Why Americans Work So Much !
In 2004, Edward Prescott, who was awarded the Nobel prize that year, showed that the higher the effective marginal tax rate on labor income -- that is, the share of each next dollar earned that the government chooses to redistribute -- the fewer hours people put in. Importantly, the tax rate in this equation includes the employer's part, and companies, too, are less interested in getting more work out of people if they have to give up more of the resulting income.The finding was unexpected even to Prescott himself. "I am surprised," he wrote, "that virtually all the large differences between the U.S. labor supply and those of Germany and France are due to differences in tax systems. I expected institutional constraints on the operation of labor markets and the nature of the unemployment benefit system to be of major importance."
When Government takes 61% of what you make, you work only enough to survive!
When a Government increases the top income tax and the economy goes down it could be because people are not stupid!
People don't want to work for others and that is the reason why when Government increases tax rated sometimes the receipts go down! Surprise? of course not.
If you look at the table below from OECD, Portugal my country takes 61% of what i make each month. Of course things are not well in Portugal. This is like this since Troika arrived in Portugal in 2011 and asked for Budget consolidation. The Government didn't want to cut expenses so they raised taxes instead.
Source: OECD
Top marginal tax rates
Personal income tax & employee social security contributions (All-in rate) first line is 50,3 highest Income tax in Portugal plus 11% social security = 61,3%
| Country | |||
| Portugal | 50.3 | 61.3 | |
| Slovenia | 39.0 | 61.1 | |
| Belgium | 45.3 | 59.4 | |
| Finland | 49.1 | 57.2 | |
| Sweden | 56.9 | 56.9 | |
| Denmark | 56.2 | 56.2 | |
| France | 54.0 | 55.0 | |
| Netherlands | 50.1 | 53.4 | |
| Ireland | 48.0 | 52.0 | |
| Spain | 52.0 | 52.0 | |
| Japan | 50.6 | 51.1 | |
| Israel | 50.0 | 50.0 | |
| Canada | 49.5 | 49.5 | |
| United States | 46.3 | 48.6 | |
| Italy | 47.8 | 47.8 | |
| Germany | 47.5 | 47.5 | |
| Norway | 39.0 | 47.2 | |
| United Kingdom | 45.0 | 47.0 | |
| Australia | 46.5 | 46.5 | |
| Greece | 46.0 | 46.0 | |
| Luxembourg | 43.6 | 45.0 | |
| Iceland | 44.4 | 44.4 | |
| Austria | 43.7 | 43.7 | |
| Korea | 39.4 | 43.2 | |
| Switzerland | 36.1 | 41.8 | |
| Chile | 39.5 | 39.5 | |
| Poland | 20.9 | 38.8 | |
| Turkey | 35.8 | 35.8 | |
| Slovak Republic | 21.7 | 35.1 | |
| Mexico | 35.0 | 35.0 | |
| Hungary | 16.0 | 34.5 | |
| New Zealand | 33.0 | 33.0 | |
| Czech Republic | 20.1 | 31.1 | |
| Estonia | 20.6 | 22.6 |
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