40% Tax

[internetheaven]

40% is a disgusting amount to have to pay once you cross over thirty grand (in the UK). The average house price in the UK is £200,000 (a hell of a lot more in London!). You have to be on £55,000 a year just to get a mortgage for an average house in the UK and then they tax you 40% of your earnings! Does that make sense to anyone?

[lawman]

Depends on what you want out of life.

[RobertRogers]

Governments around the world require 'Protection Money' for allowing you to stay in business.

Remember the gangsters in the USA? If you had a business you had to pay them a certain amount every month or they would come looking for you - and the result would not be pretty. The money you paid them so that they would leave you alone was known as Protection Money.

Here in the USA, we have traded the gangsters for a bigger and even more organized gang. It is called the IRS. Don't pay them and they come looking for you. But they do not beat you up, because violence is frowned upon. You may go to jail, though, where someone else will beat you up (or worse).

Nothing has ever changed, we just trade one thief for another. It is all the same, really.

[idolw]

in Poland they'll charge you 40% once you cross 15k EUR (10k GBP).

feeling better now? :)

[monkeythumpa]

Be glad you don't pay for healthcare.

[tbear]

I feel better about being poor now ;)

[buckworks]

A few years ago I was involved with a refugee family who came to Canada from Somalia. Of course they had much to learn. Many of the amenities of life we take for granted don't even exist in Somalia.

One day after a group of us had a restaurant meal the older sister asked what the numbers meant at the bottom of the bill ... the sales tax. We explained how sales taxes and other sorts of taxes were collected from everyone, and used to pay for schools, roads, water and sewage systems, hospitals, firefighters, police, public libraries and more.

Her response, when she understood ...

"What a good idea!"

[PCInk]

It's 40% on the extra over the thirty grand. You don't pay 40% on everything once you are over that amount.

But yes, house prices are disgusting in the UK. I live in a cheaper area of the UK and most people can't afford a house on an average wage in the area. It seems you need to earn double the average wage to get a well below average house.

[Jane_Doe]

I don't know the laws in England but in the U.S. you can really lower your taxes if you are a small business owner. I spent about $500 dollars on tax and other books related to small business finances last year and the books have paid for themselves many times over.

Plus, the books were tax deductible. :)

[RobertRogers]

Sounds good in theory, BuckWorks.

Just keep drinking the cool aide.

[lawman]

What Kool-Aid you talking about double R?

[iamlost]

internetheaven:
Are you a limited company or similar?
If not why not?
Have you discussed your tax options with a competent accountant?
If not why not?

There is little reason to pay wads of tax, even in the UK.

Re- house prices. Welcome to growing population, limited supply, and prosperity. Here on the wet coast my property assessed value has been jumping 20+% annually for the past 25 years which is great for sellers but the pits otherwise.

Re- I am a Canadian, nice and pink and a believer in government social services and accompanying taxation. I am happy to pay my applicable amount each and every month. And the local wine I drink is excellent.

[internetheaven]

Be glad you don't pay for healthcare.

That is a common mistake made by people not actually in the UK. Yes, our government tells the world that it's residents get free healthcare but that is only for the poor.

Anyone with any income will never find a dentist, that's for sure! I haven't had free treatment from a dentist in over 6 years. Same with opticians. They are always busy ... unless I'm able to pay their private rates ...

I needed some treatment on the NHS and was told it would be a 4 year waiting list ... FOUR YEARS! Of course, if I were to pay the £7000 medical fees they could do it next month.

Don't tell me we have free healthcare in this country, I only ever got it when I was unemployed and carried around a special "I don't work" certificate where ever I went.

[internetheaven]

Her response, when she understood ... "What a good idea!"

Has anyone in this thread said that tax is a bad idea? I'm saying that a 40% tax that kicks well below the average wage is just ridiculous.

in Poland they'll charge you 40% once you cross 15k EUR (10k GBP).

Yes, but what is the average wage? If you have to earn £50,000+ a year just to be able to afford an average house ... I'll repeat - an AVERAGE house, then doesn't it seem unreasonable to have the same tax band on average wage earners as those earning £2million+

[timster]

internetheaven, just curious -- is there a mortgage interest deduction in the UK? In the US there is, and it really makes sense to be paying a mortgage once those income taxes start to sting.

[gopi]

Internetheaven, This is just to make you feel good.

I am not orginally from US but live here and pay close to 40% in total taxes and if i go back to my native country (India) & structure my company wisely i know i will still make the same but pay close to 0% in taxes

But still i choose to live in US, How about that?

[Lex_Luther]

Taxes Suck

[percentages]

If you don't want to pay income tax then why don't you move to an income tax free country?

This is such an easy problem to solve!

Personally I prefer to pay a limited amount of income tax and live in a country that I like.......but, for those that hate the idea of income tax.....MOVE!

I really don't understand people who whine about income tax.......anyone can be tax free today, so if you hate it that much, why are you still paying?

