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This also doesn't really paint the full picture if you're comparing to the US because in the UK if you're earning that "much" the government will take 40% of yo

This also doesn't really paint the full picture if you're comparing to the US because in the UK if you're earning that "much" the government will take 40% of your income This is not true. The 40% tax band doesn’t even start until slightly over 50k.

mft_ 3y ago
Indeed; looks like roughly 26% tax overall (including National Insurance) on a 50k GBP salary[0]. It results in a hair over 37k take-home. [0] https://www.reed.co.uk/tax-calculator/50000 https://www.reed.co.uk/tax-calculator/50000
misnome 3y ago
How do people still confidently completely misunderstand “Progressive income tax”. Deliberate feigned ignorance? Ignoring because it has the word “Progressive” in? I misunderstood this when I was 14. Then I grew up.
- kypro 3y ago
  It was somewhat deliberate, partly a misunderstanding (maybe). Let me try to clarify. I think people who cite effective tax rates are being equally misleading, but I appreciate I'm a minority in that opinion and therefore said what I said knowing it would likely cause some controversy. The point I'd make here is that if you're earning more than £37,500 in the UK you are still paying 40% on anything beyond that £37,500 – it's not inaccurate to say you're paying 40% tax – it's just not the full picture. These brackets cause many people to want to work less because the way they see it anything they earn beyond £37,500 is worth significant less since they are quite literally paying that 40% on the additional income. So if I get a job paying me £60,000 I'd have to consider the fact I'd be paying 40% tax on a decent percentage of that when I calculate my take home pay. So I'd argue it's simply not the case that someone would look at it this purely from the perspective of what their effective tax rate is in any given financial year – especially if they're working overtime or have other forms of income which might get pushed into a higher tax bracket. I know plenty of people who refuse work when they hit the 40% tax bracket because they feel too much is taken from them at that point. While saying someone is paying 40% tax isn't the full picture, citing an effective tax rate isn't the full picture either when considering incentives for promotions, overtime and side income. I'm sure we disagree on this though which is fine. I was considering wording it differently, but ultimately felt putting it in a slightly controversial way would at least prompt people to ask the right questions. The general point I wanted to make is that tax is quite a bit higher in the UK than the US so you can't directly compare gross pay – hopefully we at least agree there.
jtbayly 3y ago
60k-80k is over 50k, which is the range he was talking about. So what are you complaining about?
- RugnirViking 3y ago
  You are only taxed that much on income in that band; the amount earned below that is taxed at lower rates.
- matthewmacleod 3y ago
  I don’t think understanding progressive taxation bands is an unreasonable expectation if you’re going to start mouthing off about tax policy.
  - jtbayly 3y ago
    Then it would have been infinitely more helpful for you to actually say that it's a progressive tax. We have brackets in the US. I just assumed bands were the same thing.
    - matthewmacleod 3y ago
      They are the same thing. This is how it works in the US as well.
      - jtbayly 3y ago
        Ha! Thanks. You learn something new every day.

mft_ 3y ago

Indeed; looks like roughly 26% tax overall (including National Insurance) on a 50k GBP salary[0]. It results in a hair over 37k take-home. [0] https://www.reed.co.uk/tax-calculator/50000 https://www.reed.co.uk/tax-calculator/50000

misnome 3y ago

How do people still confidently completely misunderstand “Progressive income tax”. Deliberate feigned ignorance? Ignoring because it has the word “Progressive” in? I misunderstood this when I was 14. Then I grew up.

kypro 3y ago
It was somewhat deliberate, partly a misunderstanding (maybe). Let me try to clarify. I think people who cite effective tax rates are being equally misleading, but I appreciate I'm a minority in that opinion and therefore said what I said knowing it would likely cause some controversy. The point I'd make here is that if you're earning more than £37,500 in the UK you are still paying 40% on anything beyond that £37,500 – it's not inaccurate to say you're paying 40% tax – it's just not the full picture. These brackets cause many people to want to work less because the way they see it anything they earn beyond £37,500 is worth significant less since they are quite literally paying that 40% on the additional income. So if I get a job paying me £60,000 I'd have to consider the fact I'd be paying 40% tax on a decent percentage of that when I calculate my take home pay. So I'd argue it's simply not the case that someone would look at it this purely from the perspective of what their effective tax rate is in any given financial year – especially if they're working overtime or have other forms of income which might get pushed into a higher tax bracket. I know plenty of people who refuse work when they hit the 40% tax bracket because they feel too much is taken from them at that point. While saying someone is paying 40% tax isn't the full picture, citing an effective tax rate isn't the full picture either when considering incentives for promotions, overtime and side income. I'm sure we disagree on this though which is fine. I was considering wording it differently, but ultimately felt putting it in a slightly controversial way would at least prompt people to ask the right questions. The general point I wanted to make is that tax is quite a bit higher in the UK than the US so you can't directly compare gross pay – hopefully we at least agree there.

jtbayly 3y ago

60k-80k is over 50k, which is the range he was talking about. So what are you complaining about?

RugnirViking 3y ago
You are only taxed that much on income in that band; the amount earned below that is taxed at lower rates.
matthewmacleod 3y ago
I don’t think understanding progressive taxation bands is an unreasonable expectation if you’re going to start mouthing off about tax policy.
- jtbayly 3y ago
  Then it would have been infinitely more helpful for you to actually say that it's a progressive tax. We have brackets in the US. I just assumed bands were the same thing.
  - matthewmacleod 3y ago
    They are the same thing. This is how it works in the US as well.
    - jtbayly 3y ago
      Ha! Thanks. You learn something new every day.