Economical debate - minimum wage
Damian Gaby
As I promised earlier, I've decided to put forward to the taxpayers (and tax dodgers) a proposal to make changes to the Work Tax system.
First, a small explanation on how the system works. You are being paid a salary, let's say 100cc for ease of calculation. Off these 100cc, a percentage of it, called a Work Tax, goes in the country's coffers. Our work tax is currently set at 3%. Therefore, the employer pays 100cc, the employee gets 97cc and 3 cc goes to the state. All nice and good.
Now, as always, there are people dodging the system. The way they do this is they pay the minimum salary, currently 1cc, and the rest of the 99cc is paid by a direct donation to the account of the worker. Work Tax is therefore paid only on the 1cc, meaning the state receives 0.03cc for every work unit. The employee also benefits, as he now received the 99cc through the donation along with the 0.97cc that he takes as a normal salary, therefore getting 99.97cc instead of 97cc. Employee profits of course, state loses.
Now, there are two leavers we can pull to increase collection on the taxes: we can increase the Work Tax or we can increase the minimum salary. Let's look at each one individually.
Increasing the Work Tax - currently at 3% to say 5%. On a normal 100cc salary, this would mean that the employer still pays 100cc, but the employee takes only 95cc, with 5cc going to the state's coffers. On the lower end of the scale, the tax dodgers would now take 99.95cc instead of 99.97cc. The state's revenues would increase of course, but the biggest contribution would be made by the people who are receiving normal salaries, not by the tax dodgers.
Increasing the minimum salary - to say 5cc. This would not affect anyone that has a salary higher than the minimum, so whoever is paid normal work market salary would still be in the same situation. The tax dodgers however, instead of paying 3% on 1cc they would pay 3% on 5cc. This means that the salary they would take home following the same calculation as above on a 100cc salary paid 95cc through a donation and 5cc through normal game mechanics would be 99.85cc compared to the 99.97cc they are currently taking. The state's take would increase from 0.03 per one worked unit to 0.15 per worked unit. We are not going to become rich from this one, but any CC helps, especially when you are a small country like we are. If we were to increase the minimum salary to 10cc, then using the same example the 3% tax on that would mean 0.3cc, meaning that the employee would end up with 99.7cc instead of 99.97, so 0.27cc per work unit poorer, with the state being 0.27cc per work unit richer.
Downsides: as always with raising taxes, there are downsides.
If we raise the work tax, then the most affected people would be the guys on a normal salary. They would stand to lose the most, and to cut their losses they would probably start searching for employers that pay by donation. On the short term we may see some extra dollars coming in, but in the long term we risk increasing the tax dodging exercise and losing more money than we gain by the tax increase.
If we increase the minimum salary, then the only affected people are the ones who dodge the taxes. The risk here is that they may refuse to work for Australian employers and seek jobs with citizens of other countries where the minimum salary is smaller.
My personal opinion: I believe that the difference in take home pay from 99.97cc to 99.7cc for a tax dodging Aussie is too small to warrant a change of employer and therefore the losses linked to workers migrating out of the country would be negligible. Therefore, I am for increasing the minimum wage to 10cc.
As always, we are a democracy and there may be things I might be missing or reading wrong so by all means, let's start a discussion and see if we need to adjust the minimum wage or not.
P.S. The use of the term 'tax dodger' is correct, the only reason you would be paid through a donation is to avoid (dodge) the Work Tax. If the Work Tax would be zero, then there would be no reason to be paid through a donation.
Comments
WT hits managers not workers. If you have many companies or Q1, Q2 food factories then higher WT directly reflect to your profit.
True, I forgot about that aspect of it. This would add to the list of disadvantages for raising the work tax. Would raising the minimum wage affect the owner-worker situation?
No, even if min wage is 20 cc there would be not big difference.
We can talk about other solution, but it's hard to find the best way without some real stat.
In some way, also decrease the % can increase gains:
Example, 1% tax could avoid direct donations because little income make it inconvenient bother with donations.
