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US vs. UK & Australian jobs 3 Comments More | Login | Reply /

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  • It's far more complex then that. The American tax system actually discourages employment. Businesses are compelled to hire their talent for as little as possible because of the high taxation overhead tied to salary. It's one of the primary reasons for job exportation. As the salary arbitrage (especially in India, currently) decreases jobs continue to transfer. Clearly there is more to it then the common cries of dirt cheap labor.
    • Regardless of payroll taxes, companies will always try to pay their workers as little as possible. That is the most straightforward way to increase profits, after all.

      Also, I must be misunderstanding your post in some way, because you seem to suggest that taxes are lower in the UK than in the US.

      • I don't think that's what was meant. In the US, our taxes are so mind-bogglingly complicated that no two tax experts get the same result on a moderately complicated return. Companies who hire people still have to deal with a bunch of little, niggling taxes being calculated, deducted from the paycheck and sent 'round to the proper offices. Right now I'm subject to withholding for federal, social security (which the employer pays half of), medicare and state taxes. If you think of medical insurance as a tax, then there's that, too. (There are also "county" taxes where I live and some companies will withhold those at the request of the employee).

        So there are tons of little deductions which have to be calculated and managed separately for each employee. That winds up being a lot of overhead. On top of that, years ago, when I was manager for an espresso company, I quickly discovered that all of our employees were costing us roughly double their hourly wage due to the taxes the company had to pay for them and all of the insurance funds we had to pay into but they didn't (such as unemployment, workers compensation, and so on). That's a bunch of extra overhead on top of all of the taxes we had to calculate and withhold.

        I'd be curious to hear a comparison with what goes on in the UK or other countries.

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