There are a few things to mention here. It’s not just marginal taxes, but marginal taxes and subsidies. That’s a slight semantics issue that doesn’t really change much. Second, only three taxes and four subsidies are mentioned. There are far more than that in this world. So a complete list of all taxes and incentives would probably show far greater disincentives (since the vast majority, aside from some excise taxes, are progressive in nature) to work than this limited selection shows.
Also it depends on your household status. I imagine a single person with no children has far greater incentives to work (they can’t cash in on SCHIP or State Children’s Health Insurance Program) than the married family with one child. I’d be interested to see how the marginal incentive to work changes with marriage status and number of children (I thought about adult dependents, but that sounds to me to be rather complicated and dependent on situation).
A horror story from the Netherlands where something like this has existed for ages. Not only do we have a minimum wage (and a minimum youth wage), lower income jobs often have universally binding wage agreements negotiated between labour unions and employers’ groups.
There are also strict limits on temporary contracts. You can offer someone a temporary contract three times in three years and after that employment is for indefinite duration. This means the employer has to demonstrate an economic need before he is allowed to dismiss workers. Until recently this worked according to a first in, first out principle. Now layoffs have to be balanced across age groups. And even then employers have to pay a month’s wages for every year the employee worked at the company.
The net result is that it is very difficult to get a job if you’re not productive enough to make the minimum wage. Say if you are an illiterate farmer from Anatolia who doesn’t speak the language. Add in a welfare system that isn’t limited in duration, housing subsidies and other income dependent programs and you’ll see why we have a permanent underclass. This is a large part of the reason why my country is starting to become ungovernable.
Sorry: I said first in first out, it was actually last in first out. Another example of so-called socially conscious laws protecting the interests of insiders against those of outsiders.
There are a few things to mention here. It’s not just marginal taxes, but marginal taxes and subsidies. That’s a slight semantics issue that doesn’t really change much. Second, only three taxes and four subsidies are mentioned. There are far more than that in this world. So a complete list of all taxes and incentives would probably show far greater disincentives (since the vast majority, aside from some excise taxes, are progressive in nature) to work than this limited selection shows.
Also it depends on your household status. I imagine a single person with no children has far greater incentives to work (they can’t cash in on SCHIP or State Children’s Health Insurance Program) than the married family with one child. I’d be interested to see how the marginal incentive to work changes with marriage status and number of children (I thought about adult dependents, but that sounds to me to be rather complicated and dependent on situation).
A horror story from the Netherlands where something like this has existed for ages. Not only do we have a minimum wage (and a minimum youth wage), lower income jobs often have universally binding wage agreements negotiated between labour unions and employers’ groups.
There are also strict limits on temporary contracts. You can offer someone a temporary contract three times in three years and after that employment is for indefinite duration. This means the employer has to demonstrate an economic need before he is allowed to dismiss workers. Until recently this worked according to a first in, first out principle. Now layoffs have to be balanced across age groups. And even then employers have to pay a month’s wages for every year the employee worked at the company.
The net result is that it is very difficult to get a job if you’re not productive enough to make the minimum wage. Say if you are an illiterate farmer from Anatolia who doesn’t speak the language. Add in a welfare system that isn’t limited in duration, housing subsidies and other income dependent programs and you’ll see why we have a permanent underclass. This is a large part of the reason why my country is starting to become ungovernable.
Sorry: I said first in first out, it was actually last in first out. Another example of so-called socially conscious laws protecting the interests of insiders against those of outsiders.