What do these people pay in tax in your country ?

In My Humble Opinion
1

Tax burdens is something that often comes up in international discussions about economy, welfare and quality of life. And there seems to be an awful lot of myth and misunderstandings out there. How marginal tax rates work.

So I thought I’d set up a bit of basis for comparison. How much do these people pay in total tax in your country ?

**Tom **is 25 and works full-time as a cashier in his local shop. He is unmarried with no children, mortgage or student loan, and he rents the flat he works in. He makes $ 57 500 per year.

Dick is 35, works as an engineer and makes 100 000 per year. He has 300 000 left to pay on his mortgage, and 30 000 left to pay on his student loans. He owns a house worth 700 000 and a cottage at the seaside worth 250 000.

Harriet is 45, a doctor, and makes 150 000 per year, and is married with two children. Her share of the mortgage is 400 000 on a house woth 1000000, and they own a flat in Portugal with Harriets share worth 150 000 and a cottage in the mountains worth 200 000$.

I’ve assumed no particular assets for Tom, and cash, car etc worth 20 000 for Dick and 30 000 for Harriet.

What is their total tax percentage in your country ? Not marginal tax rate but total tax payments?

In Norway:

Tom pays 23 % tax. Dick pays 27 % tax. And Harriet pays 32 %.

(In practice Harriet has a number of options available to reduce her tax that is not so easily available at lower incomes. Once your income becomes high enough it becomes more a question of financial advice and accountants)

People below Toms level would pay progressively less tax. If he was a student working 50 %, and making 30 000 , he'd pay 15 % tax. At 25 % hours, and an income of 15 000 he pays 8 %. Below 12 500 its 0 %.

I’ve used the tax authorities own claculator and a 10-year average exchange rate.

What does Tom, Dick and Harriet pay in your country?

2

Here’s the calculator for the UK:
https://www.gov.uk/estimate-income-tax

Fill your boots.

3

I think it would be very hard to give a simple answer to those questions because of the complexity of the Federal tax code and the variation in state tax laws. In the first example, he’d owe in the neighborhood of $6,500 in Federal taxes, and just as a total swag, maybe $2,500 in state and local taxes? So that’s what, like 16% in income taxes? And then there’s payroll taxes, so that adds about another 10%, so in rough terms, about 25% tax rate? I could be forgetting something substantial.

I can’t even begin to guess how the other two may fare, given that the interest they pay on their first house is deductible, the state taxes they pay is deductible, and so on. Maybe someone else has the patience to do that, but I certainly do not.

4

In Spain it varies by region; also by not profession but mode of employment: the engineer and the doctor will pay different taxes if they are employed by a firm, a partner in one, the owner of one or self-employed.

But your Tom-the-cashier makes more than the average Spanish doctor, so until we can do a parity exchange rather than a direct bank conversion the whole thing goes a bit out the window…

5

Using tax calculator for Canada I get roughly
57k taxed at 23% -> 43k
100k taxed at 27% -> 72k
150k taxed at 33% -> 100k

It takes into account Federal & Provincial amounts (though they do vary a bit by province), Canadian Pension Plan and Employment Insurance deductions. Property tax, provincial/federal sales taxes etc. are not included.

6

Yeah Tom the cashier is not making $57,000 in the US. More like $27,000.

7

In the US for it would depend on the state but assuming a 5% state tax Tom would pay 22.78% if you accept that his employer pays half of social security and medicare and 30% if you don’t. Dick would pay 28.2% or 35%. Harriet would pay 27.9% or 35%. The average sales tax rate in the US is about 7% and the average property tax is around 1%. If they spent everything they made Tom’s total amount would be 37%, Dick would pay 53%, and Harriet would pay 50%.

Do the figures for Norway include the VAT and the employers portion of social security? The lack of a VAT is why US tax rate are among the most progressive in the world.

8

Less. $27K per year comes out to $12.98 per hour, assuming a 40-hour schedule and no time off/OT. Apparently cashiers make more in Washington than anywhere else, and they average $23K there.

9

And the doctor would probably be making $200-250k.

