Myth! Working overtime isn’t worth it because the government takes more than I earn

Seeing as it’s Halloween, I’m going to get spooky here for a minute and talk about my old job

spooky crash

For anyone who’s new, I worked in a unionized job counting cash for 5 years ending this past May (like this but smaller, dirtier and with 100% less exercise). While I have no scientific proof, my experience has shown that unionized jobs tend to attract people who are lazy, unmotivated and/or unproductive. In my case, 95% of the employees were uneducated and said things like:

“The federal government is stealing from les Québecois”
“Why would I teach my son English?”
“Why would I enroll my child in free Arabic classes?”
“Don’t speak English near me”
“This is MY stapler”
“We need to keep subsidized tuition because $2000/year is too high”

Wow. I’m glad I got that off of my chest.

The most often hear comment though was something along these lines:

“I can’t work overtime, I’ll have to pay more taxes”
“I can’t get a second job because I’ll pay more in taxes than I’ll earn”
“You better work less Vanessa or else the government will take everything you earn”
“If you earn more than $400 a week, the government takes it”
“I’m not applying for that better paying job because I’ll earn less once I pay taxes”


(I asked my boss one day if I could hold a demonstration on how progressive tax rates work and she told me that it was a waste of time. However, if I had gotten through to even one person, he would have worked overtime and increased production. But I digress)

Taxes are a percentage of income earned. Until your tax rate is 100%, you will always, always be earning more money than had you not done overtime/taken another job.

Example (in Quebec):

  1. A cash clerk is paid $15/hr and works 40h per week. Yearly salary = $31 200 and gross tax owing is $5 361
  2. A 2nd cash clerk is paid $15/hr and works 53h per week. Yearly salary (with overtime) = $46,410 and gross tax owing is $10 169
  3. A 3rd cash clerk is paid $15/hr and works 40h per week. She has a second job where she earns $12/hr and works 20h per week. Yearly salary = $43 680 and gross tax owing is $9 121
  1. Clerk 1 walks away with $25 839 at the end of the year
  2. Clerk 2 gets $36 242
  3. Clerk 3 gets $34 559

So why the confusion? Well, aside from the obvious that most people aren’t taught and don’t seek out financial knowledge, I blame the source deductions.

You see, each pay period, the clerks will see their federal and provincial taxes deducted from their paycheques. Payroll doesn’t calculate source deductions based on what you will earn, they based them on what they usually pay you. (unless you demand that source deductions are increased). In each of these scenarios, the company will deduct the same amount from each clerk’s paycheque because, in their books, each clerk is usually paid $31 200 and owes 17% tax. What you do once your 40h is over is not payroll’s problem.

So, April rolls around and each clerk files their tax returns. Clerk 2 will owe $4 808 and clerk 3 will owe $3 760. If they are smart they’ll keep quiet because everything is normal and fair. But alas, these people are uneducated about taxes and instead complain to everyone who listens that they had to pay thousands in taxes and the government is penalizing them for working overtime and having a second job. What they have forgotten, of course, is that they earned an extra $15 210 and $12 480 over Clerk 1. However, it will be Clerk 1 who sits there smugly and advises them to only work 40h a week.

And so the cycle continues.