What do these people pay in tax in your country ?

[Quartz]

@Grim_Render

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.

As it happens, I’ve just received my tax statement: here in the UK, ‘Health’ - which includes the NHS - is 20% of my tax; ‘Welfare’ is the biggest element at 24%.

[puddleglum]

Excluding the VAT is misleading because that is what separates the US tax system from most of Europe. The US collects 49% of its taxes on profits and income. The OECD average is 34%, the US trails only NZ, Australia, and Denmark and none of those countries collect a separate social security tax. The US only collects 17% of total taxes as sales tax which is almost half the OECD average of 32%. Thus if you only compare income taxes that is the area the US taxes the heaviest while leaving out the type of tax that America taxes the least.

[puddleglum]

@CarnalK

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.

According to the OECD report Growing Unequal the US has the most progressive tax system in the world among rich countries. In 2005 the US collected 45% of taxes from the top 10% of earners. The OECD average was 31.6%. Ireland was second with 39.1%. The ratio of taxes paid to market income was also highest in the US with 1.35 compared to the average of 1.11. Note that this does not include VAT or sales tax, so just the income tax system.

South Africa does has the most progressive tax system in the world but is not included in most lists because it is not considered a rich country. South Africa is the world’s most unequal in terms of income so that is probably why it is so progressive in collecting taxes.

[puddleglum]

Since it is so hard to compare tax systems because of the different layers of government and the different types of taxes the easiest way is to look at taxes as a percentage of GDP. The percentage for the US is 26 and the percentage for Norway is 54% so Norway pays a little over twice as much in taxes as the US.

[Grim_Render]

@puddleglum

Excluding the VAT is misleading because that is what separates the US tax system from most of Europe.

That does not make it misleading.It is about comparing taxes, and you can get all that just by looking up PPP comparisons. Gas taxes, VAT, road taxes etc all get rolled up into purchasing power adjustments.

Yes, it is the area that the US taxes the least, but that is part of the reason why the US has a lower cost of living. I suppose I should have specified personal taxes.

But it’d be much more complicated to include all those surcharges. VAT varies by how much of your income goes to necessities and by location.

@puddleglum

Since it is so hard to compare tax systems because of the different layers of government and the different types of taxes the easiest way is to look at taxes as a percentage of GDP. The percentage for the US is 26 and the percentage for Norway is 54% so Norway pays a little over twice as much in taxes as the US.

No, that really is misleading because we are looking at the tax burden on individuals here. Taxes as a percentage of GDP is affected by how the tax burden is allocated between individuals and businesses, how many loopholes there are (i.e. what taxes are actually paid by businesses) and what percentage of the population is working. Or how many backs share the tax burden on individuals.

[CoastalMaineiac]

@Eyebrows_0f_Doom

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

And then only if he works some overtime.

[puddleglum]

@Grim_Render

That does not make it misleading.It is about comparing taxes, and you can get all that just by looking up PPP comparisons. Gas taxes, VAT, road taxes etc all get rolled up into purchasing power adjustments.

Yes, it is the area that the US taxes the least, but that is part of the reason why the US has a lower cost of living. I suppose I should have specified personal taxes.

But it’d be much more complicated to include all those surcharges. VAT varies by how much of your income goes to necessities and by location.

No, that really is misleading because we are looking at the tax burden on individuals here. Taxes as a percentage of GDP is affected by how the tax burden is allocated between individuals and businesses, how many loopholes there are (i.e. what taxes are actually paid by businesses) and what percentage of the population is working. Or how many backs share the tax burden on individuals.

If my paycheck goes down 15% because of a tax increase or everything I buy goes up in price 15% because of a VAT, then in both cases my standard of living has stayed the same.

Taxes fall on people, not businesses either through reduced income for the owners or higher prices for the customers. Either way, it is people who pay the taxes.

[Kimera757]

@Grim_Render

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?

In Canada, people pay taxes individually, not as a married couple (though they can share some tax credits). But in the US there are different options. For some countries we would need to know what Harriet’s spouse’s income is. (And do we need to deal with the potential of being common-law instead?)

@Grey

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.

#2 can take advantage of the student loan interest tax credit. It’s not much, but better than nothing.