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If you were to pay 50% in income tax, avoiding that tax would effectively give you a 100% raise. Avoiding paying 32.5% (the most common tax bracket) would give you an effective raise of 48.1%, which is very close of 50% when you include medicare.

Obviously they would be. They get an effective 50% raise and the business doesn't have to pay overtime, super, sick days, annual leave, etc. The only one that wouldn't be happy would be the tax man. I think that this probably isn't legal, and if it is, why isn't everyone doing it?

Considering they're avoiding paying income tax (I'm assuming), why wouldn't they do it? That's nearly like a 50% raise.