Highlights
The Unseen Economics of Salaried Work
In a viral LinkedIn post, Anish Sengupta, a technology expert based in Bengaluru, elaborated on the hidden economics of salaried employment, highlighting how taxes and corporate profit margins significantly reduce every paycheck before it reaches the employee.
Tax burdens vary greatly depending on the region. For instance, in the United States, a professional like Alex might lose around 22-24% of his $100,000 salary to taxes. In contrast, Sophie in Europe could lose as much as 38-45% of her €100,000 income. Meanwhile, Omar in the Middle East enjoys a tax-free income of AED 80,000. Indian employees, such as Arjun, who earns ₹24 lakh annually, faces a 15-20% tax obligation.
Sengupta emphasizes that in most areas, the government is compensated before the individual is, highlighting the significant impact of taxation on income distribution.
The Employer’s Return on Labor
Sengupta also points out the relationship between the value employees create and their remuneration. For example, a factory worker in the US like Joe might yield 3–5 times their salary in revenue, while analysts like Emma in the UK can deliver value up to 5–8 times their compensation.
In India, engineers like Vikram may generate profits of 6–12 times their wages for their companies. Furthermore, vice-presidents in the US could potentially provide 20 times their earnings in value.
As Sengupta notes, the more specialized an individual’s skills, the higher the returns for the employer. Conversely, for mass roles, the scale might be extensive, but the individual contribution tends to be lower.
Who Are You Really Working For?
Analyzing the average working year leads to a more revealing perspective: In the United States, approximately 90 days are allocated to taxes, 140 to the employer, leaving only 130 days truly “for oneself.”
In India, after 75 days are spent on taxes and 160 days on employer-related value, just 130 days are available for personal income.
Even in the tax-exempt economies of the Middle East, individuals might dedicate 180 days to company profits.
The Bigger Picture
Sengupta’s fundamental message is clear: Most workers are not truly earning for themselves for a significant portion of the year. He poses the question, “If half your year is spent on taxes and contributions to others’ profits, are you actually earning for yourself?”
He urges professionals to rethink their financial strategies: “The game shifts dramatically when one learns to invest wisely, optimise taxes, and accumulate assets. True wealth is not merely dictated by earnings, but by what one retains.”
In an environment where salaries are often equated with success, Sengupta’s insights serve as a powerful reminder: grasping the intricacies of one’s finances is the first step towards truly owning them.
