Sen. Bernie Sanders (I-VT)
You’re introducing legislation that would (as described in this report ) “create a 100-percent tax on large employers equal to the amount of federal benefits that the employers’ low-wage workers receive.”
Under your legislation, the greater the number of income-earning opportunities that businesses give to low-skilled – and, hence, low-paid – workers, the more these businesses will be punitively taxed. Businesses that employ no low-skilled workers will escape your tax completely. Hmmm…. What effect do you suppose your proposal will have on the attractiveness of operating businesses in ways that create jobs for low-skilled workers compared to the attractiveness of operating businesses in ways that employ only high-skilled workers?
You’ll brush aside the point of my question by asserting that your legislation will give businesses incentives to increase the pay of low-skilled workers by the amount of the tax. This assertion of yours – like the proposal that it is meant to support – rests on the premise that workers’ receipt of government welfare benefits enables employers to reduce worker pay by the full amount of these benefits. But this premise then raises this question: Why not simply abolish government welfare benefits? After all, if your premise is correct, abolishing government welfare benefits will oblige employers to increase worker pay by the full amount of these abolished benefits. Low-income working families won’t suffer at all from the abolition of the welfare state, while Uncle Sam will have lots more money to spend on other of your pet projects.
Can we count on you now to lead the opposition to the welfare state?
Donald J. Boudreaux
Professor of Economics
Martha and Nelson Getchell Chair for the Study of Free Market Capitalism at the Mercatus Center
George Mason University
Fairfax, VA 22030
P.S. Here’s another question for you, Sen. Sanders. If your premise is correct, why does any employer pay any employee one cent more than the minimum wage? I’ll be very curious to learn your answer to this question, as well as to those that I pose in the body of my letter above.
(HT to Morgan Frank for alerting me to this report on Sanders’s latest proposal.)