That’s a stretch. Businesses must respect demand. They can’t just pay whatever they want. If the pay is low, desirable employees will go to higher paying employers. You are trying real hard to find a way for no taxes to be bad for the employee. Following your logic, do you think the Federal government should raise taxes on OT so businesses increase salaries?
Unlike tip taxes I have an example for this one.
20 years ago, when working security in Vancouver, I met an elderly Indian guard from another company. We talked shop and I found out he made $3 an hour less than me. He asked why I left my post. Told him it was a coffee break. He said "at Polo Security we make our coffee at home."
So I asked "that sounds rough. Why do you keep working for them?" His eyes lit up "Because they give you all the overtime you can work. I put in 60 hours every week."
The numbers whirled through my head. "So 20 hours a week at time and a half. That's almost another check."
"Oh no" he corrected. "Our overtime is regular pay. But you still make more money."
I shook my head. It was completely illegal, but Canada's labor laws are poorly enforced. And immigrants can't collect benefits until they've been in the country 10 years. This poor guy probably needed the money even if he had to work himself half to death.
In the next few weeks I noticed Polo Security were at nearly every mall, apartment complex and grocery store. The guards came in every age and ethnicity. All looked half asleep and burnt out.
Moral of the story, there is no shortage of desperate souls willing to give up their health, dignity, and rights for a few extra dollars. There's no shortage of greedy companies willing to exploit them. Eliminating overtime tax makes it that much easier.
