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My buddy and I got in a discussion. I got a cost of living raise and told him. His response was basically "economy is bad, you should be grateful". I told him that increasing my gross pay by the inflation for the year is basically getting a pay cut because my raise gets taxed and now it no longer matches inflation. He very much disagreed with this and said that companies never account for taxes in these. Sure...they don't. But shouldn't they?
Edit: I guess I should have said "effective pay cut". I know on a pure numbers sense I make more, I just think that my net pay increase is lower than inflation, which measures how much costs increased.
No this is a very common misconception. Tax brackets are progressive. You are taxed a certain percentage on dollars after a certain amount. You never 'lose' money by getting a raise or working overtime.
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