Minimum Wage & Taxes
I have an old friend that told me this story what happened to an acquaintance of his. He lives in another country for some time now, for business purposes, and met with a guy that had a grocery stand. The guy was just a simple guy with a small business selling groceries at a street corner. My friend told me how get got screwed over with all the minimum wage laws and taxes.
We all know that taxes are theft and they are evil, but it's one thing to get robbed every month by the government, it is bad but it is predictable. But when you combine taxes with minimum wage laws, and pension contributions, then you are in a twilight zone insane asylum level idiocracy.
My friend told me how he got screwed, and this is just 1 story, how small businesses are screwed by the government. Most stories like this don't get to the media, so people have no idea how hard it is to have a small business, so I hope that by posting here on Steemit people realize how hard it is to get started in the business life.
See most small businesses are struggling, one one hand you have fierce competition from big retails chains, and on the other you have the iron fist of the government trying to destroy your creation.
Alright so here is the story:
The guy was selling fruits and vegetables pretty much all his life, he was a 52 year old guy at that time, this happened around 2010, and he was making about 900€ profit monthly, while his revenue was 3200€, his expenses were about half of that 1600€ and the remaining money was taxed at about 57% after all taxes, healthcare , pension and other stuff.
Pretty high taxes, but he was doing fine, with 900€ he could live an average life, nothing fancy, definitely not middle class, but he had an apartment, a car, and no debt, so he was fine for his age. My friend knew him pretty well, he bought his groceries from him so they've always chatted about stuff.
Then new minimum wage laws came by around 2011, which said that nobody should have income below 1100€ in the country, you know to "help the poor" wink wink. And these laws were horrible, let me tell you why.
Ok so I guess normal workers loved this job, since their income jumped from whatever below to 1100€ monthly, but what about the small businesses like the grocery guy? Let me tell you what happened to him.
So the new minimum wage laws prohibited anyone from earning below 1100€ as a worker, and since our grocery guy was self-employed, he run his business alone, with no other employees, he was technically considered in the law as an employee of himself.
Since his business was a legal entity, he was an employee of that business, even though he was an owner of it (I guess only in the legal world you can find circular logic B.S. like this). Don't look at me, that is how the laws operate in that country (call your representatives if you don't like it :D).
So the money he earned was both a salary and the company's income. A 1 man self-employed business is also considered in that country a company, so this is how it is.
Now since the minimum wage laws were applied to workers, he is now forced to pay himself 1100€. Luckily the minimum wage applies to gross income, which was 1600€ before taxes for him, so he was ok. But what about other grocery stand owners that earned below 1100€ gross income? Well the government surely doesn't care about them, they would have to shut down because:
It is illegal to earn below 1100€, or pay yourself below 1100€ even if you are self employed, in that country!
Alright so the grocery guy is lucky, the minimum wage laws don't apply to him yet (until his profits shrink, or minimum wage increases), however he still got screwed up.
This law is so F.-ed up, that I cannot even fathom how people didn't revolt there. He got screwed on the pension side.
The pension contribution tax he was paying was 15% out of that 57% total tax levied, so that was about 15% of the 1600€ which was 240€ for pension. However the new minimum wage laws re-define the word income, and since he was self-employed, his gross income was no longer the 1600€, but instead the 3200€ (revenue, before deducting costs).
How diabolical, and it only applies to the pension, every other tax is levied from the income, but the pension is now levied from the revenue. I guess the lawyers there drunk when they write the laws. I also guess the pension system is a ponzi-scheme, and pretty much needs more funding in order to survive, that is the cause of this new law modification.
And not just that, but the pension was levied the latest, so first he got taxed on the 1600€, the 42% (income tax, healthcare, business tax, etc), and then he was left with 928€, and then the 15% pension was deducted from the 3200€.
So 928-480 = 448€, yes he was left with 448€ to survive on for 1 month. His income literally got halved by this minimum wage scheme. So he was no longer taxed on income, but on revenue, but only his pension contribution, everything else remained the same.
So the grocery guy literally had to pay 86% taxes in total, and not counting sales tax, property tax, and others.
This ladies and gentlemen, this is the government
I guess I don't have to say, that he closed his business the next month, and now he is living on welfare. On welfare he only gets 600€, but at least doesn't have to deal with the paperwork and harassment that the government gave him.
Ruthless, vicious, and doesn't care about the livelihood of people. Yea maybe some workers are now happy with bigger salaries, but guys like these who has a living for 20 years from self-employment, are now gone, and on welfare.
Is this really worth it? I guess yes, because nobody cares about small businesses, when you have big retail chains selling you goodies.
So let me sum it up for you what the minimum wage is:
MINIMUM WAGE GIVES CORPORATIONS MONOPOLY AND DESTROYS SMALL BUSINESS
Small businesses can't bear these costs, and big corporations mop them up, and get monopoly on the market with their crappy imported goods, while destroying the livelihoods of honest small businessman and businesswomen.
Remember this is not in the #fiction tag, this is reality, this is literally how laws and government works, throughout all the world. And not just this guy, but every other small business person in the world gets screwed like this.
So think twice before you support new minimum wage laws. You can't legislate money into existence, all it does is it hurts small businesses and put them on welfare while doing little or no good to normal workers.
Image Credit: Red Square from http://thepeoplescube.com