3way 3rd way: roll-over income tax helps long-term unemployed

David Thorp (d.thorp@unsw.edu.au)
Thu, 17 Sep 1998 12:19:16

In case it wasn't obvious, I'd just like to emphasise that not only does
the roll-over income tax (that I proposed at the end of my contribution
yesterday) encourage the employed to quit their job for a while and thus
create a job vacancy (because they receive a tax refund for ending up with
a lower average salary (in a lower tax bracket) over the last x years), it
also makes it cheaper for
employers to employ the long-term unemployed for a given net salary,
because, for example, the average salary for someone that has been
unemployed for 1 year and is then employed on a 1 year contract, will be
half that of someone who is never unemployed, and hence will be subject to
a lower marginal rate of income tax (if there are enough tax brackets).

Regards

David Thorp

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