Worker Wages: Wendy's vs. Wal-Mart vs. Costco

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estesbob said:
Because the housing industry provides millions of jobs and is a driving force in the economy.
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The airline industry provides jobs for a lot of people, should we let people deduct the cost of airline tickets? Actually in Canada does not allow mortgage interest to be deducted and their housing market is as healthy as ours, if not healthier.
One has to look at the unintended consequences of eliminating deduction or fiddling with the tax rates-ie the total collapse of the real estate market when capital Gains tax was eliminated which lead to the Savings and Loan debacle
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Actually the seeds to the S and L debacle were started in the 70s when they had to pay more interest to get deposits than they were receiving on mortgages. The least of the problem was the capital gains tax change, because after all other asset classes did fine after the 86 tax reform. Now the government did over-encourage real estate in the early 80s, by shortening the depreciation time to 19 years in some cases and allowing real estate losses to offset ordinary income. These were taken away in the 86 tax reform. Which should be fair warning that the government has no business picking winners through tax policy.
 
stinkcat_14 said:
The airline industry provides jobs for a lot of people, should we let people deduct the cost of airline tickets? Actually in Canada does not allow mortgage interest to be deducted and their housing market is as healthy as ours, if not healthier.

Actually the seeds to the S and L debacle were started in the 70s when they had to pay more interest to get deposits than they were receiving on mortgages. The least of the problem was the capital gains tax change, because after all other asset classes did fine after the 86 tax reform. Now the government did over-encourage real estate in the early 80s, by shortening the depreciation time to 19 years in some cases and allowing real estate losses to offset ordinary income. These were taken away in the 86 tax reform. Which should be fair warning that the government has no business picking winners through tax policy.
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Exactly.
 
estesbob said:
Businesses
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There is nothing wrong with businesses taking deductions. But for an individual, mortgage interest is not a business expense, so there is no economic justification for it. Similarly, student loan interest is not a business expense, yet it is deductible. Once again, no economic justification for it.

Income is money you have to spend. For a business, revenue is not income because there are costs of generating that revenue.

So the question is, what is the problem with a flat tax on income?
 
stinkcat_14 said:
There is nothing wrong with businesses taking deductions. But for an individual, mortgage interest is not a business expense, so there is no economic justification for it. Similarly, student loan interest is not a business expense, yet it is deductible. Once again, no economic justification for it.

Income is money you have to spend. For a business, revenue is not income because there are costs of generating that revenue.

So the question is, what is the problem with a flat tax on income?
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So who decides what is justified and what is not? The problem , again, is there is no agreed upon definition of income. Can the company salesman who is paid w2 wages deduct his car expenses? His counterpart who is independent can.
 
Orogeny said:
How can it be unjust unless one HAS to work for that employer?
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I think that would be the definition of monopsony. If there was only one employer buying labor then prices may be artificially low because there are no alternatives. That would bring a moral problem.

On the other hand, the low end labor market is actually pretty competitive. I knew a guy who was a home improvement contractor and he had a hard time hiring help because grocery stores would pay more for easier work.
 
estesbob said:
So who decides what is justified and what is not? The problem , again, is there is no agreed upon definition of income. Can the company salesman who is paid w2 wages deduct his car expenses? His counterpart who is independent can.
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I think it is clear that in the case of the mortgage interest deduction that it is incompetent in determining what a legitimate business expense is.

The problem is that the government defines income for tax purposes in an insane manner. If you pay mortgage interest your taxable income may be lower. For what reason exactly? No good economic reason and from what I have read it actually may be a more accidental policy, since in the old days of the income tax we had many farmers and for them interest was a legitimate business expense, but it certainly not for most households. Unless you want to count imputed rent as income, then it would be a legitimate expense to deduct.

Or take the fact that employer health insurance premiums are not taxable? Where is the economic justification for that? If my employer pays me in the form of health insurance I am not taxed, but if I have my employer buy me health insurance it is not taxed. Once again health insurance is not a business expense, but a consumption item. We have a tax system that only a socialist would love because it is based on the premise that we need the government to tell us how to spend and invest our money.
 
stinkcat_14 said:
If there was only one employer buying labor then prices may be artificially low because there are no alternatives. That would bring a moral problem.
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Only if one wasn’t allowed to move to an area with more than one employer.

I had to leave my hometown and all the friends I grew up with to take a job in the field I hoped to make a career of. It wasn’t what I wanted to do but it was definitely something I had to do.

Peace

Tim
 
Orogeny said:
Only if one wasn’t allowed to move to an area with more than one employer.

I had to leave my hometown and all the friends I grew up with to take a job in the field I hoped to make a career of. It wasn’t what I wanted to do but it was definitely something I had to do.

Peace

Tim
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My guess is that wages in North Korea are probably unjust.
 
stinkcat_14 said:
Or take the fact that employer health insurance premiums are not taxable? Where is the economic justification for that? **If my employer pays me in the form of health insurance I am not taxed, but if I have my employer buy me health insurance it is not taxed. **
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:confused:
Once again health insurance is not a business expense, but a consumption item. We have a tax system that only a socialist would love because it is based on the premise that we need the government to tell us how to spend and invest our money.
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👍
 
stinkcat_14 said:
Sorry about that. What I meant is that if my employers buys my health insurance, that compensation is not taxed, but if I get cash instead of health insurance (which some companies offer) it is taxed.
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Thanks.

I do think health insurance benefits will soon be taxed, though. We are already required to report the benefit (informationally) on the W-2 as of tax year ending 2012.
 
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