It’s quite straightforward, really. In addition to the valuable tips and overtime compensation that many employees rely on, we strongly advocate for either the complete elimination of taxes or a significant reduction in tax rates on bonuses.
It seems fundamentally unfair that when employees are fortunate enough to receive a bonus from their employers, a substantial portion of that bonus—often around 40-50%—is taken away by taxes, leaving the employee with far less than they originally earned. Bonuses are meant to be a reward for hard work and dedication, yet the current tax structure diminishes their value considerably.
By reducing or eliminating taxes on bonuses, we could ensure that employees truly benefit from their extra efforts and contributions to their companies. This change would not only provide immediate financial relief but also help to motivate employees to strive for excellence, knowing that their hard work will be more adequately rewarded. Ultimately, we believe that such a reform is not just beneficial for individual employees, but also advantageous for businesses looking to foster a more engaged and productive workforce.
Okay I’m restructuring my employment contract then.
They can pay me $1 a year and I’ll take a 200k bonus.
I’m okay with this idea but you have to implement limitations. Like the first 5-10% of your gross take home pay is untaxed when awarded as a bonus. So if I make 100k/year then the first 5000 of my bonus would be untaxed. This prevents people from taking no salary and being paid entirely in bonuses
You get that money back @ tax time FYI. They just tax bonuses at a higher rate up front then it counts toward paid taxes when you file. They aren’t KEEPING 40% of it forever lol
The amount paid gets factored into your total taxes paid. If you owed more taxes then yes you wouldn’t get any back but you don’t actually get taxed that high on it… just up front (which is still dumb because it’s a 0% interest loan to govt)