Originally posted by Teinosuke
I would assume that employers are going to have factor in current tax rates when they set salaries. So if this hypothetical person's job is 10,000 dollars more demanding than that of the person who earns 73,000 dollars, the employer is going to have to find the 30,000 dollars needed to supply that extra 10,000 net salary, plus 20,000 tax.
Up to a point, ...[text shortened]... of high tax rates on upper income brackets is likely to be higher gross incomes for employees.
"I would assume that employers are going to have factor in current tax rates when they set salaries."
That would be my economic assumption as well. However the consequence of that is likely to be finding other ways of getting jobs done. Let's see, we need x work performed, and it will cost us $30k of which the worker get $10k. Can we just hire a part time worker and pay the $10k directly? Or can we automate the function, creating unemployment?
The problems come from the fact that human actions are the result of thinking humans doing their best to relieve uneasiness. (Mises) If acting makes me more uneasy, I am likely to avoid those actions, and choose alternative courses.
As long as the employee doesn't think about the amount deducted from gross earnings, the higher gross earnings, and proportionately smaller net pay checks work. But for educated, higher level workers, it becomes evident that moving, or taking part or their work underground may be advantageous.