Answer to Question #305764 in Sociology for Rose

Question

what are the impacts of income tax on final salary package

Answer 1

1. When the tax rate increases, every employee has recourse to the employer who compensates employees for the said changes and this simultaneously forces the competitors to raise the salary as per the tax rates to retain their skilled workers (McGuigan, 2015).
2. The increase in tax rates offsets the annual increase in employee’s salary and hence diminishes the annual increase by the value of the tax rate applied. This means that if annual increase is lower than the increase in the tax rate, the gross income will increase but the personal income earned or after-tax income will diminish.