RE: TAX BRACKETS IN THE UK

My apologies for over-estimating UK tax rates.  The UK does have still some incredibly high marginal tax rates for those are elderly and lose higher rates of personal allowance for having higher incomes, or those on child or pension tax credits and lose these for receiving greater income.

The exact rate is not always too material except to say that the last contributor is spot-on to say that in high tax states (such as New York, Georgia and California) effective tax rates can be higher than in the UK.

There are significant differences though, in that the US system generally gives many more tax deductions than the UK; but the UK gives significant deductions for housing & commuting costs for some folks who come for less than 2 years and those with non-UK workdays who come for less than 3 years.  As a consequence, people on assignment here can often end up paying far less than back home.

Also, the US charges tax on worldwide income and gains, while for almost all readers of this site the UK only charges tax on income and gains arising in or remitted to the UK.  So those with reasonable levels of investment income can save a bunch of taxes while living in the UK (because for those of us not domiciled here, the UK only looks at worldwide income when assessing child and pension tax credits).

Can anyone tell me what the allowances/deductions are for dependents?  I used one of the online tax calculators to estimate what my husband's take-home pay will be, but there was nowhere to fill in the number of dependent children.  I imagine this makes a difference in the tax-free allowance (as it seems to be called--what we would call the standard deduction in the US) that you are allowed to take?  Does anyone have any idea how much of a deduction you can take for each dependent child?

Thanks!

Jade

The poverty rate in the UK is higher than in the US.  Outside of the south, the UK is essentially a socialist state.  Most citizens there either work for, or survive on benefits from the govt, or should I say, the taxes collected from the south.  When you tax the middle class at 40% and have a VAT at 17%, its no wonder that the economy and GDP/capita is pitiful compared to the US.

There are no tax allowances at all in the UK for children.

However, if you qualify, there are child benefits, child tax credits and other tax credit payments.

Ouch.

Nearly half of one's income goes to taxes. Welcome to the real world, sprigged. 

Psweeney,

According to the IMF, the GDP/capita in the UK is $38,097 and $41,916 in the US for 2005. You're right that it's higher in the US, but only by 10%, and the US is far behind countries such as Switzerland and Norway. The US ranks 8th overall, and the UK 13th, but many of the top countries are social democracies so their model can't be completely wrong.

http://www.econstats.com/weo/V015.htm

As far as poverty rates though, you are completely incorrect. The US has one of the highest poverty rates of any industralized nation. For example, the percentage of children living in households that are under the poverty line is 22% in the US while 15% in the UK. This can be compared to 3% in Norway, Finland, and Sweden.

http://news.bbc.co.uk/2/hi/in_depth/4307745.stm - data from UNICEF

The poverty rate in the UK is higher than in the US.  Outside of the south, the UK is essentially a socialist state.  Most citizens there either work for, or survive on benefits from the govt, or should I say, the taxes collected from the south. 

I guess I am just imaging going to work at an insurance company in York every day, and all the people I work with are figments of my imagination.  And the lady at the bank who helped me open the account the other day, my landlord, the people who work in the shops, the man who repaired my boiler are all imaginary friends.

Office National Statistics data on regional employment rates are at
http://www.statistics.gov.uk/pdfdir/lalm0905.pdf

  Outside of the south, the UK is essentially a socialist state.  Most citizens there either work for, or survive on benefits from the govt, or should I say, the taxes collected from the south. 

Please... I beg you... don't talk mince.

Outside of the south, the UK is essentially a socialist state.  Most citizens there either work for, or survive on benefits from the govt, or should I say, the taxes collected from the south. 

Can people in an essentially socialist state be called "citizens"? Aren't they subjects, or comrades, or something like that? Essentially?

"Outside of the south" Man, that's so cute!

Psweeney,

According to the IMF, the GDP/capita in the UK is $38,097 and $41,916 in the US for 2005. You're right that it's higher in the US, but only by 10%, and the US is far behind countries such as Switzerland and Norway. The US ranks 8th overall, and the UK 13th, but many of the top countries are social democracies so their model can't be completely wrong.

http://www.econstats.com/weo/V015.htm

As far as poverty rates though, you are completely incorrect. The US has one of the highest poverty rates of any industralized nation. For example, the percentage of children living in households that are under the poverty line is 22% in the US while 15% in the UK. This can be compared to 3% in Norway, Finland, and Sweden.

http://news.bbc.co.uk/2/hi/in_depth/4307745.stm - data from UNICEF

The UNICEF figures are not the povery line if you look at it carefully.  They are the number of children living under 50% of median income.  Since the standard of living in the US is so high, even those living well under the median are not in poverty.

Some real numbers: UK nearly 25%, US 12.5%

http://www.oxfamgb.org/ukpp/poverty/thefacts.htm
http://news.bbc.co.uk/1/hi/business/4198668.stm


The GDP per capita figures are $42k to $30k.  You have to use purchasing power GDP / capita to get the true figure.

It is the poverty line that they have established, but I understand that the EU has a different poverty line. The link you provided states the poverty line to be “below 60 percent of contemporary net disposable income in 2000/01” but it doesn’t state how the poverty line is calculated for the US numbers.

The way the poverty line is calculated in the US is by using a 40-year old formula that simply looks at living expenses in the 1960s and it has only been adjusted for inflation. You can’t compare poverty levels unless you use the same method.

http://www.dollarsandsense.org/archives/2000/0300bergmann.html

Also, how do you explain that the Nordic countries, which are even more socialist than the UK, have such a low poverty rate?

Well, you didn’t mention PPP, just GDP/capita, so I only responded to that. When using PPP you are correct that the UK lag behind, while many other countries are well ahead of them, but this is just one measure of standard of living. A more accurate one would probably be the UN’s human development index.

http://www.answers.com/main/ntquery;jsessionid=tgju6ccxfelu?dsid=2222&dekey=Human+Development+Index&sbid=lc03a

Also, how do you explain that the Nordic countries, which are even more socialist than the UK, have such a low poverty rate?

That goes to my theory that capitalism is still a grand experiment to which the verdict is still out!  Especially as trade barriers break down in a global marketplace, capitalism behaves quite a bit different then small groups where automatic social responsability plays a greater role.  When you end up with large economies, automatic social stability and responsability tend to lessen and you end up with companies like Enron.