People with families get paid more, and taxed less. Why?
One of my coworkers gets paid 80% MORE than I do, and we both do similar jobs and have the same paygrade (I saw his paycheck). The difference is all in allowances for having a family (“Household Allowances,” “Education Allowances,” “Dependent Children Allowances”). Of course, allowances aren’t taxed, so he is effectively paying tax at a rate 90% LOWER than I am.
How is he worth 80% more to the company just because he has kids? We do the same job!
I realize companies need to attract married employees as well as single ones, but, “Holy Shit, Batman!” That is a LOT of additional money spent by the company for ZERO added value.
If it’s bad to pay women less than men for the same job, why is it okay to pay single employees less than married employees?
Are you saying he gets paid more by the company for having a family? Or that he is being taxed less? In neither case does it jibe with my experience in the US, outside the Army. But with family separation pay I got $100 more a month than my single buddies ($250 more in wartime). Still not 80%.
I can’t address the particulars of your company, but in general society favors families because they are more stable, more productive, less criminal, less destructive, and - crucially - more politically active than singles, whom they outnumber and outvote in large margins.
Single guys often would bitch about my BAH, but they got free housing, too. I agree the living quarters were much better for families than the barracks.
Yea, I get transportation and housing allowances, those are applied to both single and married faculty. Perhaps the education allowances are not for the kids but for your co-worker, intended to pay for CE and courses to make him better. Perhaps he is enrolled in a program.
Also, even with those allowances, depending on the kids and how he/she is raising them, those kids suck up most of it, leaving his/her “free money” to be probably the same as yours.
My experience is mainly in the US (though I am, as of last month, working in the EU). I’ve seen many companies that offer allowances for one’s dependents (but I’ve never seen one that paid this much). Moreover, parents always get some tax breaks for having children. First, they get extra deductions and second, allowances aren’t taxed by the IRS.
In effect, I am paying a price (a very big price) to encourage others to have as many kids as they want. Why am I paying to raise their kids? I didn’t even get to have sex with their women. If you can’t afford a family on you paycheck, don’t have a family - or, if it’s too late, apply for benefits (I’m not calloused to the needs of children).
Do I get extra pay and reduced taxes if I end up with a boat, or a coke habit? Both would probably be cheaper than kids, by the way.
I manage nuclear construction in France, but it was the same when I worked in the US (though not so severe).
I’m not mad at my co-worker, he’s just taking what’s given to him. I’m trying to understand how employers and legislators can justify it. Honestly, I think it’s simply because most of them are married and they’ve decided it’s okay without realizing that they are unfairly biased.
It sounds like you’re misunderstanding how percentages work.
Income taxes are a fraction of your pay (I think it’s around 15-20% for most people here in the US). Even if your coworker ended up paying NO taxes due to allowances, tax credits and the like, his net pay (pay + benefits - taxes) would only be ~20% more than yours.
If he is actually grossing (pay+benefits, before taxes) nearly twice what you are, it’s highly probable there’s something more than family or marital status being considered.
Also, taxes are set by the government, and not the company. While workers with spouses and/or families are worth a little bit more to companies because of the expected stability, reliability, motiviation, and tendency to evoke those traits in coworkers, it’s the government that truly values them nearly twice as much (or more) as single people.
Your boat and coke habit aren’t quite as crucial to the future of the country as your neighbor’s kids are. They will be footing the bill for your social security someday, so in the end, yes, you do derive a benefit from them.
The government provides an array of incentives for behaviors/activiites/choices that we’ve all decided are good for the country. This is why you get tax benefits if you have children, and (to cite another example) it’s also why you get tax benefits if you buy a house.
It’s both. His gross pay is much higher than mine, and he pays a lower percent of taxes.
I did mess up the numbers a bit, 'cause I initially did them in my head. Numbers:
My take home pay per month: 4100. His: 7200. He makes 75% more than me.
My effective tax rate: 17%. His effective tax rate: 10%. Now, 10 is 60% of 17, so he pays 60% the tax rate that I pay (not 90% less as I said previously).
Yes, of course. Apparently, employers and the government both think that I should be bearing something like half the cost of this guy raising his children.
I believe taxes should be progressive, and I donate to the poor and help people around me who need help. But there is a big leap between helping those who can’t help themselves, and just giving money to people so they can have children without it costing them anything extra - something that they do presumably because it makes them happy. There are a lot of things I could spend money on to make me happy, but nobody is going to reimburse me for any of it!
I’m so sorry to hear you’re feeling envious. Maybe you’ll feel better if you mind your own business and work on increasing your own value to your company or the job marketplace as a whole?
I’ve honestly never heard of such a thing in my entire life, and again I ask what companies these are so I can apply for a job.
In a country that is notorious for offering little in the way of legally mandated parental leave, vacation and the like, I find it hard to believe many companies just hike people’s pay because they say they had a baby.
In other words, I’d like some evidence. I cannot find any reference anywhere online to a “dependent children allowance” existing in the USA. I do not believe your co-worker was being paid $3000 a month to have children.
Clearly parents do not get so many tax breaks that they are effectively paying no tax at all, which is your claim. The exemption for a dependent isn’t really very much money - it’s like $3800 or something off your taxable income, so a person with a legitimate career that pays reasonably well would have to have a truly astounding number of children to eliminate 90% of their taxes.
I honestly think your problem is that he gets paid more. Any pay check taxes that top out at certain levels will necessarily make his effective tax rate lower.
The Wikipedia article mentions several taxes on payroll that are capped at certain multiples of an earning level of ~39000 euros.
