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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: If||Date: 10/11/2012 4:38 PM|
|Author: desertdaveataol||Number: 405818 of 455593|
Personally, I don't think personal income taxes (which seems to be where you're headed) play any role whatsoever in a business' willingness to hire. Walmart doesn't care whether their employees are paying 1% or 80% on their income, they only care whether or not their customers have money to spend.
Hummmmm... where to start...
OK, if we stipulate that the employer needs to pay employees enough to eat we have a baseline. The higher the personal income taxes the higher that baseline has to be in order for the employee to have enough left over after taxes to eat.
So in a place like NYC where employees pay personal income tax to the Federal, State & City government the employee's wages must be higher for the employee to eat.
Higher wages means greater expense which means higher prices. If (as in your example) Walmart employees are giving up 80% of their pay in taxes then Walmart must pay higher wages for the employee to be able to afford to eat after losing 80% to the taxman.
Hiring another employee would simply double the burden.
There's another aspect to this: the underground economy. If an employee is willing to work off the books both parties benefit financially.
Also, the customer who's lost 80% of his or her wages to taxes has that much less to spend which does effect their spending which does effect a businesses cash flow.
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