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I don't think there would be any more gaming than on any other tax change of that sort. Claiming to not be paid for the first 40 hours is convoluted, and besides, lawmakers aren't total morons and usually close such simple holes in the laws they write.
Don't you have such tax exemptions for night work, sunday work, overtime work in the US? They are very common in Europe - Sarkozy passed one (winning campaign slogan: "work more to earn more"). So did Hitler, and it held up.
Economically, the argument’s pretty straightforward. Why favour the hard-worker over the smart-worker? You can’t really entice workers to be more productive, but you can entice them to work more. So this is better for GDP.
Politically, people think it’s fairer to be rewarded for conscentiousness than intelligence. You could sell it as industrial policy, onshoring. You need more people in factories doing dumb stuff for long hours if you want to compete with china.
No. The night exemption seems especially bizarre to me. Why should income earned at night be any less taxed than income earned during the day?
For my father's long-time job the differentials were 2x for Saturday work and 3x for Sunday or holiday work. In my previous federal government job (~30 years ago) there was a shift differential of 10% for second (16:00-00:00) or third (00:00-08:00) shifts. I worked second shift which was quite acceptable for a young single guy.
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At one point post-war euros were struggling to encourage 2nd shift factory work. Maybe it's a holdover from that.
Edit: and not-post-war too, re. Hitler. I remember hearing a lot of German factories were running one shift even during the war. Admittedly probably half due to material shortages and supply chain problems, but they could have been doing some extra labour substitution.
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