my personal experience is that loyalty is not rewarded - it's only when you leave that you get offered more - and i don't think that will change whatever the tex system. If they think you're going to work for them forever they won't try to encourage you to stay. and what's wrong with a taxable raise as a form of encouragement? you still get more money! anyway, the tax regime is already factored into the labor market - if we currently accept a raise of $100 after tax then the market will support a raise of $100 whatever the rate of tax. so you'll be unlikely to get more but your employer will benefit by the amount of the tax reduction.
by the way, there's no need for tax at all in an economy where the state rather than the banks creates the money.
naff looking website but the ideas in it are pretty good.
http://www.xat.org/