Sorry for bad english. Hope understand. In any case, there's a way to find real stat about that? Should be hard. Only try can and feedback can givee us an idea.
That still fails to take into account where workers are paid in goods, as is often the case in commune arrangements. What if the work tax were decreased to 2% but the minimum wage was raised to $20. Or something. Not saying it's a good idea necessarily, just throwing it out there.
Sure, but probably would be good to try this out with little % changes to taste differences and study each change effect, also for citizens information.
As a guide, with our present average salary of $70, multiplying that by 400 gives a total national salary of $28,000 (although there may be some overseas workers working for eAustralian managers and vice versa).
Based on and our across the board work tax of 3%, we earn around $840 in income tax. For a 2% rate it would be $560 and for a 4% rate it would be $1120. Note that this isn't necessarily the fact, and as preciously mentioned by others changing the rate would change market behaviour.
I'm not sure that takes into account tax from manager work. Our manager work number according to http://www.erepublik-deutschland.de/en/tools/countryinfo is $2.11, I have no idea what that means so if someone could enlighten me that would be helpful.
I'm not sure if the average salary takes into account overtime either.
Ok I've answered one of my own questions. The manager work number is the amount paid by managers for each unit of work they do. It is calculated by the formula MW=AvgSalary*WorkTax. In our case it is $70.36*3%😳2.11
Ok so I misinterpreted it. The average salary is based on the number of salaries paid not the number of citizens. As far as I can find there is no measure of the total number of work units which are done each day for eAustralian companies. Well done erepublik. *sarcasm*
All good comments about the work tax. I would say however that any change to it still affects quite a big number of people. Certainly the impact would be bigger than changing the minimum salary.
Changing the minimum salary may also affect manager work as it will increase the average salary (no more 1cc salary when you make the average). I still think it's a good measure though. Does anyone have anything against it?
I'm in favour of testing the waters on a $5 minimum wage. Seeing the effect on the average salary should be easy enough, it seems to have been sticking fairly close to $70 recently. Testing the effect on anything else will be difficult though unless employers and employees give us feedback, and that feedback might not be reliable as I'm sure some would wish to preserve the status quo.
A trial period of 1 month does seem prudent. To me, 5cc seems a bit low, I would go up to 10cc, this will make it easier to spot the impact ib the daily taxes.
I'll give it one more day for the article to gather differing opinions, assuming no one comes with a good reason to say no than I will propose the law into congress. We will monitor it for one month (I'll put up some articles to get feedback from people and also ask around congress for their thoughts) and we can change it back if required.
I oppose both your proposals Damian.
First, on the rate of Work Tax (WT). WT is mostly paid by people using the work-as-manager function. I pay over 30 CC a day in WT to run my companies (compared to 5 CC in direct wage work tax). Making this cost higher isn't going to encourage me to build more factories. In the worst case, where I lose money, I'll stop running the Q1 factories and Treasury will be the poorer as a result.
On the minimum wage setting. Honestly, I don't know any people using it as a tax dodge. It seems like a lot of actual clicking work to save a measly amount of money (really, 2 CC is peanuts...). I do know people who run weapons communes. That is, you work for minimum wage and receive weapons in a weekly drop. Many MUs around the world operate on this basis. Why should we make it harder? Minimum wage communes help keep the average wage (and thus the work-as-manager WT amount) down. $2.11 is higher than most other eCountries - even those with full bonuses.
Valid point Ilene, thank you!
Looking around the eWorld, the minimum wage seems to be around the 1cc mark, but the work tax varies from 1% to 15% (USA). Now, admitedly, these countries have big bonuses, but the most common value seems to be 5%.
As for the comunes, yes, most countries have a 1cc min salary. However, there are countries that make it work with 8cc (Serbia) and I am sure that they have quite a lot of work comunes. Japan also has 3cc for example.
