Ot: I've been wondering... are lower taxes for lower salaries actually a good approach? If you imagine they are fines or punishments we should punish low salaries more.
I"ve seen a lot of employers minimize wages and hours to get as much of their budget into workers pockets as possible. It converts into productivity more efficiently like that.
(Tax here in NL is 39% with a discount over the first 8k or so)
If you consider government benefits too, there are "cliffs"[1] at low incomes where an increase in income can result in less take home. But probably not at the salaries a typical developer would get.
Policy makers are smart enough to not intentionally design welfare cliffs (usually). Most of the time it’s the result of complicated eligibility criteria, multiple benefits stacking together, and the program designers not anticipating large increases in the value of the benefit (e.g. housing subsidies).
That's a fascinating chart. I would like to reference it in the future, but I cannot find a source for the data. Did you compile it yourself? Have you written your data and methodology somewhere?
It's from this presentation[1], but you can find similar analysis for lots of different places if you Google around (e.g. this one[2] for Illinois or this one[3] for Georgia).
If the tax brackets are 0% for the first $5, and 50% for the second $5, then if you pay one person $10, $7.5 goes into worker pockets. If you pay two people $5, then $10 goes into worker pockets.
> I"ve seen a lot of employers minimize wages and hours to get as much of their budget into workers pockets as possible. It converts into productivity more efficiently like that.
That's only if you assume minimal cost in having more people doing the same amount of work. Between hiring, HR overhead, training, team communication, number of desks, and a general need of staying on top of things, that might be a steep assumption. If twice as many people don't get the work done twice as fast, why would twice as many each working half as much do it in the same time as before?
Of course, I'm thinking of engineering here. I can imagine that employing several part-time workers in, say, a retail store won't have the same level of drawbacks.
I"ve seen a lot of employers minimize wages and hours to get as much of their budget into workers pockets as possible. It converts into productivity more efficiently like that.
(Tax here in NL is 39% with a discount over the first 8k or so)