Why is take home pay in the UK, so much less than other Western Countries?

paddyrg

davey_b wrote: »

We still pay far too much though, so the more people complaining the better.

Complaining is just whiny unless you can propose a better alternative. And if you have a good alternative, then by all means propose it as I'm sure Cameron will be all too keen to hear it.

Raise more money from industry? Great idea - but how? Raise tax and drive more Amazons and Starbucks chains offshore and so starve small business which provides employment? Cut taxes to attract businesses, but in the process raise less revenue from corp tax.

Or spend less? Well, that really is what they're trying to do after the spendhappy days of the last government getting into this situation. Which services should we cut altogether, seeing as they all face deep budget cuts already?

BTW do similar calculations for Sweden - you may see we're in the middle of a spread.

somethingcorporate

lvader wrote: »

My annual salary is quite a bit more than that and I don't pay nowhere near that amout of tax. I'm PAYE and don't file a tax return.

True, that.

It does not take into account all those lovely tax deductible goodies like salary sacrifice pensions, share schemes, childcare vouchers etc.

My gross on paper is over £50k but I pay nowhere near that amount in tax as bring my true salary way down with all the above.

drc

somethingcorporate wrote: »

Well, not really. If they cut income tax where do you expect them to get the money to fix the huge deficit from?

Increase VAT? Corporation Tax? all have massive downsides.

Taking a single point of view is completely blinkered when it comes to considering macroeconomic policies of a nation and it will never be solved by pulling a single lever.

I'm of the belief that lower income/corporation taxes = more productivity, more entrepreneurship, more companies investing in the UK etc. Higher taxes just feels like punishment for doing well and discourages investment. Just look at what is happening in France - all the rich are leaving because they don't want to pay punitive tax rates.

No taxes are nice but I favour raising VAT, rather than taxing income, especially VAT on non essentials. That way everyone pays, not just those on PAYE.

Btw, I used this calculator which I assume is correct http://listentotaxman.com/

Dunroamin

drc wrote: »

Yes of course but I was just surprised at how much tax and NI we pay in the UK. And then we pay even more tax in the form of council tax, VAT, car tax to name but a few. Where does it all go? How come the US and Germany can have a fairly well functioning society without high taxes? I know the Americans have to pay for health care separately but it can't be that much and presumably they get much better quality care as they can choose what to pay for and which insurance to go with?

Even if you're young, healthy and single, healthcare costs in the US are horrendous and you often have to pay extra out of your own pocket, even if you can afford cover.

MacMickster

Here is a list of nations and their taxation as a percentage of GDP.

http://en.wikipedia.org/wiki/List_of_countries_by_tax_revenue_as_percentage_of_GDP

If you want low taxation try Afghanistan or Cambodia. US taxes are pretty much at the bottom end of first world nations. Germany's tax take is a larger percentage of GDP than the UK.

Despite the party in power, the UK tax take percentage has changed little over the years. Unfortunately parties of all colours have tended to spend more than their income from taxation, hence our deficit and debt.

Get set for both higher taxes and greatly reduced spending over the next generation, pretty much whichever western country you choose to live in.

CLAPTON

drc wrote: »

I'm of the belief that lower income/corporation taxes = more productivity, more entrepreneurship, more companies investing in the UK etc. Higher taxes just feels like punishment for doing well and discourages investment. Just look at what is happening in France - all the rich are leaving because they don't want to pay punitive tax rates.

No taxes are nice but I favour raising VAT, rather than taxing income, especially VAT on non essentials. That way everyone pays, not just those on PAYE.

Btw, I used this calculator which I assume is correct http://listentotaxman.com/

so basically you want less tax paid by the well off and more tax paid by the less well off

very seasonal sentiment

happy christmas

somethingcorporate

drc wrote: »

I'm of the belief that lower income/corporation taxes = more productivity, more entrepreneurship, more companies investing in the UK etc. Higher taxes just feels like punishment for doing well and discourages investment. Just look at what is happening in France - all the rich are leaving because they don't want to pay punitive tax rates.

No taxes are nice but I favour raising VAT, rather than taxing income, especially VAT on non essentials. That way everyone pays, not just those on PAYE.

Btw, I used this calculator which I assume is correct http://listentotaxman.com/

Yes, I used that for the UK and this for the US: http://us.thetaxcalculator.net/

We can raise VAT but it raises prices which lowers demand. Plus, it is still a tax on the consumer so whether taken via PAYE or via VAT it largely amounts to the same thing! And as a % of income poorer pay more VAT than the richer so would not really be that great an idea.

I would not suggest our Income Tax rates are particularly punitive in the developed world, not compared to the level of service you get along side.

I am dead against the wastage throughout the public sector and services but I am proud that there is something in place to help everyone that needs it.

BritAbroad

drc wrote: »

Yes of course but I was just surprised at how much tax and NI we pay in the UK. And then we pay even more tax in the form of council tax, VAT, car tax to name but a few. Where does it all go? How come the US and Germany can have a fairly well functioning society without high taxes? I know the Americans have to pay for health care separately but it can't be that much and presumably they get much better quality care as they can choose what to pay for and which insurance to go with?

I live in the US and in my experience we pay significantly more tax than your calculation would suggest. Also, health care costs are very, very high - think several hundred dollars a month to have the insurance, and then you still have out of pocket expenses for every visit to the doctor, hospital appointment and prescription. The quality of care is not any better than the UK either. We also pay substantially more for household and car insurance than in the UK (my house insurance last year was almost $3000 and my car insurance was around $1500), because the insurance companies require you to have cover in case of liability or health costs.

Public services here are not good - I was shocked by the number of beggars I have seen. There is no safety net here and it's not at all unusual for people to be bankrupted by medical costs. The public education system appears to be mediocre at best.

My annual property tax is equivalent to what I paid in the UK for council tax, but with fewer facilities provided. We have HOA fees (a bit like factoring), I am lucky that my HOA is cheap but some are very expensive. My gas, electricity, water and waste bills are about triple what they were in the UK and there's no choice of provider either.

Petrol here is undoubtedly cheaper - currently running at about $3.10 per (American) gallon. Car tax is about the same as I paid in the UK. We also pay sales tax when you buy a used car.

Sales taxes vary significantly here, to the point where it can be cheaper to travel to a different city or county if you're making a major purchase and have something delivered, rather than buy it locally.

Things like clothes are generally cheaper, but the quality is not great compared to in the UK. Food in the supermarket is more expensive than it is in Britain yet eating out is cheaper.

I think the point is that looking at tax and NI alone only tells part of the story. Overall, I think the cost of living in the US is about the same as the UK.

Dunroamin

drc wrote: »

Do you think? I don't think the NHS is that great and it is not completely free, you have to pay for a lot of things still, even after paying all that tax and NI.

Average cost for a US health insurance for a single person is around $200 pcm, for a family, just over $400. Average cost of the deductible (excess) for health policies is $2,000 pa. (2011 figures)

Don't knock the NHS!

kabayiri

I work with IT contractor types, some of which use lets say interesting umbrella companies.

There used to be one outfit offering nearly 90% take home. That's pretty much gone, but others offer 70 to 80%. They do get pressure on them from the authorities, and some fold, but others spring up all the time.

They use offshore facilities just like the Amazon and Googles off this world. If you can't beat the big boys, join them!