5 ms·

In the Austrian tax system you are not taxed in one bracket. The first 15k are free next 5k at 15%, next 10k at 25% and so on. So your average tax rate will alw

In the Austrian tax system you are not taxed in one bracket. The first 15k are free next 5k at 15%, next 10k at 25% and so on. So your average tax rate will always be lower than your marginal rate, thus removing 20% gross will never remove 20% net. Actual values depend on your income of course.

benjaminwootton 4y ago
In the UK we have the tax free allowances, but we start to lose them as we earn more. For instance, around £100k in earnings they start to tax your personal allowance so you are effectively taxed at 60%. You then move into 45% tax and then start to lose pension allowances at £250k. First world problems, but these are all cliffs where it makes sense to keep your income down. Losing 20% off the top line will reduce your income by closer to 10% if my math is correct. We have a problem in the UK with higher earners dropping out of the workforce partly because of the tax incentives. I personally choose not to work as an employee in the UK because I would be paying more than 50% in tax.
- rpep 4y ago
  The child benefit threshold makes it pretty bad for most mid to high household incomes too, effectively a 60% marginal tax rate between £50k and £60k if you have a student loan
- nasmorn 4y ago
  That is horrible. Basically repeating the mistakes the government makes with people on benefits in the tax code. I don't understand how you can design any financial incentive systems with discontinuities such that you actually earn less by working more. That is a totally unforced error. I agree that people on 100k a year maybe don't need some kind of allowance but then just add another bracket at 85k that erodes it away instead of pretending that the people at 99k still really depend on it.
I_AM_A_SMURF 4y ago
Yes, basically every country works like that. I don't know why people talk about "moving a higher braket" like it's a discontinuity in the amount of tax you pay. It's always a _marginal_ tax rate.

benjaminwootton 4y ago

In the UK we have the tax free allowances, but we start to lose them as we earn more. For instance, around £100k in earnings they start to tax your personal allowance so you are effectively taxed at 60%. You then move into 45% tax and then start to lose pension allowances at £250k. First world problems, but these are all cliffs where it makes sense to keep your income down. Losing 20% off the top line will reduce your income by closer to 10% if my math is correct. We have a problem in the UK with higher earners dropping out of the workforce partly because of the tax incentives. I personally choose not to work as an employee in the UK because I would be paying more than 50% in tax.

rpep 4y ago
The child benefit threshold makes it pretty bad for most mid to high household incomes too, effectively a 60% marginal tax rate between £50k and £60k if you have a student loan
nasmorn 4y ago
That is horrible. Basically repeating the mistakes the government makes with people on benefits in the tax code. I don't understand how you can design any financial incentive systems with discontinuities such that you actually earn less by working more. That is a totally unforced error. I agree that people on 100k a year maybe don't need some kind of allowance but then just add another bracket at 85k that erodes it away instead of pretending that the people at 99k still really depend on it.

I_AM_A_SMURF 4y ago

Yes, basically every country works like that. I don't know why people talk about "moving a higher braket" like it's a discontinuity in the amount of tax you pay. It's always a _marginal_ tax rate.