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Surely the amount you pay yourself is deducted from the amount you pay 20% corporate tax on before you are taxed?
by rorykoehler 5y ago
Surely the amount you pay yourself is deducted from the amount you pay 20% corporate tax on before you are taxed?
- Scoundreller 5y agoProbably not. Dividends aren’t a deductible expense for a Corp. Income is (which is why the rates are higher).
- jbverschoor 5y agoThere you pay 40-50% incometax first
- rorykoehler 5y agoNo one pays that much in a progressive tax system. Every time this discussion comes up people spout off these numbers but if you calculate out how much you actually pay it's probably in the 20-30% of total salary range. That's still high but it's just dishonest and makes people look like idiots when they throw around 40% etc. If you are truly paying 40% of your income in tax you are earning millions and are benefiting massively from the system already.
- benjaminwootton 5y agoIn the UK you pay a flat 40% over around £45k, no ambiguity whatsoever, then 45% over £150k. Not exactly millionaire status.
- Nextgrid 5y ago150k sounds very low when you take into account this tax rate and the property prices in London.
- ben_w 5y agoLondon property is considered abnormally expensive in the U.K., and £150k is only slightly less than the £157k which the Prime Minister earns. Median U.K. income is £29,400: https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom
- zelos 5y agoTo be fair, though, the prime minister's salary is generally a drop from whatever job they would be doing instead (making no comment on whether that's right or wrong). Same with judges, I believe.
- zelos 5y agoYou also lose your personal allowance between £100-125k, which bumps up the effective tax rate.
- thorin1 5y agoThey are surely talking about Europe. Not US.
- rorykoehler 5y agoI live in Germany and pay between 20-25% of my income in income tax depending on how much I bill. I easily support a family of 4 on this. Rent, car, holidays, the lot.
- Grustaf 5y agoAccording to Wikipedia, if you pay 25% income tax in Germany you make €50 k, which doesn't sound like a very comfortable family income, unless you live in the country side perhaps.
- thorin1 5y agoI believe, when you are employed, you must also pay pension insurance, unemployment insurance, health insurance and other. No way you will be at 20-25 percent in Germany. When you count employer contributions, then you are quite close to 50%.
- yunohn 5y agoI pay easily 40%+ effective tax on my income in NL. Not sure why you’re so dismissive of the poster.
- rorykoehler 5y agoCongrats you are earning a lot. You should be grateful to be in such a privileged position few can dream of.
- yunohn 5y agoNot really, I wish I were. Here’s the NL tax brackets: * € 0 - 68.508 37,10% * € 68.508+ 49,50%
- rorykoehler 5y agoThere is no tax free allowance in NL? Do you pay extra for healthcare or is it paid for out of that amount?
- yunohn 5y agoHealthcare is paid from post-tax income. As a single person, I pay approx. €150 monthly. There is also a deductible of €385-885, and choosing a lower amount means you pay more per month too. There is no tax free allowance. There is general/labor tax credit, but it’s incredibly minimal and reduces with income: * €2.837 for those with a taxable income under €21.043 * €2.837 - 5,977% x (taxable income - €21.043) for people with an income between €21.043 to €68.507 * €0 for people with an income over €68.507
- rorykoehler 5y agoTIL. I thought absurdly high tax rates were a nordic specialty. NL seems very wealthy whenever I visit. Are median incomes substantially higher than surrounding countries?
- mutatio 5y agoIn the UK, if you're a contractor caught by IR35 and earn £600 per day, your effective tax rate is 40% if the client allows you to engage using your Ltd. company. If you use an umbrella you'll be even worse off. Net income from the arrangement would be £69,925 based on 190 days billed.
- rogual 5y agoYes, it's very hostile to independent contractors, especially with the new rules this year. I'm not a conspiracy guy, but it's amusing to note that Rishi Sunak, under whom the changes came in this year, is related (son-in-law) to a cofounder of IT consulting behemoth Infosys.
- adflux 5y agoWhat a load of horseshit, just take a look at a bunch of western european countries. https://taxfoundation.org/taxing-high-income-2019/ https://taxfoundation.org/taxing-high-income-2019/ Then there's a 21% sales tax for everything but food and medicine in the Netherlands aswell
- refurb 5y agoYup, it’s easier to just look at total tax revenue as a percent of GDP. https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_revenue_to_GDP_ratio https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rev... It’s not perfect as not all taxes are borne by the individual, but it’s gives you a ball park. Netherlands 39% Switzerland 29%
- jbverschoor 5y agoFor fuel it's insane. We pay €1.80 // $2 for a liter of fuel. That's $7.5 per gallon. This includes: - VAT - Excise - Kwartje van kok (was supposed to be temporary, already > 20 years there)
- edp 5y agoHere in France, as a contractor, if I bill a client 100 000€ annually and decide to get as much as possible in personal income, 30 000€ will go as social taxes (health, retirement ...) and for the remaining 70 000€ you will have to pay around 25% as income tax (if you don't have any children). You will have an income of ~52 000€ for 100 000€ billed during the year. You're not earning millions and yet around 50% of revenue was paid for tax purposes.
- rorykoehler 5y ago25% is what I would expect. You're getting some of the other expenses back eventually (hopefully) in form of pensions, unemployment (if you ever need it) etc. Health itself is a service you are buying. I wouldn't call it a tax despite it being mandatory. I think taxes are too high and the system needs to be redesigned but I just think we need to be exact on our figures when we discuss this stuff.
