Marginal Tax Rates

 Marginal tax rates must be higher in Europe. 2. Labor supply must slope upward enough to match the differences in hours.

Marginal tax rates are indeed lower in the United States than in Europe. Recent research finds that the marginal tax rate on labor income is about 34.5 percent in the United States compared to 57.7 percent in Europe (Germany, France, Italy, and the United Kingdom).[4] So, if you work an extra hour and earn a pretax wage of $10, then you would keep $6.55 in the United States and $4.23 in Europe. The evidence is also consistent with the view that labor supply increases as the after-tax real wage increases. shows the implication of this. On the vertical axis are two different levels of the after-tax real wage: a low one for Europe and a higher one for the United States. These differences in the after-tax real wage translate into differences in hours, using the labor supply curve of an individual. Thus, as in , individuals in the United States work more hours than in Europe. As this is true for everyone in the labor force, this argument immediately translates into a statement about hours worked for the aggregate economy. Differences in Hours Supplied There are two real wages after taxes shown: one for Europe and one for the United States. These differences in real wages translate into differences in hours worked. Can the difference in the after-tax real wage explain the observed difference in hours worked? This depends on how responsive labor supply is to changes in the real wage.shows two labor supply curves. In one case (the solid curve), labor supply is very responsive to changes in the wage. Relatively small differences in taxes then have substantial effects on hours worked. In the other case (the dashed curve), labor supply is not very responsive to the wage. Differences in tax rates are then unlikely to be able to explain the differences in hours worked.

Don't use plagiarized sources. Get Your Custom Essay on
 Marginal Tax Rates
Just from $13/Page
Order Essay

Essay Writing Pros
Calculate your paper price
Pages (550 words)
Approximate price: -

Why Work with Us

Top Quality and Well-Researched Papers

Our writers have been trained on how to handle papers placed by our clients. The writer must read and understand before embarking on writing the papers. In case of any issue that needs clarification, writers are encouraged to ask the client or support.

Professional and Experienced Academic Writers

Our team comprises of the best writers and editors. We do thorough vetting during recruitment to make sure that our writers have the knowledge and experience we aspire in the team.

Free Unlimited Revisions

Our aim is to give the client the best outcome. If for some reason you are not satisfied with the wok done, you can ask the paper to be revised or rewritten. This will be done to your satisfaction with no extra charges.

Prompt Delivery and 100% Money-Back-Guarantee

We have writers who work round the clock. This helps in making sure that all our clients’ papers are delivered on time. If we have issues with the deadline, we will ask for extension. If its not possible, the money is fully refunded.

Original & Confidential

Our clients’ confidentiality is highly respected. We can never disclose our clients’ details to third parties. In the same regard, we strive to give our clients 100% original papers. We do not tolerate plagiarism from our writers.

24/7 Customer Support

Clients can reach us any time of the day, and any day of the week. There is a live chat, email or phone numbers to help in ease of communication.

Try it now!

Calculate the price of your order

Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

You should never be worried about your papers even in the middle of the night. Our team will work round the clock to deliver.


Essay Writing Service

We have an able team that can deliver your work in the shortest time possible. The academic level or the type of work should never be a hindrance. Our highly competent support team is always around (24/7) to give you any assistance you may need.


Admission Essays & Business Writing Help

Do you need to be admitted in your dream institution but find it challenging to write an admission essay? Our team is in a position to write the best letter that will guarantee you an admission. We do as well write the best business proposals and reports.


Editing Support

Writing can be fun and enjoyable when everything has been done right. Writing is not just enough without proper editing and proofreading. We have a team of editors that ensure everything falls in place, whether its issues to do with grammar or referencing styles.


Revision Support

Once the paper has been done and submitted, that is not the end of it. You can always ask for amendment or improvement if you feel something has not been done right. Our team of writers and editors will gladly assist you to your satisfaction. Revision is free of charge.