Maastricht Treaty revisions needed?

[kandrathe]

Pre-tax income is not context-free, and therefore is a very poor indicator of "economic power." It's not the amount you would earn, if only that meddling government didn't take anything away. It's an amount that includes both the expectation of taxation, and the productivity benefits of everything the government provides. Think of how much less people would be able to produce in the absence of roads, of defense, of a functional system of policing and laws. Now add the benefits of free education, health care, and so on. All of that increases productivity, and therefore wages, leading to a much higher level of pre-tax income.

Actually, I believe the government's meddling actually harms our society. Consider roads; When in the control of the State, the people just demand more and get them, then more lane miles are available and need to be maintained making room for more cars. Conversely, if the pain of tolls were added to commuting, then people may change their consumer behavior more readily and walk, or bike to work. Consider schools; When the government and the teachers unions control the outcomes, the actual consumer is left out of the loop. As parents, we do not get much of an influence in the quality of the school our child attends. If the local school had to earn my loyalty (and dollars), I would be much more involved in ensuring it provided a quality education for my children. But, again, I don't have a problem with the government leading, and setting standards for what constitutes a basic education, however, they do an abysmal job at creating efficient systems with high quality outputs.

---

But did you think the average wage would be the same if taxes were 20 %? Of course not, it would be much lower.

This may shock you. I've hired people at a wage higher than they've asked for, and I've given raises well above 15% when necessary. I believe a smart employer values their "human capital". When I've spent many years investing in the training of an employee, and find they are the perfect fit for an skill set that is hard to replace, then there is great incentive to reasonably "over pay" for that position. I've worked for manufacturing firms that pay their non-union labor at 150% of union scale.

So no. If taxes go down, wages do not go down. Employers calculate and compete at the gross wages level, and not take home pay. In the professions I deal with, wages are well over a "living wage", so any additional money is merely wealth that they have earned.