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I'm just an armchair economist but it seems obvious that this payroll tax (especially when combined with minimum wage hikes) will further incentivize companies

by nugget 10y ago

I'm just an armchair economist but it seems obvious that this payroll tax (especially when combined with minimum wage hikes) will further incentivize companies to relocate entry level workers to lower cost of living areas, e.g. Yelp customer service moving to Phoenix. Companies will keep their most skilled (and highest paid) workers in San Francisco because access to those workers is why they HQ there in the first place. As a result, the middle class continues to hollow out and inequality is actually worsened, which likely puts additional pressure on homelessness and the other problems they were trying to solve in the first place. I wonder if these politicians think about the unintended consequences of their proposals - whether they don't know, don't believe it to be so, or simply don't care.

coldcode 10y ago
If you only tax for workers above a certain wage and use that money to support rentals for lower income folks you might make it work. Maybe such a thing would incentivize tech companies to move elsewhere which of course has other side effects. There is no free lunch when using taxation to enact public policy.
- raldi 10y ago
  > If you only tax for workers above a certain wage [...] you might make it work. Actually, payroll taxes usually do the opposite: "It only applies to the first $110K in earnings. That way, it makes sure to capture a significant portion of the earnings of all poor-to-middle-class people, and then cut off before capturing a significant portion of the earnings of any rich people." http://gawker.com/5986230/the-unfairness-and-stupidity-of-the-payroll-tax http://gawker.com/5986230/the-unfairness-and-stupidity-of-th...
- nugget 10y ago
  You run into the same problem as means-testing social security and similar ideas -- turns out that income is a very pyramid-like distribution and there's just not a ton of it at the top, relative to the base and the middle. It wouldn't surprise me if 75% of this proposed tax would be collected from the component of salaries below the FICA limit ($118,500 for 2016). Another question is do you consider RSUs to be part of payroll on which tax is due? What about options? These can be 50% or more of compensation in many of these large firms.
tomsaffell 10y ago
Hope this doesn't sound nitpicky, but I'm curious about the implication that 'Yelp customer service' would be considered 'middle class'. Were you specifically meaning that, or was it just co-incidence? I'm curious because I find that the issue of 'the hollowing out of the middle class' hinges on the definition of 'middle class', so I'd like to know how this might help inform the definition. thanks.
- aphextron 10y ago
  Customer service jobs at a large tech firm in SF start in the $20/hr range. Firmly middle class.
- nugget 10y ago
  Discussions of class can be semantic minefields, but broadly I'd consider that entry level customer service job ($20/hr as another poster mentioned) as lower middle class. Importantly though, entry level lower middle class jobs can serve as a path upwards for skilled individuals who would become more solidly middle class after a few years. It's not just the loss of the entry level jobs I'd look for but the few rungs in the ladder above them as well.

by nugget 10y ago

coldcode 10y ago

If you only tax for workers above a certain wage and use that money to support rentals for lower income folks you might make it work. Maybe such a thing would incentivize tech companies to move elsewhere which of course has other side effects. There is no free lunch when using taxation to enact public policy.

raldi 10y ago
> If you only tax for workers above a certain wage [...] you might make it work. Actually, payroll taxes usually do the opposite: "It only applies to the first $110K in earnings. That way, it makes sure to capture a significant portion of the earnings of all poor-to-middle-class people, and then cut off before capturing a significant portion of the earnings of any rich people." http://gawker.com/5986230/the-unfairness-and-stupidity-of-the-payroll-tax http://gawker.com/5986230/the-unfairness-and-stupidity-of-th...
nugget 10y ago
You run into the same problem as means-testing social security and similar ideas -- turns out that income is a very pyramid-like distribution and there's just not a ton of it at the top, relative to the base and the middle. It wouldn't surprise me if 75% of this proposed tax would be collected from the component of salaries below the FICA limit ($118,500 for 2016). Another question is do you consider RSUs to be part of payroll on which tax is due? What about options? These can be 50% or more of compensation in many of these large firms.

tomsaffell 10y ago

Hope this doesn't sound nitpicky, but I'm curious about the implication that 'Yelp customer service' would be considered 'middle class'. Were you specifically meaning that, or was it just co-incidence? I'm curious because I find that the issue of 'the hollowing out of the middle class' hinges on the definition of 'middle class', so I'd like to know how this might help inform the definition. thanks.

aphextron 10y ago
Customer service jobs at a large tech firm in SF start in the $20/hr range. Firmly middle class.
nugget 10y ago
Discussions of class can be semantic minefields, but broadly I'd consider that entry level customer service job ($20/hr as another poster mentioned) as lower middle class. Importantly though, entry level lower middle class jobs can serve as a path upwards for skilled individuals who would become more solidly middle class after a few years. It's not just the loss of the entry level jobs I'd look for but the few rungs in the ladder above them as well.