During college at East Carolina University, I did research on the “Cost of Living.” Throughout my research I found that wages were not keeping pace with the Cost of Living. I took an average cost of one individual living in North Carolina. I evaluated travel, housing, insurance, groceries, utilities and clothing, the basic necessities for living one year in North Carolina. I considered rent/mortgage, vehicle payments/insurance, health insurance, eating habits, travel habits, fuel expense, utilities expense and necessary maintenance.
The outcome resulted was: wages were not increasing to offset the increases in everyday costs. Inflation is constantly cutting into take home wages. I concluded that it cost between 12 to 17 percent of an individual’s income just to drive back and forth to work when you factor in fuel, maintenance and insurance. By time you factor in the additional costs for an individual to operate/live you will find there are no funds left for savings or investments.
All these factors resulted in my plan to make minimum wage tax-free. In eastern North Carolina most people live at or below the poverty rate. If we were to allow each worker to make minimum wage tax-free it would allow them to have some additional disposable income to cover many of the increases in cost of living.
My proposal would allow every worker to make $15,080 per year tax-free and keep their exemptions if they had dependents. If they were married it would calculate $30,160 per household. It would replace the earned income credit for filers without dependents. In the case of filers with dependents the earned income credit would kick in to reduce the individual taxes even more to help taxpayers cover their cost of living and the increases they incur weekly. It would hopefully allow them the opportunity to start saving for unexpected events such as car/home repairs. It also cuts governmental administrative costs by not having to process refunds or tax returns for these filers.
If this program were passed, it would have an immediate impact on our local/state and federal economies. The additional disposable income would go directly into the economy to help taxpayers pay for the necessities they need daily resulting in more revenue for businesses and more tax revenue for the taxes incurred on purchases.
When passed by the state or federal into law it will stimulate business growth and save jobs without increasing the minimum wage rate. If Congress decides to increase minimum wage it will only hurt businesses, employees and consumers. Businesses will be forced to cut staff and hours while at the same time increasing their prices. By time we factor in these, employees will have returned to or below the current minimum wage rate they started. Another factor is, the taxes withheld will be greater for employees and employers because of the wage increase.
Our leaders would not be benefiting wage earners making more than the minimum wage by increasing the rate and my proposal benefits all workers the same. We need to reconsider raising minimum wage as some propose because it will not be the raise most employees expect. It may actually be a wage reduction.
I have discussed this with a state senator this past week who exclaimed it was realistic and he was amazed that he had not heard something like this before; especially not within the house or senate. The proposal has been shared with many state/federal officials in North Carolina and several other states.
As an aside, I have never had any type of written response in support of or opposing this plan. In multiple meetings throughout North Carolina over the past four years it has been enthusiastically received by all constituents, for whatever reason the message never got past the meetings. At all cases elected officials appear to be the least aware of this alternative to forming committees administrative make work, more rules and regulations when all it needs is, just do it. Step one, contact your local representatives. If you agree that this sounds like a plan let local officials know it.
Remember, in North Carolina we get to elect’em again. Since wages require a job to begin with, I will be following this up shortly with a very basic and simplistic Job development Program that can be implemented at any level in any place. Your response welcome at www.taxfreeminimumwage.com.
— Arthur Rich is an East Bladen High graduate who ran for North Carolina lieutenant governor and Congress on the Republican ticket.