Montana Debates Tax to Achieve Living Wage

By George Anderson
Critics of large national and regional retailers have argued that states ultimately pick up the cost for caring for many of the employees of these companies through public assistance programs because they fail to pay a living wage and provide inadequate and/or costly health insurance.
In Montana, a state Senate committee heard from supporters and opponents of a bill proposed by Sen. Ken Toole (D – Helena) that would tax companies with a workforce consisting primarily of full-timers that failed to compensate entry-level workers with the equivalent of $22,000 a year including pay and benefits.
The proposed legislation (Senate Bill 272), reports the Helena Independent Record, “would charge a gross receipts tax of 1 percent of a store’s annual gross receipts of $20 million to $30 million, 1.5 percent on gross receipts from $30 million to $40 million and 2 percent on gross receipts exceeding $40 million. The bill is projected to raise about $16 million a year for the state.”
For his part, Sen. Toole said he hopes that no company in the state pays the tax, preferring to adequately compensate employees themselves.
Businesses were in clear opposition to the proposal. Even Costco, which according to regional vice president John McKay, pays its average full-time workers over $60,000 in pay and benefits, and 92 percent of its part-timers $39,000 in combined wages and benefits, voiced objection to 272, saying it unfairly taxed businesses with high sales volumes.
Moderator’s Comment: Do you believe companies are morally obligated to pay a living wage to full-time employees?
Do you agree with the Senate Bill 272 in Montana and other proposals to legislate a living wage? –
George Anderson – Moderator
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17 Comments on "Montana Debates Tax to Achieve Living Wage"
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The first fundamental rule of business is to make money. Retailers make money when they control costs associated with running their operations. Labor is a large component of store operations and filling slots for the lowest total economic cost is part of the deal. Morals have nothing to do with it.
Additionally, wages will always be a function of supply and demand. If retailers couldn’t find workers at below living wage rates, then they would have to raise offers to fill slots.
Morally obligated? No.
It’s a free market economy, in which people are paid what the market will bear. That the market doesn’t support a living wage is another issue, and a crime of its own.
Are they fiscally required to pay a living wage? If they want productive workers who provide the level of service their customers require to become loyal customers, it’s the way to do that.
Are companies morally obligated to pay a living wage? No!! We have freedom of choice in this country to choose our own careers and to set our own pay scale. We don’t need the government doing it for us. I think the workers have a moral obligation to straighten out whatever personal issues they have that keeps them from earning a living wage. This is anti-capitalist and I doubt it would ever become law. Large businesses would leave the state, prices would rise, and worker production would go down. Why try to improve yourself when the government is going to turn your paycheck into a welfare check?
Well, lots of good arguments on this one. Let’s not forget that Montana is trying to mitigate their welfare transfer payments. Does the state really care that much about that low wage earner? This would not supplement income, it would supplement the welfare account – or so it would seem. My guess is that within six months this money would find its way to a “general account” with a discretionary amount guaranteed as going to pay welfare. Uh huh! Ill conceived idea that would simply stifle the growth of the companies that are already paying both wages and taxes. They would do better to implement a sales tax and administer it such that the welfare accounts received a direct deposit, establish the administration needed to track this money and then consider tax abatement periods should the fund exceed requirements.
I can just see it now, with caravans of the “Grapes of Wrath” types driving into Montana in broken down vehicles in search of $22,000 a year jobs. While at the same time moving vans are heading south out of Montana relocating businesses. Suddenly, you would see 20% unemployment. Businesses would simply pass on the increased labor costs or extra taxes on to the consumer, therefore wiping out any gains someone gets through higher wages. Or worse yet, companies leave the state to a more business friendly area and put those $22,000 a year types in the unemployment line.
There’s no moral obligation to pay full-time employees a so-called “living wage.” First, the terminology is loosey-goosey. One man’s morality is another’s scrawl on a restroom wall. For example, Islamic terrorists consider their jihad “moral.” Second, if the definition of a living wage is $22k in Montana, what do you suppose it is in New York or San Francisco? Triple? Quadruple?
This proposal is simply another effort by Democrats to be “big brother” to citizens. Tax businesses to pay the poor, and eventually barely-surviving businesses will close their doors and create more unemployment. As we’ve learned from welfare practices — which this is — the more the government gives people, the less they try to improve themselves.
Is this the oxymoron of the day? Companies and morally obligated in the same sentence? Will wonders never cease?
As far as I can tell, there ain’t nobody in business nowhere feeling any obligation other than to make money. Go tell your investors you want to pay employees more and they will have to take reduced dividends. Go tell your customers that they will have to pay higher prices to foot the bill. Then go sign on for your own share of unemployment. If there is a way to get government or anyone else to supplement meagre wages, then why on earth would companies whose executives still don’t see the admittedly hard-to-attribute benefits of paying a decent living wage and enabling staff to feel pride in their work to voluntarily pay more than they can get away with?
This is a complicated issue. On one hand, you don’t want government more involved than they already are in determining wages. And, the free market should take care of it best, in a perfect world. But, if full-time employees of some retailers actually qualify for welfare, as the article says, that’s a problem in that the state is subsidizing wages already. Wish I knew the answer but my gut feeling is that more taxes won’t solve anything.
American industry has proven time and again it is wholeheartedly in favor of giving workers a living wage.
Unfortunately, they are paying it in third-world countries where they’ve moved their operations so they don’t have to pay decent wages here.
While I am pro-business, Wal-Mart, which the bill seems to target, ought to be conducting themselves this way. Plus, The Montana state Senate bill to fight Wal-Mart’s low wages works as follows. If passed, the law would impose a tax on gross retail receipts of any retailer doing more than $10 million per year in business. No tax would be owed, however, if they certified that all full-time workers were making at least $22,000 per year. $22,000 per year? Please.
Oddly enough, I find myself on David’s side on this issue. Not the part about a worker having “personal issues” if they can’t get a higher paying job. I know it’s hard for some of us “type A’s” to imagine, but some people are actually working to their greatest potential in these retail jobs.
But, I agree in that the logic being used here by the legislator seems full of holes. Why is it assumed that because someone has a full-time job, that they shouldn’t need public assistance? We all (supposedly) benefit from programs like Medicare, Social Security and other social programs while holding full-time jobs. If the government’s role is to provide a safety net and prevent people from bottoming out in society, that responsibility doesn’t magically stop when they land a job. It should be done on a graduated scale, according to need. (And in a way that will ENCOURAGE self-improvement….but that’s a separate issue.)
Taxing a business based on its sales volume is ridiculous. It would be giving mom-and-pop stores a free hand in keeping their employees in poverty. If this law passes, Wal-Mart should stop buying from suppliers located in Montana. It would be grossly unfair, of course, but it would send a loud and clear message to the legislature.
If they feel employees are underpaid, they should just raise the minimum wage across the board. Raising it based on sales volume is about the worst idea I’ve read in a long time.
Why should Montana (or any other state) pay the health care cost for the employees of a company making $10 billion in profit? If these large companies would take care of their own, the state wouldn’t have to step in and regulate then. I’m against increased taxation, but if the state has to pay these costs, then we will all be faced with higher taxes if they don’t tax the offending parties.