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PaperclipPerfector  2mo ago (text post)   33969 thread views

Culture War Roundup for the week of September 9, 2024

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This overtime proposal is interesting since it only rewards people who are already working more than 40 hours a week.

Policies like this always take too static/naive of a world view. You imagine how people currently behave, and This rewards people who are "working" more than 40 hours a week after all of the employers and employees update their behavior to exploit the new system. Instead of offering a 40 hour week at $20 an hour, companies can offer $10 an hour for 40 hours and then with 10 $30/hour "overtime hours" of make-work to make up the difference. Maybe they'll have people be "on call" so it counts as overtime but doesn't actually add work.

And then the salaried people will all want to be "hourly" so they can get two thirds of their pay count as "overtime". Your $80k/yr Secretary and your $300k/yr chief engineer are going to become hourly employees whose total yearly pay just happens to coincidentally always adds up to approximately $80k and $300k respectively, but technically half of it is overtime. A lot of the more highly paid people already work more than 40 hours per week anyway, so it wouldn't be too hard for the business to fudge the values around and count their pay as overtime. And for the people who don't, again I'm sure the business could just make make-work for them to technically count as overtime, while shuffling the numbers around to keep their total pay the same, or even less, since if the employee is paying less taxes their effective pay is higher even at a lower nominal value. And that's why the companies would go through the effort of doing this. Why pay $60k for an employee when you can pay $50k to one who gets to evade taxes via loopholes?

I get the sentiment of wanting to pay blue collar workers more in a way that doesn't enable welfare leeches. But this isn't the way to do it without some serious modifications to fix the incentive structure.

What's wrong with any of these incentives either politically or in the absolute? It rewards Trump's friends and punishes his ennemies by transferring ressources away from state administration managers and into individual lower class people's hands.

It's good politics at it's most obvious. Raises up your voting base, sounds good at a glance (everybody likes lower taxes) and doesn't cost you much because everyone in the race is running on deficit spending.

Hell you can even spin this as equalizing worker relations. In the world of mostly overtime, you can strike without striking by just doing the minimum your contract requires.

What's wrong with any of these incentives either politically or in the absolute? It rewards Trump's friends and punishes his ennemies by transferring ressources away from state administration managers and into individual lower class people's hands.

Yes, in the sense that it is a creative tax cut, for eventually, just about everyone. Unfortunately we don't really need tax cuts until we get spending cuts or inflation will continue.

The problem with that is that we haven’t had a significant spending cut in the modern era. Unless we get a real balanced budget amendment to the constitution (which won’t happen) budgets won’t go down. So then there can’t be tax cuts, basically ever, because the state is going to need every penny.

My point is that this will reward upper class people more than lower class people. The correlation between "overtime hours worked" and "lower class people" has no reason to persist under the paradigm. Upper class people have more leverage to negotiate with their employers for overtime shenanigans, more institutional savvy and networking to figure out that this is a loophole that exists and is worth exploiting, and higher tax brackets that make it more profitable to avoid. John Manager who is a pencil pusher earning $200k/yr working 60 hour per week is going to benefit from this, while Billy Bob who struggles to get by working 20 hours each at three different part time jobs gets nothing, because none will hire him full time and have to pay benefits. This is a regressive tax relief, and then the government has less tax revenue and either has to raise taxes elsewhere to make up the difference, or cut spending. And if you were going to do that you'd be better off with a flat income tax reduction across the board, or if you still want to cater to working class then a tax reduction to lower income tiers.

This is probably good politics because it superficially sounds like it helps working class people, because a lot of them work overtime right now and their bosses are salaried. Lots of things sound good if you only look at immediate. first order effects and ignore long term second order effects. Printing free money to hand out as stimulus during Covid while all the supply chains shut down superficially sounds like it would help too, and yet here we are.

Overtime is not really optional in the US labor market.

You’re acting like individual income tax avoidance is a bad thing? Just like Trump’s proposed tax incentive on tips, this too would benefit blue-collar and service sector workers. Maybe we should be advocating policies that place a greater proportional tax burden on those who society caters to already: corporations and white-collar PMCs?

This isn’t the first time that politics has created tax incentives for employers based on hours worked, either. Remember that the Affordable Care Act’s large employer mandate kicks in for “full-time” employees who work 30 or more hours per week? Take this with a huge grain of bias, but the Cato Institute in 2023 found that there was a minor effect in reducing FTEs due to the employer mandate.:

[w]e estimated that the ACA increased low-hours, involuntary parttime employment by 2–3 percentage points, or 500,000 to 1 million workers, in retail, accommodations, and food services—the sectors where employers are most likely to reduce hours if they choose to circumvent the mandate.

Maybe we should be advocating policies that place a greater proportional tax burden on those who society caters to already: corporations and white-collar PMCs?

There's already a much easier way to do this: Increase marginal rates on higher earners. This comes with the added benefit of actually increasing government revenue and not decreasing it.

Maybe we should be advocating policies that place a greater proportional tax burden on those who society caters to already: corporations and white-collar PMCs?

Here in the real world, white-collar PMCs are already shouldering an absolutely massive share of the tax burden. The top 10% make about 50% of the income and pay about 70% of the taxes; the top 25% make about 70% of the income and pay about 85% of the taxes.

"The only tax analyzed here is the federal individual income tax, which is responsible for more than 25 percent of the nation’s taxes paid (at all levels of government). Federal income taxes are much more progressive than federal payroll taxes, which are responsible for about 20 percent of all taxes paid (at all levels of government) and are more progressive than most state and local taxes."

Yes, and? It's Federal Income Tax we're talking about here. Including payroll taxes makes it less progressive but the upper 25% is STILL paying the lion's share. State and local taxes are irrelevant.

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