given to others, then it would seem that I am being robbed—the value I have earned is being taken from me, not to pay for the goods and services I use, but to simply give handouts to those who have not earned it. This seems to be clearly wrong.

At this point, it might be wondered what this has to do with wages. Fortunately, the answer is straightforward. If the principle is accepted that a person is entitled to the value s/he has created (and thus earned) and that for someone to take from that person is theft, it would follow that an employee is entitled to the value s/he has created. For the employer to take that value for himself/herself would be the same as if the employer was receiving money taxed from a worker and just given, unearned, to him or her.

It might be countered that the employer earns what s/he receives by the value the employer contributes. The obvious reply is that this claim is true—but this would entail that the employer is not entitled to profits acquired by underpaying employees or overcharging customers. Either approach is like the employer being taxed so that the money can be given to people who have not earned it.

It could be countered that the employer-employee relation is different because of things like market forces, abundance of laborers and so on. As such, an employer can justly pay an employee less than the value the employee creates by his/her labor because of these factors. The obvious counter is that an analogous argument could be made regarding taxation—that the various complex economic factors warrant taking money by taxes to give the money to those who have not earned it.

Thus, those that argue against taxes by contending that they have a right to what they have earned must extend the same principle to the wages of workers. They, too, would be just as entitled to what they have earned. So, if taxation is theft, so is underpaying workers. As such, the minimum wage should be the value of what the worker creates. Anything less that allows the employer to steal from the worker would be theft.

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  1. Professor LaBossiere,
    Inconsistency is like a deeply embedded sliver: the mind or body grows hard around the bit to seal off the irritation. Neither mind nor body is able to open itself to disgorge the canker.

    Besides that, the only remedy for hardcore conservatives is shaming for their abuse of the Queen’s or queens’ English. Taxation is not theft. It is forced spending. The hapless tax-payer is forced to buy things which have little or no value for himorher. At the same time, the hardcore conservatives are typically the first to line up at the Gov’trough for freebies and entitlements.

  2. Here’s philosopher Alex Rosenberg, Duke University, on whether we “earn” our wealth:

    The trouble for conservatives is that inequalities in wealth and income are almost never earned. That’s because the abilities and ambitions that produced the inequalities were themselves almost never earned. Each of our initial endowment of abilities, disabilities, temperament, character, intelligence, is a matter of genes and prenatal environment over which we had no control and so did not earn. These “God-given” endowments combine with environmental factors through childhood and youth to shape the way we “earn” our livings. But we had no more control over the contributions of family, teachers and others than we did over our genes. Being ambitious or slothful is no more a choice than being left-handed. If the difference between the rich and the poor is the difference between the talented and energetic and the untalented shiftless, then their inequalities are largely unearned.

  3. Some people earn more than they need. Some people could pay more taxes, particularly wealthy people.

    Removing minimum wage is bad for society in quantifiable ways too numerous to specify here.

    Raising taxes for science and basic research of any kind is directly useful for improving the education of a society. Raising taxes for welfare is useful for removing society’s need for charities, and, in general, organized religions (if there were a legitimate need). Let the government, in a secular fashion, decide how to give money to organizations, e.g., soup shops, book fairs, good will clothing, cancer foundations.

  4. The simple way out of the mess the politicians are in with minimum wages is simply to change to flat rate benefits for all citizens irrespective of whether they are working or not.
    Then they are guaranteed a ‘minimum wage’ whether they work or not, and the opportunity cost of employment is very very low, since payment by the employer would be over and above the actual minimum income guaranteed by the universal pension.

  5. Leo – you are surely joking guess? Where do you think the benefits come from, those of us who work. Payment by our employers to the Govt’s fisc (the government has the money of its own) has to be related to the profit the employer makes over his or her costs… Which we are part of. Why would we work so that others don’t have to…? Wait, we already do. Okay you win, let’s pay even more people not to work, that’s worked out so well so far (no pun intended).

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