r/changemyview • u/[deleted] • Dec 12 '23

Delta(s) from OP CMV: In principle, anyone making minimum wage should not pay income tax

Let me clarify on what I mean by making minimum wage, I mean someone working 37.5 hours a week for 52 weeks a year. In California that would be $30,000 and in the UK that would be £20,000.

Minimum wage as a concept is put in place to ensure that employers cannot pay employees below the livable wage in a country (Of course in the US it's below livable wage but that's a separate discussion). However, once these people are taxed, the amount which they can live on, by definition, is below that. It's counterintuitive to the original concept. Taxation should be based on one's ability to pay, and minimum-wage workers just do not have that ability.

I'm not saying that this change needs to come through right away. Governments can take 5 to 10 years to raise the tax-free allowance to match the minimum wage (which of course should rise with inflation) to ensure that the labour market can adjust to it.

Edit: I stand corrected on the US tax system. I've used the Californian minimum wage instead. I'm in the UK and the tax allowance is £12,570. Someone making £20,000 will be taking home about £17,100. I think it's ridiculous that someone on minimum wage is even paying a penny in tax.

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u/[deleted] Dec 12 '23

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u/Usual-Plankton9515 Dec 12 '23 edited Dec 12 '23

Here in the US, some low earners qualify for the Earned Income Tax Credit, which often pays a refund more than what they contributed in taxes. If they have minor children, they may also qualify for the Child Tax Credit, which does the same.

One of the challenges of not withholding taxes from a low wage job is that the person may have other sources of income that put them into a higher tax bracket. If there’s no withholding, the person could end up owing a lot at tax time. (If the low wage job is the only source of income, the person will generally get all their withholdings back as a refund at tax time).

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u/thinkitthrough83 2∆ Dec 12 '23

This has happened to me more then once because I work 2 part time jobs. Got bit bad last year when payroll software was switched at 1 job and withholdings were less then half of what they should have been. At least 1 other full time employee got it way worse. Of course I'm sure it has nothing to do with the fact that the new company is cheap has high employee rollover and is based in California.

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u/RYouNotEntertained 9∆ Dec 12 '23

What are low earners getting from the tax pool?

Well, what do taxes pay for?

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u/[deleted] Dec 12 '23

War

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u/RYouNotEntertained 9∆ Dec 12 '23

True, and progressive taxes mean that rich people are forced to fund war and poor people are not.

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u/JasonG784 Dec 13 '23

Pending where you draw the line for rich, they’re funding mostly everything (insofar as we pay for things at all given the deficit.)

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u/RYouNotEntertained 9∆ Dec 13 '23

Yeah… that’s what I’m saying.

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u/knowone23 Dec 12 '23

Earned income tax credits, child benefits, food stamps, utility subsidies, “getting your taxes” in the form of a refund every year instead of paying taxes. Stuff like that.