And while I know youbare not fond of tax dodging expression, working in a commune is done to do just that, avoid paying work tax and VATvon buying weps and food from the market. The point of the commune is to dodge the taxes.
Even when considering thebwork communes problem Istill believe that an increase to the minimum wage will bring more advantages to the state then dissadvantages. The value of the increase could be smaller, say to 3cc maybe like Japan, rather than 10, so as to not make things to difficult for the communes to adapt
Actually on the average salary thing. An increase to a $5 wage would be interesting as by looking at the resulting increase in the average salary we would be able to get some vague idea of how much of the labour market is composed of minimum wage employees.
I maybe wrong here, but to find out an avg, wouldnt you need to know how many jobs are on offer/being worked. If you lets say increase the min wage to 5cc a day, you saw the avg wage increase to let say 72cc a day, you will be able to see that there are jobs being offered/worked for 1cc a day, but the percentage would be still unknown. As you do not know how many jobs make up the total job market and the range of wages in that job market.
Hence why I said a "vague idea," not an "exact idea." If the average jumped $2 with a $4 minimum wage increase, that would indicate a large number of minimum wage jobs. I doubt it would be that many, but I guess we'll soon see.
Let we accept min wage of 20$ and if there are unhappy producers we can always change it. Those who are affected will present us the calculations and if they are reasonable we will find the perfect ratio.
That's what I though asc well, though 20cc seems kind of big. I'd go 5cc, see if it makes a difference. Will propose the law later tonight.
Spending so much time of writing and thinking for such small difference is not serious. Let we make bigger step and you will see that average salary will not move because we don't have many workers hired on 1$.
If we were a nation with many farmers with FRM and WRM companies then all farmers will be happy to have lower average salary, because they will score bigger profit while working as manager. What they do? They hire players paying high salary first and then they message them with offer of commune working, for example working for 1$ but taking 6 or Q7 weapons instead.
I doubt that we have so complicated structure in Australia so changing WT will not affect anyone much, but I am for changing - just for breaking the boredom and to provoke some discussions.
Later tonight???
You proposed the law right on the moment after writing your message 🙂
Running out of battery on my phone, may not be here later tonight 🙂. Realised that after I wrote the message, sorry!
Well there goes the commune, you just cost me 500% more running costs ....
This is why producers need to get involved in the discussion. Publish an article, tell us what you're doing and what you need. What difference any changes you are asking for or any which have been proposed would make for you. It would make my job as MoF a lot easier. Getting data from producers has been more difficult than getting blood from a stone.
Also if it is a true commune then surely you only need to adjust the amount of goods which each worker receives for their effort. Unless it's a MU supply commune which might be different. In which case see my replies to your comment on my weapons industry article.
What you run a commune??? and your not called a black market profiteer? what has this world come to.
As I said on the weapons article, I'm treating MU communes as a special case, although HT8 still hasn't confirmed or denied that his commune is one of those, although I note that he is a commander of the KH and you are a commander of the CFH.
But my argument about the need for data to inform my decision making still stands, in this case around the set up of MU communes, their productivity numbers, the benefits they bring in terms of defence outcomes, and exactly how any regulatory changes they are for or against would effect them.
There are only half a dozen major MUs in eAustralia. Surely collecting together some basic data, which I'm willing to keep confidential, shouldn't be an impossible task. The only details I speak publicly about are the government's own figures, or those which are already have already been made public by the people in question.
Do I make mistakes? Sometimes. Do I correct them? Usually. Do I work hard for no pay and put up with a lot of belligerence? Certainly. It's easy to constantly criticise but easier still to back up what you say with some numbers, which is all I ask.
I am still waiting for your response to the comments where you branded me a black marketer: https://www.erepublik.com/en/article/australian-congress-2579501/1/20
There you made a point it was because I have people working for 1cc/day and/or sell packs.
In regards to my MU, that is my MU's business and not the governments, I have not had one government minister ask me about damage, request for it to be directed somewhere or anything like that. When my MU did release a public DO, due to the lack of the government one, I was branded as a shadow government.
