Max asked a very important question, which desrves more time and attention than it can get in this forum, but tossing out some ideas may help get the discussion going. Peter Dorman wrote: Max, I think there are arguments for both average wages and CPI as indexing options, but I would offer this argument for average wages: it has the potential to become an international standard. In thinking about labor standards that might be pushed internationally, minimum wages are central. It is difficult to write a standard that would be applicable in all countries -- even the standard of "meets minimum subsistence needs" is difficult to define and measure. But pegging the minimum at, say, half the average is perfectly feasible, and low-wage countries can't complain that it has a differential impact on them. Putting our own minimum wage system on this type of automatic pilot would be a small step towards attaining a global minimum. ------------------------------------------------------- I agree with Peter that setting the Min wage at one-half of the average has the advantage of being used as a small step toward establishing a global minimum. But it may not help US workers much. As other posts have pointed out, average real wages in the US have been dropping since 1979 (with very minor increases the past two years). Thus, if the min wage was pegged to average wages, it would be going down as well. Thus, I would propose a two step adjustment (similar to the recently passed initiative in WA state.) First, raise the min wage to one-half of the average wage (which is what it was back in the 1930s and the 1960s), then index it. But then we have to decide what to index it to. If we index for inflation, you then need to decide which inflation index to use - CPI, CPI-UX, GDP deflator, etc. It might be better to index it to productivitity. In the current situation, firms are upping productivity thru downsizing and speed-ups. They are not able to raise prices because of intnat'l competition. So if the min wage were indexed to the CPI, no increase goes to workers for the increase in their productivity. All of the productivity increases go to shareholders as profit increases. If the politicians really believed the neo-classical dog shit (oops theory), they would note that wages are supposed to reflrect productivity. So if productivity goes up, wages should go up. By indexing the min wage to productivity, the gov't would force wages to follow NC theory! WRT tax policies, that is not my specialty but a general suggestion and three specific ones. In general, the policies should aim to return the tax structure more toward what existed prior to 1980. The share of tax revenues from corporate income taxes has plummetted, while corporate subsidies and tax expenditures have gone up. I am sure Max has a great list of tax breaks to corps that could be eliminated. Increasing marginal tax rates on the ultra wealthy is a good idea, tho politically unlikely. So is a tax on wealth. All those CEOs,etc get the majority of their compenstation as stock options, which shows up as wealth. Four specific ideas. 1) Currently, payments made by firms to cover future pensions promises are fully tax deductable. The same tax break should be extendied to all workers. Make worker "contributions" to social security tax deductable. Currently, the amount paid in payroll taxes for over 60% of workers exceeds their income taxes. Cutting payroll taxes would help the right wing gut social security, but deducting payroll taxes from income would not have this impact. In fact, if these "contributions" were deductable, there would be much less resistance to raising the payroll tax rates in the future if (which is highly unlikely) there is a shortfall in covering social security payments. (NOte: this tax changes starts us down the road of coviring social insurance out of general tax revenues - which the way it is done in most "civilized" countries.) 2) Increase the tax deductable contributions to IRAs. This is not a radical idea - it benefits the upper middle class more than the poor. But it is still worthwhile. Workers covered by company pensions now get tax preference for retirement. Uncovered workers do not, except for the small amount they can put into IRAs. The limit was set at $2000 and never changed. This could be reaised to $5000, which would benefit the middle class, but not the wealthy, and would not help the poor. The only way to help the working poor in retirement is to INCREASE social security benefits (which is also a good idea - but right now preventing a decrease in benefits is the battle) and/or making private pension coverage MANDATORY (which is not really a tax policy). 3) Implement a tax on the "big casino." This is the Pollin/Baker idea from the 1994 Nation article. Put a tax on every finanacial transaction. If there is a tax on buying milk, there should be a tax on buying stock! Pollin/Baker proposed a tax of 0.5% on each transaction, and note that with the techno. changes in the markets, this would still make these transactions cheaper than they were in 1980. Why is that necessary. Make the tax a full 1%, or even 1.5%. If the transaction makes "economic" sense, it will still occur. But if it is purely speculative gambling, then it might not. Pollin/Baker also propose taxing bond trades, based on the length of time held and maturity dates. This also makes sense. Finally, add it the Tobin tax on currency trades. 4) Raise the capital gains tax back to at least match the income tax rates, or preferably higher. It is important to always stress the "logic" of the current tax system, to expose it to public scrutiny - if you have to work for you income, it is taxed, but if you don't do anything to get it, you get to keep it!! Note: 1 will reduce tax revenues significantly. 2 will reduce revenues only slightly. Thus we would need 3 and 4 to make the changes "revenue neutral," which is the current mantra. Doug Orr [EMAIL PROTECTED] Max Sawicky wrote: > > Apologies for interrupting the anti-imperialist struggle, > but I'd like to know if there are any thoughts here on > how to best index the minimum wage. Possibilities > include the CPI, average wages, productivity, etc. > > Another issue is progressive tax cuts, to contrast > with the proposed 15% across-the-board rate cuts > being pushed by the GOP. > > (I'm writing economics resolutions for the ADA > convention this week.) > > mbs
