Save Social Security without raising taxes

And stimulate the economy too.

I've been doing some thinking, that's dangerous in itself, but anyway.

I sent a letter to Paul Krugman this morning, for his input, because I had to make a few assumptions, as I couldn't find all the data I needed.

According to the Bureau of Labor Statistics, there were approxomately 112 million people employed in Feb. 2005. I couldn't find the exact data, but I assumed about one quarter of them earned the minimum wage, or 28 million. They would work 2,080 hours per year, based on a 40 hour work week.

An increase in the minimum wage of $1 per hour would generate 58.2 TRILLION dollars in earnings, almost all of which would go right back
into the economy. In addition, the payroll tax of 8%, combined employer and employee contribution, would generate an ADDITIONAL $4.6 TRILLION dollars in new Social Security revenue.

Did I make any mistakes?

the min wage increase.

back to the economy.

Message removed by moderator. Click here to review the message board rules.

While one simplistic effect of an increased minimum wage is to increase labor expense and thereby reduce corporate/business profits (and the corresponding income tax revenues), this is neither a 'Bad Thing™' nor a net effect. When workers are paid more, especially those earning the least, they spend more - especially in the most basic segments of the economy: food, shelter, clothing, and health care. That spending is income to business.

When workers are paid more, it becomes earned personal income which is currently taxed at a higher rate than either unearned personal income or business income!!! Thus, especially considering sales taxes (which businesses most often do not pay) in addition to income taxes and FICA, any increase in wages and salaries has a net positive impact on tax revenues!

In your 'arguments' (1) and (2), you claim impacts which are mutually contradictory. In any business, an increase in any expense (cost of goods/services) either reduces taxable profits or is recaptured in pricing. The same dollar does not have both effects: it either has one or the other! And any such effect is neither the only effect nor the net effect.

Your 'argument' (3) is not only a myth which has never been seen as an impact of the several times the minimum wage has been increased, it's a frequently-spouted right-wing talking point. It's a myth. It's not supported by the facts.