Inside Report (2)

Do heavy taxes on wages take away some of the blue-collar employee's incentive to work?

Yes, says David R. Kotok, an economic consultant in New Jersey. He cites the following example:

An unmarried, unskilled new worker in New Jersey is paid about $4 an hour - roughly $7,800 annually. From that the young worker must pay about $910 in US income taxes, a $156 state income tax, a $523 social security tax, and a $78 state unemployment and disability tax. Total: $1,667 in taxes. What's more, studies show that New Jersey workers averaged $1,185 a year in job-related expenses in 1981 - transportation, work clothes, meals, and so forth. Deducting this from the worker's net pay after taxes leaves only $4,948 a year, or about $ 95 a week.

If the worker loses his job, instead of that $95-a-week pay he can cash in on ''vacation.''m