Trade Unions, wages and taxation

<p>The recognition that trade unions are more likely to be concerned with the level of post-tax real wages of their members, rather than simply the gross wage, has led to a great deal of debate concerning the use of tax policy to affect the supply side of the economy in addition to the more traditional demand side factors. A prime example is the use of tax cuts in an attempt to reduce trade unions wage demands and thereby help in the 'battle' against inflation and unemployment. This type of supply-side argument contrasts with those suggesting that tax cuts can have a significant effect on the supply of labour; for discussion of these issues see Dilnot and Kell (1988) and Brown (1988).</p>