[vik_c]

In India, we pay 30 % tax on any amount we earn above $5500 a year and we pay 3% education cess on the tax we pay! Besides this we pay VAT on everything tangible we buy and service tax on almost every intangible. Of course, we also pay sales tax, excise tax, octroi tax, road tax, luxury tax, municipal tax, professional tax, gift tax, securities transaction tax, short term and long term capital gains tax, stamp duty, registration and wealth tax. When we take a flight, almost half of what we pay goes for taxes. When we fill gas at the gas station, there's a sales tax on all fuel. When we make payments to anyone beyond $450 a year, we have to deduct tax 5.1 % and pay the government, it's called TDS or tax deduction at source because the government doesn't trust the receiver to make payments. I may have missed to mention a few taxes, in fact.

The law makes no distinction between the middle class and the super rich. If you earn $20000 a year, you're in the same bracket as a company that makes $2 billion a year. The company may in fact, pay less, in percentage terms than you.

Mumbai alone sends over $13 billion each year to the government but doesn't get even $1 billion for its development in a year. Inflation is galloping ahead and so are interest rates. Couples who took loans six years back for houses are today paying 50 % more every month than earlier towards their mortgage repayment because of higher interest rates. Consider that in suburban Mumbai, today rent for the cheapest two room apartment in the least expensive area starts from $200 a month. The finance minister announced the annual budget this week, left foodgrains untouched and made imported dog food cheaper.

[gopi]

Vik_C, If your income is substantial and if most of it comes from outsde india, you can easily register your company as a STP unit and get a 10 Year Tax Holiday!. You need not even has to be physically located inside a STP

This is why i posted before that if i move back to india and structure myself correctly i may pay 0% in tax.

[Rugles]

Like most things in life, you get what you pay for.

If you feel overtaxed that is why you get a ballot every few years. Or, if you think you can do better job, you can run for office yourself.

I for one, pay plenty of tax but I do not feel ripped off most days as long as the roads are good and the hospitals are open.

[lawman]

>>Like most things in life, you get what you pay for.

Bureaucracies must be much more efficient where you live. ;)

[Syzygy]

Just to clarify - the 40% higher rate of tax applies when your salary is above £33,300.

Syzygy

[gamiziuk]

If you don't want to pay income tax then why don't you move to an income tax free country?

I think we had a thread about that last year - which countries are "tax havens."

I do not recall which countries made top of the list, but the countries with less taxes also seemed to have a lower level of "civilization" as well (phones, electricity, internet services... etc.)

[King_Fisher]

Look at the total!

Federal Income Tax, State Income Tax, Sales Taxes, Car License
Property Taxes, etc,etc,etc! If you add them all up they will
easily go over 40% of your income. You must take advantage of all your deduction to whittle this down to a reasonable amount. That
said I've been all over this world including places that have zero taxes to those with 50% and the USA is still the only place to be.
King Fisher

[Rugles]

>>>>Bureaucracies must be much more efficient where you live. ;)

sure there is waste and i have some complaints

but overall things are pretty good

>>>>>I do not recall which countries made top of the list, but the countries with less taxes also seemed to have a lower level of "civilization" as well (phones, electricity, internet services... etc.)

that is the trade-off

[edited by: Rugles at 3:35 pm (utc) on Mar. 6, 2007]

[gamiziuk]

I've been all over this world including places that have zero taxes to those with 50% and the USA is still the only place to be.

This is my perception as well.

Just choose carefully which STATE you live in - there are vast differences between the tax rates of different states (I escaped from New Jersey to Florida ten years ago).

[davewray]

Why don't you incorporate? Here in Canada you only pay 17.5% tax on net earnings up to 400k...so long as it stays in your company (Yes, eventually they'll get you...). Anything you take out as salary and dividends get taxed at the going rate...so just pull a smaller salary/dividend...or start paying your kids a salary to clean up the office..etc, etc. While your money is in your corporation you can grow it by buying properties/stocks and pay lesser taxes than if you were to take it straight out of your company to spend...that way you can grow your money at lesser tax rates until you need to take it out in the future... Oh, and having to pay 40% taxes is a good problem to have..it means you're starting to make good money ;)

Another idea...purchase office space in a tax haven and hire an employee to pick up the mail, clean office...hold one or two "meetings" there per year. We have a web based business...it is a global business that cannot be tied to any particular country. If you get your mail sent to your office in the tax haven and open an account in that tax haven...then you can get that money sent back to your country at a lesser taxed rate (at least in Canada you can)...Sure, it costs money to buy the office space, hire a person...but in the end you save bigtime.

Dave.

[perfectcoding]

I'm saying that a 40% tax that kicks well below the average wage is just ridiculous.

The average wage is well below £33,300, as far as I remember from the last time I looked.

[Syzygy]

The results of the 2006 ASHE [the Annual Survey of Hours & Earnings] show that median weekly pay for full-time employees in the UK grew by 3.7 per cent in April 2006 to reach £447. Median earnings of full-time male employees was £487 per week in April 2006; for women the median was £387.

Source: National Statistics Online [statistics.gov.uk]

£447 x 52 = £23,244

Syzygy

[edited by: Syzygy at 2:18 pm (utc) on Mar. 7, 2007]