The Republicans are pushing a tax bill that drew a veto message by president
             Clinton. It is a $245 billion tax package that would tax labor. The bill was approved
             by the House by a vote of 237 to 174, but the Senate will not vote on the bill until
             Friday. The tax bill also contains a $1 boost in the federal minimum wage over the
             next two years, which would raise the wage floor to $6.15 an hour.
             The market for labor is very inelastic, because people are going to work whether
             or not there is a tax. Most people claim they would work full time regardless of wage.
             Even if there is a tax people just cannot stop working, because they need money. So
             Assuming that the tax is needed, labor would probably be the best thing to tax because
             there will be a small deadweight loss.
             The $1 boost in the federal minimum wage included in the bill could actually
             hurt the bill in the process of becoming a law. By raising the minimum wage you put a
             There will be more people willing to
             work at this price, but fewer people
             willing to pay this price for labor.
             The equilibrium price would be the best way for the market to reach a perfect medium
             between the labor supply and the demand for labor. By including this provision to the
             tax bill it could make it harder for the overall bill to passed. There will be many people
             opposed to raising the price floor on minimum wage.
             Both the labor supply and the people demanding labor will be affected by a tax.
             That is why taxing labor is the best thing, because it will keep the loss of surplus to a
             minimum, due to the labors supply being so inelastic. This
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