Pharos-Tribune

March 24, 2013

PUBLIC FORUM: Raising minimum wage good idea?


— Our government keeps raising the minimum wage. Is this a good idea? Is it a deception to the people? People tend to think “I make more money.” Do you? Let’s look at this.

Yes, you make more money on the hour. But the increase may put you in a higher tax bracket. So the government gave themselves a raise on tax revenue.

When the minimum wage increases, so will the cost of living. For example, our fast food places have to increase the cost of their product to cover the cost of labor, as well as the places they receive their products from. We can’t forget where our products come from will have to increase that cost also. So here we have an increase twice. One is the cost of producing the product, second is the retail cost to you. This in return will increase cost of many other areas.

The question is what would be a great avenue to help the people and the businesses the same? Why not mandate a percentage raise for time of service? Would this be a better idea? Example: for every year a person puts into the company, they receive a certain percent increase. Reason is that the fast turnover businesses will not hurt from the increase. This would inspire the employee to stay with the business longer, which would lower the cost of the business on training replacements. And the employee would be of more use for the company by learning more on the job.

Why can’t the government mandate Section 125 of the United States Code on the businesses?

What is Section 125? Many people and businesses are not aware of Section 125, or even now what a Section 125 is.

Section 125 is for insurance premiums. The way it works is the employer takes out the premiums on the gross pay instead of the net pay. This in return will give the employees more take home pay. The downfall would be less tax revenue for the government.

This is a good way to provide health care benefits to your business employees is with the establishment of a Section 125 plan. Also known as a cafeteria plans, flexible spending plans or similar names depending on the specific plan’s purpose. The plans are named after Title 26, Section 125 of the United States Code where “cafeteria plans” are specifically excluded from the calculation of gross income for federal income tax purposes.

Not only does a Section 125 plan allow an employer to provide health care benefits, a full cafeteria plan can be used to provide dependent care benefits and spending accounts for employees to decide what they want in their benefits plan.

What the insurance companies call this is “Found Money” because subtracting the insurance premiums from the gross income would be less income taxes taken out of our checks. This would give us more “spending money” for the cost of raising prices an not effect our businesses.

Rick Gibbs

Logansport

 

For more on this story and other local news, subscribe to The Pharos-Tribune eEdition, or our print edition