Why is tax so high ?

[Greebo]

It would be interesting to calcuate how much you actually pay in tax through a year and convert that to a percentage. For higher tax earners, I really would not be surprised if it breached 50%.

Sue I saw a figure somewhere for an average 40% tax payer family doing normal stuff accounting for vat on purchares, direct tax and NI, council tax, fuel duty, vehicle excise etc it worked out to be 59% of your earnings.

 

[Andrew_McP]

Nobody will defend every penny of tax spend. But generally we undervalue the cost of living in a civilised nation where we have -- for better or worse -- decided to pay people to look after our elderly, care for our sick, and look after lowlife so that we can stand around filming them on our expensive smartphones instead.

When all's said and done, we don't do so badly in this country, and anyone spending £500 on a video card isn't exactly struggling for cash. And if they are, then they're struggling for sanity instead.

 

[momentimori]

It would be interesting to calcuate how much you actually pay in tax through a year and convert that to a percentage. For higher tax earners, I really would not be surprised if it breached 50%.

Dividends and capital gains, major sources of income for the richest, are preferentially taxed compared to income. Add in the other perks and you'll discover those on the highest incomes pay a far rate of tax than you'd expect.

 

[stuie]

The tax is higher than most people realise... you've already paid 23% or 40% tax on the money earned before spending it. So if you're a 40% tax payer then it's:

£500
of which you already paid £200 in tax as PAYE.
then another £100 VAT

So for a £500 item you may have paid £300 in tax if an upper rate tax payer. That doesn't even include NI.

Assuming your on 35k a year 500 pounds of that it is 1.42 % of your yearly income

22% of that is tax free leaving 409 pounds taxable
of your 35k only 1% is at 40% so thats 4.09 at 40% which is 2.92
leaving 406 at 20% which is 81
added together means less than 85 quid is paid in income tax on your 500 quid purchase half of what you thought it was

 

[Freefaller]

If you're cross at 20% vat don't get a job where you're taxed at 40%!

 

[peter_hutson]

Dividends and capital gains, major sources of income for the richest, are preferentially taxed compared to income. Add in the other perks and you'll discover those on the highest incomes pay a far rate of tax than you'd expect.

It seems that the moderately successful get spammed for tax, while the very successful get of relatively lightly.

Why cant we just aligh corp tax, income tax, capital gains tax and dividend tax( or whatever it's called). You can argue about what the tax rate and tiers should be (progressive or regressive), but why should someone or an organisation pay less tax on incremental income if the source is X rather that Y? It just seems odd to me.

 

[Freefaller]

Assuming your on 35k a year 500 pounds of that it is 1.42 % of your yearly income

4.375 % of that is tax free leaving 478 pounds taxable
of your 35k only 1% is at 40% so thats 4.78 at 40% which is 1.92
leaving 478 at 20% which is 94.644
added together means less than 100 quid is paid in income tax on your 500 quid purchase half of what you thought it was

If you're on 35k you're not a 40% tax payer.

 

[stuie]

I think the government might have something to say about that

https://www.gov.uk/income-tax-rates

edit ahh no your right 35k plus the 8k allowed see thats why im not an accountant. Eitherway though you get the idea its nowhere near what he thought it would be

 

[mattyg]

If you're on 35k you're not a 40% tax payer.

Depends on how good your accountant is

 

[LordSplodge]

If you're cross at 20% vat don't get a job where you're taxed at 40%!

But not all that income is taxed at 40% (and if you are a higher tax payer you don't tend to get so concerned about that £100 vat on a GPU. It's only a £100 after all)

 

[Disco Boy]

If you earn £35k gross, then you take home £26.62k net after tax and NI. So your effective taxation rate is 24%.

 

[mattyg]

But not all that income is taxed at 40% (and if you are a higher tax payer you don't tend to get so concerned about that £100 vat on a GPU. It's only a £100 after all)

Plus If anyone asks of course I need a Titan for my business PC.

 

[momentimori]

It seems that the moderately successful get spammed for tax, while the very successful get of relatively lightly.

Why cant we just aligh corp tax, income tax, capital gains tax and dividend tax( or whatever it's called). You can argue about what the tax rate and tiers should be (progressive or regressive), but why should someone or an organisation pay less tax on incremental income if the source is X rather that Y? It just seems odd to me.

The less mobile a factor of production is the easier it is to tax.

Capital is extremely mobile and therefore lightly taxed.

Labour is a lot less mobile and more heavily.

Land is immobile and barely taxed.

We would get a far more equitable tax system if we moved some of tax burden from labour onto land; reward hard work and discourage destructive property speculation.

 

[mattyg]

The less mobile a factor of production is the easier it is to tax.

Capital is extremely mobile and therefore lightly taxed.

Labour is a lot less mobile and more heavily.

Land is immobile and barely taxed.

We would get a far more equitable tax system if we moved some of tax burden from labour onto land; reward hard work and discourage destructive property speculation.

Whilst I think your correct.

I develop property aswell so begger off

 

[aln]

That reads like for every £500 you earn as a 40% tax payer you pay £200 in tax. Thats NOT correct

It is a bit like that though. Sure, it's not worked out like that, but for anyone earning a living wage or better, you're probably losing over 40% of your money on tax.

Earning ~nat average you'll lose about 21% from NI + Income Tax. Beyond that, you'll now face 20% vat on everything you spend, which will bring you to about 36%. Sure we have tax free items, but realistically the likes of fuel duty and council tax is fairly regressive and will hurt the less wealthy disproportionately, happily rasing you over 40%.

There are studys to suggest that such a family will be paying a 73% effective tax rate, the highest in the world, and while we're all too happy to quote higher rates for the likes of sweden, generally those are affect the rich and at national average you're going to be seeing far more sane numbers such as 30%.

What you actually spend on tax is really bloody complicated. It depends on how you earn you money, how much you earn, and how you spend it. It's a shame that the poor are too stupid to realise how much they pay because they're focused on how much the high earners do.

 

[Freefaller]

Depends on how good your accountant is

Hehe true however if you're earning 35k gross I doubt you'll be needing an accountant

But not all that income is taxed at 40% (and if you are a higher tax payer you don't tend to get so concerned about that £100 vat on a GPU. It's only a £100 after all)

No of course you're right, however I was just pointing out the example was incorrect.

https://www.dropbox.com/s/4osgd2q9bsd4qyj/Photo 24-05-2013 13 20 05.png

 

[PermaChanged]

What is this VAT you speak of?

 

[Souleh]

That is ofcourse VAT paid with money that is typically subject to income tax, not forgetting national insurance.

Unless ofcourse youre purchasing it as a busines where you pay neither.

 

[peter_hutson]

and if you are a higher tax payer you don't tend to get so concerned about that £100 vat on a GPU. It's only a £100 after all

In which case, can I have £10 out of eveyones pockets that pays 40% tax. They won't mind, it's only £10. I suspect I won't get many offers

 

[Freefaller]

Only if I get £100 from all the 45% tax payers