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[Paxiecrunchle]

*grabs some tasty popcorn*

Posting to watch.

[Neonivek]

Isn't one of the biggest problems with MANY of the low taxation countries simply the disparity between those on top and those at the bottom?

[Reelya]

Perhaps, but not necessarily, Venezuela and Vietnam both have lower government spending per GDP than the USA, and neither of them are exactly capitalist paradises. But ... you have to ask about the chicken and the egg then. if high spending nations in Europe have the lowest inequality compared to low-taxing nations, then perhaps the lack of a strong government spending sector drives higher inequality.

In fact, if you look at the countries with lower government spending per GDP than the USA on this comprehensive list then there are basically zero examples of the libertarian dreamland to be found. The only exceptions are a few city-states that effectively attract tax dodgers from larger nations, and the "city-state leeching off larger nations" model is something that clearly doesn't scale up.

 e.g. Mexico's government only spends 24% of GDP vs 38% GDP in the USA. And just think about that. Mexico is the #1 nation likely to benefit from lower taxes because of American businesses right next door looking to save a buck on their taxes. Yet the lower taxes/spending in Mexico haven't help even with that advantage. How is lowering taxes going to help America when there isn't even a bigger America next door to attract investment from, when lower taxes clearly haven't helped Mexico in the first place?

Taxes get spend on roads, public transport and infrastructure. Think about the extra costs you'd have setting up a business in a place where those things don't exist. Both customers and employees can get to a business much more easily when there's subsidized transportation. If you set up a factory in a place where your employees absolutely 100% must own a car to get to your business, do ya think you could attract anyone to work for minimum wage, let alone less than minimum wage? And how are your customers getting to your location?

Companies that are paying minimum wage right now absolutely are only able to get away with that because they are being subsidized by the huge public infrastructure spending that exist in the USA. If they had to pay the true costs of getting both workers and customers to their locations, then they would go out of business, and minimum wage workers are often still receiving some sort of welfare payments. So ... it's arguable that current minimum wage job providers are leeching off social spending.

And the problem with saying e.g. just have private bus companies to take up the slack, is that a private bus company must make all their money from that one bus route, so they can't take externalities into account, e.g. the value of commerce created because the buses were cheaper. A public bus company can take into account the holistic situation. If bus fare prices are cut in half, more people will travel and they will spend money in local businesses, which creates new sources of revenue, which can then pay the costs of the buses. When everything is private and disjointed, those types of synergies can't happen.

[Neonivek]

I mean when I think about places with low - no taxes... I think about places within it where the people there might not even have access to fresh drinking water, electricity, sewage, medicine, law enforcement, or education.

They also tend to have governments that have the backs of their people less and exploitation is rampant.

I am sure there is a genuine exception. I am speaking without an education opinion, so don't be too harsh.

[Reelya]

I think there's a still a causal link there. If you don't collect revenue then you can't have those services. And calling for e.g. "private law enforcement" isn't a caveat to that. With e.g. private law enforcement systems, they still collect taxes, they just pay those taxes to a private company. And the evidence that doing so saves money is exceptionally poor - they're usually sold to friends of politicians. Basically this type of "privitazation" is about redirecting taxpayers funds into private hands and is not actually about tax reduction. Tax-cutting solutions that abolish services are in fact very different from that.

If you call for low-tax or no-tax solution, then your asking for each citizen to e.g. privately fund their own law enforcement needs rather than relying on a centralized police force, which means employing private security that only protects you on a subscription basis. Or imagine a user-pays sewage system. Businesses take public sewers for granted, they are a major piece of infrastructure that costs a lot of money to maintain. Things like sewers and available cheap/free tap water subsidize businesses that pay their workers low wages.

[Neonivek]

I am reminded of when the UK persecuted the Puritans.

They were only allowed to do business and thus they spent TONS of money actually creating an infrastructure in order to accommodate these businesses.

Yet I am sure that the government wouldn't have accepted petitions to build those roads themselves because they would have argued that it doesn't help any of the citizens.

The idea of having everyone fund private things is that... well... Cities are interconnected between themselves and from within. A lot of people might go "Well, I don't need security I am an immortal highlander" their neighbors might suffer for it and that eventually will affect him.

---

Then again big corps do not benefit from higher standards of life within the countries they build factories in a lot of the time... because that would mean higher wages.

Though I have only heard of a FEW times they actively circumvented standards... and that was by negotiating a sort of legal zone that has entirely different sets of laws.

-Note: I am not saying they don't do more seedy things... I just have been taught the "They would benefit from being evil bastards, therefor they MUST be acting like evil bastards" method of thinking. So I have very little factual information beyond cripplingly low wages how they encourage low quality of life within an area.

[Reelya]

Actually, for the minimum wage issue, some fact-checking is in order. Less people make minimum wage than the number of official unemployed. 2.6% of all wage and salary workers earn the US federal minimum wage or lower. That has in fact dropped from 7.9% in 1979, so the proportion of people earning federal minimum has in fact severely declined. It cannot therefore be a driving factor in unemployment. Since minimum wage represents so few workers then it's illogical to claim dropping the minimum wage will create many jobs or much value.

http://www.pewresearch.org/fact-tank/2014/09/08/who-makes-minimum-wage/

Basically, if someone is unemployed because of minimum wage there are two possible reasons.

One is that there is already a minimum wage job available, but nobody wants to do that job for that price, in which case lowering the pay isn't going to help. In those cases, there's a discrepancy between how much the employer is willing to pay and how much a hypothetical employee is willing to accept.

The second reason is that the value generated by the job is lower than federal minimum wage, but a worker would be willing to do that job for less than minimum wage. So let's say there's a job that generates $7.00 worth of profit per labor-hour, but you have to pay $7.25 per hour for a worker. So you don't advertise that job. If you could lower the wage to $5.00 per hour then it would be worth advertising. The problem with this logic is that very few people will be willing to work for such a low wage, when travel and other expenses are going to eat up most of your wage. And the value to the business is minimal, it's going to be a couple of dollars in revenue extra per labor-hour worked at best. And you have to deduct from that whatever extra costs of infrastructure / public transport needed to support a job that was so minimal. If someone is working for $5.00 per hour they're almost certainly getting subsidized public transport to get to their place of employment, which is a net cost to society.

Finally, the problem with dropping minimum wage to increase employment is that everyone who pays minimum wage will drop their wage at the same time. There will be "more" jobs on offer, but less people willing to do them, so the increase in job oppotunity will be balanced by less people willing to do those jobs. So overall the improvement will be minimal. However ... there will be less money in the local economy due to decreased wages, which is also a job-killer.