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You've excluded employers national insurance contributions here, which is 13.8% of total pay. That makes the true "main" marginal rate c.44% (20% tax + 12% empl

You've excluded employers national insurance contributions here, which is 13.8% of total pay. That makes the true "main" marginal rate c.44% (20% tax + 12% employee national insurance + 13.8% employers NI / 113.8%). Most higher earners in e.g. tech or professions will be in the 40% band at least, where the true marginal rate is c.49% (40%+2%+13.8% / 113.8%). The "top" marginal rate is c.53% (45% tax+2% employee NI+13.8% employer NI / 113.8%) although the highest marginal rate comes between £100k and c.£123k as the personal allowance (bottom 0% band) gets withdrawn making the effective rate (40%+50%x40%+2%+13.8% / 113.8%) = c.65%. (And at the very low end of the scale, as benefits get withdrawn the marginal combined rate of tax and benefit withdrawal is also extremely high). We don't allow joint filing for married couples which is a significant benefit, especially for single earner couples with high earnings, in the USA. Then we have mandatory minimum private pension contributions (given these all go into a defined contribution scheme, it's just pay by another name), the apprenticeship levy, etc etc. Overall, I'd say the UK and "high-tax" parts of the USA (California, New York etc) are similarly taxed at least as far as income is concerned.

walshemj 8y ago
Adding the employers contribution to calculate marginal rates for employees is not how its calculated. Do you think any employer in the uk would magically give you the 13.8 if employers ni went away. And most STEM jobs including tech don't get into the higher band at 46,350 I think you ignored the tax free band.
- Joky 8y ago
  Not including employers contribution when comparing countries is just non-sense to me: the only number that matters is the total cost per added employee for a business, and on the other side for the employee the after-tax money that remains after everything is deducted. And then you can put the services you get for the money (i.e. yes taxes are higher in France for instance, but the state provides also much more).
- tomatocracy 8y ago
  Yes I do think it would be likely to end up in employees pockets for many actually, over time (but probably only for a few overnight). This is what has largely happened with employer pension contributions which were capped first via the lifetime allowance and then the taper down from 40k to 10k for income over 150k. Most employers now offer a cash (ie salary increase) alternative at neutral cost to the employer.
isostatic 8y ago
Withdrawal of child benefit puts a 60% or more marginal rate from £50k to £60k (plus the 12% employer ni)
arountheworld 8y ago
The professionals in the UK work on a b2b basis because with current salaries and taxes it makes no sense to be an employee. Still you get taxed highly, but it is slightly better. Sadly the Tories are turning left and they look into taxing professionals too. I would be looking into leaving the country if they do.

walshemj 8y ago

Adding the employers contribution to calculate marginal rates for employees is not how its calculated. Do you think any employer in the uk would magically give you the 13.8 if employers ni went away. And most STEM jobs including tech don't get into the higher band at 46,350 I think you ignored the tax free band.

Joky 8y ago
Not including employers contribution when comparing countries is just non-sense to me: the only number that matters is the total cost per added employee for a business, and on the other side for the employee the after-tax money that remains after everything is deducted. And then you can put the services you get for the money (i.e. yes taxes are higher in France for instance, but the state provides also much more).
tomatocracy 8y ago
Yes I do think it would be likely to end up in employees pockets for many actually, over time (but probably only for a few overnight). This is what has largely happened with employer pension contributions which were capped first via the lifetime allowance and then the taper down from 40k to 10k for income over 150k. Most employers now offer a cash (ie salary increase) alternative at neutral cost to the employer.

isostatic 8y ago

Withdrawal of child benefit puts a 60% or more marginal rate from £50k to £60k (plus the 12% employer ni)

arountheworld 8y ago

The professionals in the UK work on a b2b basis because with current salaries and taxes it makes no sense to be an employee. Still you get taxed highly, but it is slightly better. Sadly the Tories are turning left and they look into taxing professionals too. I would be looking into leaving the country if they do.