I think that it would be wise for US Latinos to be very
active in the current US Fiscal Cliff deliberations to ensure that they are
treated more fairly on economic issues.
Let me just mention four economic policies that are unfair
to US Latinos, and which they should consider pushing for changing in the
current Fiscal Cliff negotiations.
First, the federal minimum wage is much too low…..it is not
even close to being a living wage.
The best solution would be to increase the federal minimum
wage significantly. Since given that probably not a single Congressional Republican in either the US House or in the US Senate would vote for it, at least at this point in time, here is a back door way to effectively
increase the federal minimum wage for at least 2013 in the Fiscal Cliff
deliberations.
The payroll tax holiday was 2% of first roughly $110,000 of
Wages for 2012. This is patently unfair
to those making lower amounts of wages.
Someone making $20,000 in 2012 only received $400 (2% X $20,000) of a reduction
in his payroll taxes.
On the other hand, someone making $110,000 of Wages in 2012
received $2,200 (2% X $110,000) of a reduction in his payroll taxes.
Is it fair for someone to be lucky enough to have a higher
paying job to get a reduction in his payroll taxes, which are 5.5 times that of
someone really struggling financially with a much lower-paying job? I don’t think so. That’s not economic fairness.
One way to correct for this unfairness is for the US
Congress, in the fiscal cliff deliberations, to give a payroll tax holiday on
the entire 7.65% of payroll taxes on the first $20,000 of Wages earned in
2013. That would yield a reduction in
payroll taxes of $1,530.
Then, I would also consider giving a 60% payroll tax holiday
on the 7.65% of payroll taxes on the next $10,000 of Wages earned in 2013. That would yield a reduction in payroll taxes
of $459.
And lastly, I would also consider giving a 30% payroll tax
holiday on the 7.65% of payroll taxes on the next $10,000 of Wages in
2013. That would yield a reduction in
payroll taxes of $230.
When you add this up, you get $2,219 of total payroll tax
reductions on the first $40,000 of Wages earned in 2013, which pretty much matches what those
making $110,000 and above in 2012 received.
And the added benefit here is that this robust payroll tax
holiday, targeted to benefit mainly the neglected Underemployed, will sharply stimulate the US
economy in 2013, just as extending unemployment benefits will do.
Now clearly, it would be nice to make this back door minimum
wage increase from this robust payroll tax holiday last for more than just one year.
But unfortunately, the Republicans will fight hard to keep this from
happening.
Second, on US individual income tax returns, the personal
exemption should be converted from a dollar amount deduction, which clearly
benefits higher income individuals, to a fair flat tax credit per exemption.
Third, on US individual income tax returns, the standard
deduction should also be converted from a dollar amount deduction, which
clearly benefits higher income individuals, to a fair flat tax credit.
And fourth, the US Congress should make changes to the
employee vs. independent contractor rules, which now clearly favor US
businesses over people working for them.
So many US
companies, especially very large ones, will use every device in their arsenal to
classify someone working on their behalf as an independent contractor, in order
to avoid payroll taxes and other employee benefit costs. What’s going on here now is a moral outrage,
and the US Congress needs to address this issue to more fairly balance the
employer/worker situation.
And all four of the above proposals will help provide a path for those laboring hard to get into the US middle class, as well as a path to build the
US middle class out, both visionary key goals of the Obama Administration.
