Monday, January 12, 2009

Tax Freedom Day - been and gone for some

Just seen this (a bit overdue):

"The Adam Smith Institute copies a US right wing think tank in publishing a ‘tax freedom day’ for the UK. They claim it is on 2nd June.

But that’s a very selective view of ‘tax freedom day’. That happens to be the day when, they say, a taxpayer on average income, including indirect taxes, local taxes and National Insurance contributions, has paid all their taxes for the year, their remaining earnings being theirs to spend as they then will.

But there’s a major problem in that calculation. Not everyone pays tax at the rate a person on average earnings pays. Far from it in fact."


Via the Other Taxpayers Alliance site.

3 comments:

Tim Worstall said...

Mindboggling, isn't it?

Not everyone is average. You'd think they would include that little detail in the statistics handbooks or something.

stephen said...

The other problem with it is that it doesn't recognise the value you get from paying those taxes

ActionAmerica said...

Although I have not done a detailed analysis of who pays tax in the UK, my impression, from living in the UK as late as a year ago, is that it isn't that far from the income breaks in the USA. In other words, the richest 5% pay 60% of the taxes actually collected, while the poorest 20% pay virtually no tax at all. In the USA, those two groups pretty much balance out the tax load, so that Tax Freedom Day represents a person whose income is just slightly above average. It wouldn't be fair to consider the fact that the poor actually receive much more in services than the rich, but if you did, that minus tax to them would mean that Tax Freedom Day represented a person of below average income.

The question we must all ask ourselves, whether in the USA (April 23) or the UK (June 2), is, "Are the services that I receive from the government, worth more than 25% (USA) to almost 50% (UK) of my work life?"

Having lived in both countries, my answer in both cases is a decided, "NO". Many of those services, I could provide for myself, for much less money than the government spends on the same service, on my behalf.