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With a 45% tax rate and a 20% VAT, something that costs $1 would require an income of $2.18.
by koolba 3y ago
With a 45% tax rate and a 20% VAT, something that costs $1 would require an income of $2.18.
- skippyboxedhero 3y agoNo, it wouldn't because when you pay tax your money isn't being flushed down the toilet. You don't understand at a fundamental level how the govt works in the UK.
- bilekas 3y agoThis has nothing to do with the government policies.. it's simple math.
- Retric 3y agoIf you’re making 50k, paying or not paying health insurance matters. The US suffers from both a high tax burden and poor services. We just tend to nickel and dime our taxes more but it doesn’t really matter if you’re paying 1$ to the feds in income taxes, pay 1$ to use a state’s toll road, or 1$ to a “fee” your town tacks on the water bill. Looking at total government spending as a percentage of GDP doesn’t show differences in services but it does show just what it all costs.
- 11101010001100 3y agoLet's just mint that 1T coin and solve the simple math.
- zamnos 3y agoIf people are getting the math wrong (as is what happened here) then maybe the math isn't so simple?
- skippyboxedhero 3y agoSimple math that you got wrong. Do you understand that 45% is a marginal rate? And yes, it does have everything to do with govt policies because you are getting value back. It is like saying taxes are high in Nordic countries, ignoring the fact that most of what you pay is returned to you. Saying that doesn't impact demand or the price level is not accurate, and misunderstands (again) at a fundamental level how govt operates.
- dukeyukey 3y agoAlthough the 45% is only applied to income above £120,000 and VAT either doesn't apply or is reduced to 5% on stuff like (most) food, rent, utilities, children's clothes, and loads more. So what you're saying is pretty wrong.
- Goz3rr 3y agolisted prices include VAT pretty much everywhere I've been to in the world, other than the US. If something says it costs €1 or £1 then you're paying €1 or £1 for it at the checkout.
- koolba 3y agoIf the tax is included in the price, then you’re getting less than $1 of the good or service as it’s already baked into that price. For example with a 20% VAT, a $1 priced item is really an $.83 item, and to pay for it at a 45% tax bracket would require $1.81 of income. The numbers themselves are meaningless. Only the total ratio of income required to goods received is important, and it remains unchanged.
- monkeynotes 3y agoIsn't this basically how all economies work? You get taxed on your paycheck and then on purchases too. It's not unique to the UK to recognize taxes diminish your purchasing power. In Canada tax rates are similar, although we do have lower VAT. In other EU countries income tax is more aggressive but they have more social benefits.
- larksimian 3y agoHe's not taxed at 45% he just doesn't understand progressive taxation. You'd need to make like 1 million a year or more for the effective rate to be 45% i think.
- gpderetta 3y agoWell yes, including NI the marginal tax rate is 47%, so you can only asymptotically reach it. But your effective tax rate is already 40% at 125k.