If employers are paying employees more then they will raise costs to offset the added expenses. This will cause the buying power of the dollar to decrease, making it so people who received the minimum wage increases will not be making any more money than they otherwise would’ve, and people who did not have their pay increased, will be making even less money then they had used too. This would do nothing but increase the poverty rate even higher, doing exactly the opposite of what the counter argument says it would. The second way this counterclaim is disproven, is because of the increase people will see in the cost of living. With the price of housing, food, etc.
Is it ethical and rational to tax more on rich? Why must the rich pay more tax to help the poor? Although taxing more on rich seems unfair for the rich, it is necessary that rich people should pay more tax and the amount they pay are based on their incomes. First of all, the important reason that can be presented is that the rich people have utilized the public system more. As Elizabeth Warren said, "There is nobody in this country who got rich on his own.
In the job market, the increase in minimum wage will cause a shortage, making it less profitable for companies to employ many workers. This will result in higher unemployment. In response to such criticisms, the government has come up with a concept called the “voluntary living wage,” which is an “attempt to encourage firms to pay higher wages” (Economics Help). A living wage is an “hourly wage rate considered the minimum level to provide the essentials of modern living” (Pettinger, 2012). To put it into simpler words, a living wage is an adjusted type of wage that takes into account the average price level of the country.
However, in the long run these will have an effect on unemployment that will rise up and getting even worse. Moreover, most people are unlikely to be happy to accept higher taxes as it reduces disposable income and the level of consumption. A reduction of government spending may result in less people will support the government. Demand side policies will bring down the price level (reduce inflation), but they will result in lower national output and rise in unemployment. Therefore, government could use supply side policies to deal with the unemployment situation such as in interventionist supply-side policies will increase the levels of human capital of an economy by support education and training institutions with subsidies or tax benefits and for market-based supply-side policies will reduce trade union power.
Wealthy people have a higher income and consequently spend less of each marginal dollar, which caused the economic growth to slow. Economic inequality is also one of the reasons of the Great Depression that occurred in the United States in August 1929. The Great Depression period was when the country first went into an economic recession. This period caused massive unemployment and an economic downturned. Income inequality can also cause a lower demand.
Another argument refutes the claim that lower taxes for the rich encourage them to invest more which brings about economic growth. In the late 1920s and once again in the earlier part of the last decade, a lot of money was put into speculative investments than productive investments. Hence, increased government spending on improving the labour force and infrastructure through revenue generated from taxes can possibly be more effective than investments in driving economic growth. Now let us look at the other side of the coin – the negative impact of taxation. Taking into consideration other factors such as government spending, business cycle conditions and monetary policy, research has consistently pointed towards the fact that taxes have a significant negative effect on economic
Classical or real-wage unemployment occurs when real wages for a job are set above the market-clearing level, causing the number of job-seekers to exceed the number of vacancies. Many economists have argued that unemployment increases with increased governmental regulation. For example, minimum wage laws raise the cost of some low-skill laborers above market equilibrium, resulting in increased unemployment as people who wish to work at the going rate cannot (as the new and higher enforced wage is now greater than the value of their labor). Laws restricting layoffs may make businesses less likely to hire in the first place, as hiring becomes more risky. However, this argument overly simplifies the relationship between wage rates and unemployment,
America is losing its freedom and changing its economic system. By increasing minimum wage, America would be hurting its people, not helping them. Therefore, raising the minimum wage is not a smart move for America. Increasing the minimum wage would hurt the jobs of America profoundly. First of all, if one looks at it logically, increasing minimum wage increases the amount that an employer pays his employee.
A large economic inequality gap implies that the poverty levels are quite high and this implies that the country’s ability to provide amenities like health, education and security are crippled and this may eventually create economic burdens to the country. Acquired power shuffles among the rich can weaken tax policies in favor of the rich, thereby leading to low tax return collection and minimal funding of the economy due to lack of government revenue (Corak, 2013). Government Initiatives to Lower Economic Inequality a) Progressive taxation – governments and local authorities should tax the wealthy proportionally higher as compared to the poor and this will help to minimize the income inequality amount within the cities (Autor, 2014). b) Product subsidization or nationalization – by lowering the cost of basic services and goods such as healthcare, housing and food enables the government to effectively enhance the poor people’s purchasing power in the society (Autor, 2014). c) Public education – by providing affordable education systems to the society helps to increase the skilled labor force supply and thereby minimizing the income inequality brought about by the differentials in education (Autor, 2014).
He believed in a population-trap model that suggested that the income per person would eventually reach low equilibrium levels. In other words, the economic growth of a country may serve to increase the population size of the population, however it will not increase the living standards for everyone. Instead, it would create major disparities between the rich and the poor in a country (Firebaugh). The income inequalities of a country can be measured by several different measurement