- disiplus 5y agoit sure feels like taxes because it is based on your pay. In other countries like Switzerland it costs the same if you earn 5 or 10 k CHF.
- rorykoehler 5y agoIn Germany health insurance for example is also based on income but it's capped. My point is that it is more nuanced than 40%. No one counts the money they get back from these programs when they need to use them in their calculation etc
- Algent 5y agoHis numbers aren't false for France. I don't have my last payslip on hand right now but it show cost for employer and it's roughly the double of what you get after taxes. Something like 3k€/month before tax turn into around 2100€ for you but your boss have social charges on top of it so for him it's more like a 4k€ cost.
- 5y ago
- magicalhippo 5y agoI pay an effective income tax of 45% (14.1% "arbeidsgiveravgift"[1] and 36% income tax after deductions). And when I buy stuff I then have to pay 25% VAT (12% on groceries). So the effective tax is 59% except for groceries. [1]: https://www.skatteetaten.no/en/rates/employers-national-insurance-contributions/ https://www.skatteetaten.no/en/rates/employers-national-insu...
- rorykoehler 5y agoDo you get payments from the Statoil?
- magicalhippo 5y agoNot directly, no. Gov't uses parts of the oil tax money to fund budget deficits, but they've limited themselves to how much. https://www.regjeringen.no/no/tema/okonomi-og-budsjett/norsk_okonomi/bruk-av-oljepenger-/id449281/ https://www.regjeringen.no/no/tema/okonomi-og-budsjett/norsk...
- rorykoehler 5y agoI was under the impression you also got a dividend/basic income of a few thousand a year like in Alaska?
- magicalhippo 5y agoNo, nothing like that. Though you can get support if you're temporarily without a job[1], sick[2] or declared permanently unable to work[3]. These programs are of course partially funded by the oil tax money, by virtue of being part of the government spending. [1]: https://www.nav.no/no/person/arbeid/dagpenger-ved-arbeidsloshet-og-permittering/dagpenger https://www.nav.no/no/person/arbeid/dagpenger-ved-arbeidslos... [2]: https://www.nav.no/no/person/arbeid/sykmeldt-arbeidsavklaringspenger-og-yrkesskade/sykepenger/sykepenger-til-arbeidstakere https://www.nav.no/no/person/arbeid/sykmeldt-arbeidsavklarin... [3]: https://www.nav.no/no/Person/Pensjon/Uforetrygd https://www.nav.no/no/Person/Pensjon/Uforetrygd
- Grustaf 5y agoOr you live in Europe. The _average_ Danish taxpayer pays 45% in income tax. This is not counting payroll taxes that the company pays on top of that, or of course 25% on everything you buy. So the overall effective tax rate is more like 75% than 50%. There used to be a slogan in Sweden, "half left", meaning people wanted to keep at least half of their gross pay. https://www.usnews.com/news/best-countries/articles/2016-01-20/why-danes-happily-pay-high-rates-of-taxes https://www.usnews.com/news/best-countries/articles/2016-01-...
- ceejayoz 5y agoAs an American citizen who paid $30k for healthcare last year and looking at college for two kids in less than a decade, I'd take the Danish deal laid out in that article pretty happily.
- Grustaf 5y agoI live in Denmark, and frankly speaking I think most Europeans view the US as a kind of developing country. It can be nice if you're well off, but so can Rio or Capetown. Thinking about it Capetown is much nicer than most US cities.
- tluyben2 5y agoPeople like to complain about taxes here, a lot, but where would we get the standard of living without it? Seems there is a disconnect. In the US, where, by the way, you pay quite a lot of tax still, you can end up living in a box or get worse health treatment even then. We do not get things for free: we pay taxes for it. It can be lower because we could cut corruption and inefficiency but it would still be a lot and people will still cry in forums.
- knuthsat 5y agoCheck Austria. Without any expenses a dev with a US salary will pay more than 40% in taxes and social benefits. Let's say you have 250k EUR, 12% of it you can take without any taxes (given no expenses, which is ~25k EUR), but then on 225k you pay 112.5k to the government. That's it. Then you take into account VAT and you realize they are really sucking you dry but all of the giants in collusion with Austrian banks avoid taxes easily. Of course, you can game the system with fictitious useful expenses (travelling but saying you went to a dev conference etc.) but it's hard to really accumulate much if you live a somewhat normal life. https://en.wikipedia.org/wiki/Taxation_in_Austria https://en.wikipedia.org/wiki/Taxation_in_Austria
- bzbarsky 5y agoWhat's the effective tax burden on a self-employed single person making $300k in, say, Massachusetts (5% income tax; not exactly the highest in the US)? Based on 2020 US tax brackets, standard deduction, including the both sides of FICA (capped at the social security cap for the social security part) and the medicare extra tax they are paying, I am ending up at ~37-38% effective (not marginal; marginal is 43.8%) tax or so. This individual would in my mind be excused for claiming that they pay "40% in income taxes" and is not making "millions" (though obviously is not suffering financially).
- deleted 5y ago[deleted]
- jbverschoor 5y agoIn the Netherlands: 70k -> 24k tax / 34% 90k -> 35k tax / 38% 120k -> 51k tax / 42%
- tinomaxgalvin 5y agoYes. So you either pay income tax OR corporation tax plus dividend tax, but not both.