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Comment by scotty79 | Hacker News Reader

People tend to think that income taxes lower your salary. While in practice employers know exactly for how little money (in hand) you are willing to work and in absence of income taxes would just pay this much less so that your money in hand is the same.

As an employee you should fight for income taxes to be as high as possible since they are neutral for you and might fund useful things for all. When left in the pocket of your employer they just become their takeaway. Employers won't spend it on improving the company if they don't have to. And the only things that force them to spend money in a predictable manner is regulation and markey opportunity to earn more. When they have those needs they mostly do it with credit anyways.

Conversely as an employer you should advocate for lowest income taxes possible for your workers.

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You're suggesting that 100% of the income tax burden is shifted from employees to employers.

The incidence of taxation (which party bears the burden of the tax, irrespective of who 'pays' it) is widely studied. As it relates to payroll taxes (paid by the employer) and income taxes (paid by the employee) most research finds that employees bear most (but not all) of the burden. This is the opposite of your claim.

It's not shifted. It's just there. It was never on the employees. Employees don't have their own money to tax. Employees money is employers money. That's its source.

Employees get taxed when they spend money by being consumers. Sales taxes and VAT are their tax burden. But income taxes of the employees are the burden of the employer. It's employer who has to fork that money because otherwise he wouldn't be able to pay enough so that the employee agrees to work.

The poster is referring to https://en.wikipedia.org/wiki/Tax_incidence

It's really not as straightforward as they make it to be:

https://www.sciencedirect.com/science/article/abs/pii/S00472...

Higher taxes cause gross pay to raise.

There's evidence that increasing cost of operation of corporations through taxation is not fully born by workers. It falls in large part on the owners and landlords (who were omited in earlier works on income tax incidence).

https://www.google.com/url?sa=t&source=web&rct=j&opi=8997844...

> We find strong evidence of partial shifting of the burden of income tax from worker to employer. Although income tax is incident on equilibrium wages, the tax burden is not fully shifted

Debunking your claim:

> While in practice employers know exactly for how little money (in hand) you are willing to work and in absence of income taxes would just pay this much less so that your money in hand is the same.

Yeah. Things are never simple, and rarely binary.

I exaggerated my claim to draw attention to the fact that it's not like many people believe, that income tax burden lands fully on the worker.

While my claim sound proposterous the opposite claim that is also false (maybe even equally so) rarely ever raises an eyebrow, which I think is very telling.

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