Business: High Cost of Being Made Whole

How big a raise would a worker have to get to keep up with inflation after federal, state and city income taxes take their bite? Certainly price rises and tax rates vary from one part of the country to another; but the following figures, prepared by the Ernst & Whinney accounting firm, show how big a boost three families, each consisting of four people and living in New York City, must be given to keep them even with the national inflation rate of 13%. In all three cases, both spouses are assumed to be working, each earning half the family income.

Current gross income / $15,000 / $30,000 / $60,000

Raise needed to increase after-tax income by 13% / 2,418 / 5,830 / 11,516

Percentage increase / 16.12% / 19.43% / 19.19%