10

I am with Ravenman, OP. You are asking a pretty complex question. Also you’ve given superfluous information and omitted important ones. The amount of interest being paid on those loans is what’s important, not the balance. And in Canada at least, owning a vacation home doesn’t affect your income taxes unless you’re renting it out, selling it would require paying capital gains taxes.

Tom is the only easy one: In Canada, depending on the province, he’d pay 17-23%.

11

Maybe he’s a cashier at the Harry Winston diamond store.

12

A quick google shows that the minimum wage in Norway, obviously the OP’s place of residence, is about $21 US. (there’s no min wage law, that’s worked out through collective agreements)

13

So Tom is making about 20% over minimum wage. In Canada, that would be about $28,700/yr and he’d pay 12-16%.

14

Ok, the reason I am doing this is that I have just read too many people who post “well, the reason that Europeans can have UHC is that they pay 60-70 % tax” and similar things. Not necessarily here. By people who don’t know what marginal taxes are or assume their own country is the only one with such a concept. So I was looking for more knowledge on actual out-of-your paycheck taxes for a spread of normal people.

It may have been better suited to General Questions. I thought it a bit more of a discussion, but not enough for Great Debates. Maybe it should have been in one of those.

I have deliberately avoided the things that do not come out of your paycheck, but are included in purchasing parity adjustments.

The loan interest is deductible in Norway too. I plugged the numbers into a loan calculator and used a fairly average interest, about 4 %.

That is interesting, it is almost identical to Norway.

I looked up the average pay of a full time shop assistant for that. It is why Tom is a bit older than the average shop assistant, young people doing it part time for a couple of years pull the average down. I selected shop assistant as an example of one of the remaining options that require no particular degree, education or apprenticeship.

I’ve included the amounts because I suspect the interest rate varies by nation. You are however correct that the actual interest would have been better because it would eliminate variables like how many years are left on the mortgage. I didn’t think of that:(

I have included things that may be superfluous in some nations because other nations have wealth taxes etc. These are the common denominators in Norway. There will be other deductions and tax dodges, but they won’t affect the majority of the population from shop assistant to doctor.

The average for a specialist in the US is 230 000 , a GP is 161 000. The average for a non-specialist GP in Norway is 110 000. I can’t find an average for specialists but they make a good chunk more I think. But a lot of difference between the specialities.

Nothing that goes into purchasing parity adjustments, just what comes out of your paycheck.

15

I’d like to know how puddlegum came to the conclusion that the “US tax rate are among the most progressive in the world.” Canada has a VAT, is it significantly less progressive in its tax rates? South Africa has one of the most progressive tax regimes and they have a VAT, I believe.

16

At least for the US, remaining mortgage amount is meaningless. What matters is mortgage interest paid that year, and in most cases the interest is capitalized more towards the beginning of the mortgage.

17

It would be more precise to say the U.S. tax system taken as a whole is among the more progressive in the world. A VAT is close to a sales tax, and sales taxes are a lesser part of the U.S. tax system. There is no federal sales tax, and the rates of state sales taxes vary from zero to about ten percent, with lots of items excepted. Sales taxes/VATs are regressive, in that low income households spend the same or a higher share of their income on taxable items than high income households.

The low income cashier might well spend half his income on VAT items, so in Norway, for example, with a 25 percent VAT, that adds 12.5 percent to his tax charge.

18

In Canada and South Afica the VAT is made somewhat more progressive by exempting staples and such. In Norway, that VAT drops to 15% for food and beverage.

19

I’d like to see someone’s research before I agree that the US has one the most progressive tax regimes even taken in total. This oxfam study seems to put them behind Canada and South Africa:

20

In point of fact, VAT in Norway range from 0 to 25 %, being weighted so necessities (for example food, children’s clothing, cultural stuff, books, dentistry, transport etc) have reduced or zero VAT. The point of that is to angle VAT towards luxury consumption. The more you spend that isn’t a necessity the higher VAT climbs towards 25 %.

That is one reason not to include it among takehome pay calculations. It’d be very, very complex to calculate how much it takes out of an individuals consumption. Whereas it is included in PPP adjustments so that all done ahead of time.

Also a part of Norway has no VAT. WHereas other nations have varying levels by state/location. Bit of a mess to calculate.