It's Not A War On The Rich, It's About Growing Our Economy
Upworthy writer Maz Ali wrote an article (read here) showing the disparities between the effect of Wall Street bonuses, JUST their bonuses, and the total earnings of every full-time minimum wage worker in the U.S. Ali cited data done by the Institute for Policy Studies analysis of New York State Comptroller and Bureau of Labor and Statistics (BLS) data for the article. In the first chart (here) it shows just how much the difference is. While Wall Street bonuses for roughly 165,000 employees totaled $26.7 billion, minimum wage pay for almost 1.1 million workers was $15.1 billion. In the second chart (here) Ali shows just what the multiplier effect on the economy would be if that $26.7 billion were in the hands of minimum wage workers instead of Wall Street bankers. The results show that 80% more money would flow into the economy than just giving it Wall Street. This isn't to say that Wall Street does or doesn't deserve the bonuses, but it does show exactly how to help better our economy. The question then becomes if we're serious about improving our economy how do we fairly reallocate some of those bonuses to low wage and average workers in order to take advantage of that growth?
The best option would be to raise taxes on high earners (those making over $1.5 million) and raise the minimum wage to roughly $11.50 an hour, bringing their earnings to roughly $24,500 a year. The raise in taxes should be just enough to offset the increase in minimum wage. Why? This is in order to give the government some power to provide employers incentives to pay their low wage employees more with a temporary tax credit . The money raised in taxes can be used to offset the cost to the federal budget caused by the tax credits, which would only be in place for 2 to 3 years, giving small business owners who may not have the demand to pay the increased wages a safety net. That 2 to 3 year safety net affords small business owners a reprieve until the increase in demand caused by low wage and average consumers having more money to spend kicks in.
Let's be clear; this isn't about punishing the success of Wall Street, it's about finding ways to get more money into consumers' hands so that our economy has sufficient demand. Taxing those who have the much more money than needed to provide for their basic needs and wants in order to grow the economy is the least harmful way to improve our economy. Low wage workers end up making more money, thus allowing them to take fewer federal benefits and decreasing the need for others to do so by stimulating the economy with much needed consumer spending. As Ali points out such policies aren't about a war on the rich but are instead about a better return on investment for our economic system.