Our Universe | Alternate Universe | |
Marginal Tax Rate of Joe's Employer | 25% | 75% |
Joe Gets a Raise | 5,000 | 5,000 |
Additional cost of Joe's raise to Employer after tax | 3,750 | 1,250 |
New Employee Salary | 50,000 | 50,000 |
New Employee Payroll taxes | 15,000 | 15,000 |
New Employee Equipment & Real Estate | 35,000 | 35,000 |
Total Pre-tax cost of New Employee for one year | 100,000 | 100,000 |
Total After-tax cost of New Employee for one year | 75,000 | 25,000 |
2011-07-30
How Income Tax Rates Affect the Marginal Cost of Job Creation
An employer's marginal income tax rate influences his or her incentives for hiring new employees.
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