Tax cuts make people work harder

There are some who think this is incorrect.

Let's think about this.

Taxes cut, I keep more of my money earned. I am therefore more motivated UNLESS a) I have reached my target income and trade off work for leisure and also b) I am ABLE to cut down on my hours. (How many jobs let you do this?)

So either a) I will look for more work, more overtime (as the rewards have risen) or there will be no reaction other than short-term benefit.

Theerfore out of ten people, 7 may have no effect or only short-term, three will work more overtime.

Then there's the self-employed. They work hard anyway but cut their tax and the rewards are greater and so they may work even harder. Maybe they have more control over their work-life balance, maybe less.

If tax cuts don't make people work harder then why do companies offer higher wages to attract new workers? Why offer productivity bonuses?


  1. Companies offer higher wages to attract new workers, it is because people always want a higher income, more new workers would choose to go to the company that offered higher wages, companies have more choices among the workers. By offer productivity bonuses, it is like an addition , movitate people to work more, then the companies gain as well as the worker.

  2. By offer higher wages,more worker would be attracted certainly, and companies would have more choices among the workers.By offering producivity bonuses, it motivate worker to rise their productivity to have higher income. they gains and so does the companies, and normally, companies gains more.

  3. and i wondered, if people pay less tax, government spent less on public services such as health care, therefore, people might have to spent on some services that previously was free?

  4. Companies will offer higher wages in order to attract workers, especially those with skills adn high productivity. I have real doubts that only 3 in ten people will work harder if expected to get higher incomes. In my opinion, tax cuts and productivity bonuses have a profound effect on the productivity of labour. The backward bending supply of labour curve shows that at a certain point the target wage will be achieved. However, we cannot say at which point of the curve individual workers are and if we are deep in the substitution effect part of it, workers will work harder and productivity will be raised.