In regards to my private industry, your round table talks, you basically said I was only trying to look after myself. And dismissed any idea's presented, however by the sounds of things, you are looking at a government sponsored scheme, which was something I suggested to you weeks ago, but it was labeled a left wing agenda topic.
The min wage debate, myself and Damian spoke about it before he proposed, as he asked question of me, since he knows I am a producer. I am all for a raise of a min wage, my industry can support high wages.
As for your request for numbers, all those will not be forth coming by me, until a bit of respect is shown.
As you have stated you no longer sell on the black market I have provided a follow up comment stating I withdraw that part of my comment. I can't unfortunately edit the original comment as there were other things mentioned which there were follow up comments about.
When you mentioned government sponsored schemes I said I was in favour of the idea in principle, and clarified that I mean left wing as a compliment as that is the side I lean to. It needs to be the right scheme with the right settings though and it needs cross party support due to its long term nature.
I'm happy to hear you're in support of the $5 minimum wage in your private business, but I am still interested in the MU side of things, especially if it will effect our defensive capability
Regarding the MU daily orders, I have no reason to doubt that the 3 main MUs are setting orders in line with the national defence strategy. I cannot vouch for some of the smaller ones, although they are perhaps less active both in battle and commune work anyway.
As for the numbers you are under no obligation to provide them, and you could have refused from the outset and saved us both the trouble. But realise it may affect my decision making, and how much I can take on board your assertions. I can only work with the numbers I have.
In the next day or two I will be sending a separate email to each of the 3 main MU commanders with the same list of questions. If from the responses I find that the increased minimum wage will adversely effect them and there is no other way around it, I will propose that itns be decreased again. I will also use the answers provided to see what else I can do to help the troops from the standpoint of either changes to economic regulation or government schemes. This will need to be balanced against any effects those same changes may have on the economy as a whole. I realise there isn't necessarily a magic number there but perhaps some improvements can be made.
I don't buy gold, I don't sell products, what I do is what KH/Hawks has done for like 6 years ....
We (well only me now as other KH producers have left or died in RL) don't profit from our citizens, we are all about giving our soldiers top quality weapons for merely working at min wage, this allows me to run a commune with the net profit (Q7 weapons) being entirely handed back to our soldiers, with no bonuses it's hard and can't afford a real wage for my guys 🙁
There was a time before Plato went and fucked things up that I could actually pay top wages AND deliver weapons and food, and still made a profit !!!!
But those days are long gone and all we have now is a dwindled down supply system that is hard to maintain .... So my issue is that if you make it hard for people like me then you hurt not just 1 person but a whole battalion of people ....
and then expect that battalion of people to do damage for a country that is trying to stop them producing the weapons they use to fight for that country.
While I do not know the inner workings of your commune, I am guessing the people there are not forced to work for you, they choose to work for you and are happy with the contracts they have. They are happy to follow your DO's you set, which being an Aussie MU, I am guessing are for the interest of Australia and her allies.
I have supply records dating back like 5 years .....
The KHs has "Officially" supplied like 300+ people non-stop over the past 5+ years while they were part of our crew .....
If we were to add all the gold, weapons, food, moving tickets etc in the mix it would easily reach over 1000 people, and because of those actions we saved eAus many times in the past, also all the other countries that we liberated because we were so efficient and effective.
Yes times have changed, many that were with us have faded away due to a plethora of reasons, but in the spirit of Sam Cougar we stand strong and I believe 1 day we will rise again to be the dominating force in eAus, but in the current global climate we can't facilitate the supply demands needed for protecting our shores from outside forces, let alone inside ones ......
So yes I disagree with certain tax changes 😛
For future reference the average salary sits at $68.45 at the time of the minimum wage increase to $5. It was about $70 yesterday. It'll need a month I think to see the full effect on the average due to the way they calculate it, but we may well hear from MUs about the state of their communes before that.