This table has just been published by the OECD and shows the "tax wedge" taken from employment earnings for all 34 OECD countries.
Richard Murphy is the founder of the Tax Justice Network
This table has just been published by the OECD and shows the “tax wedge” (the difference between before-tax and after-tax earnings) taken from employment earnings for all 34 OECD countries:
The OECD say of this:
Note then that this “wedge” includes employer’s national insurance – which most people do not appreciate is paid on their behalf.
The UK is at 32.3 per cent, well down the list.
Of course, that may also be why we have such a high deficit: we are undertaxing high earnings in particular.
But there’s no case for saying we’re overtaxed, most especially at high rates. That’s for sure.
11 Responses to “For those who argue people are overtaxed in the UK and will run away if rates aren’t cut”
Kathryn
We’re barely any higher than the US? This really doesn’t make sense at all…
OldLb
So why are you worried about tax havens?
That’s people running away to lower tax regimes.
Either its not a problem, or it is a problem.
Either way, we are over taxed. In particular taxes on employing someone. Just like taxes on fags, that kills jobs.
Anthony Masters
I believe the author is conflating a number of issues. The tax wedge is defined here as the difference between “total labour costs to the employer and the corresponding net take-home pay for single workers without children, at average earning levels”. As the author correctly notes, this difference includes employer-side National Insurance (NI) contributions.
Firstly, it is erroneous to make claims about higher-level earners, that “we are undertaxing high earners in particular”, since this difference is specifically about the income tax and NI contributions made “at average earning levels”. The claim about taxation of higher earners may be true or false, but it cannot be made from this data alone.
Secondly, it is also incorrect to draw conclusions about the overall tax burden from these figures, such as “there’s no case for saying we’re overtaxed”. The Guardian’s data-blog on tax finds in 2012-13, the UK government raised £154bn from income tax, £104.1bn from NI, £101.1bn from VAT, £39.8bn from corporation tax, £26.2bn from fuel duty, £19.9bn from tobacco, spirit, beer, cider and wine duties. There are other taxes levied, but direct individual income taxation (income tax plus NI) represents £258.1bn of the £593.8bn total tax take. http://www.guardian.co.uk/news/datablog/2010/apr/25/tax-receipts-1963
Whilst the author is concerned with higher taxes on larger incomes, a low ‘tax wedge’ as defined above signifies either a tax system dependent on indirect taxation or progressive income taxes. Since these figures are for the direct taxes levied against average earners, we cannot conclude from these figures that our national deficit is caused by low taxation on high earners.
OldLb
Switzerland, New Zealand, Korea. Notice the tax rates?
No doubt these are cess pits on the par with Somalia. After all, if the government doesn’t tax and provide, it will be a disaster.
How can these countries provide services at rates almost half the rate of the UK?
Or is it that the public sector in the UK is so inefficient they have to double the price?
Or is it that we are being gouged and the public sector is pocketing the cash?
How can you charge double, and still run up 7 trillion of debt?
henrytinsley
And high tax Germany is such a failure, as you know.