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Comment by kowlo | Hacker News Reader

Meanwhile my (single-person) company is paying around 20% corporation tax, and then I'm getting taxed a further 20-40% on top of that when I pay myself.

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Yep, the current corporate tax laws basically punish single-nation companies, while giving multinationals a free pass. International tax laws desperately need an overhaul.

Is Ireland not a democracy? Can't they vote to change their own tax laws if they have a problem with them?

This is you assuming "democracy" actually works to empower average people to make these types of changes, instead of being co-opted or controlled by these same corporate behemoths.

The problem is not that Ireland gives a good deal to companies in Ireland, the problem is that Microsoft can falsely pretend that their Irish branch is the one making all the profit and then not having to pay any tax elsewhere.

They don't want to. These companies employ thousands and thousands of people in Ireland and pay them pretty well. In the bigger picture it's probably in their collective interest to tax them more but there's a pretty strong individual incentive to maintain the attractive tax environment.

Why would they do that ? The light tax they require from those entity still benefits them immensily, because those entity choose to pay them there instead of elsewhere. If Ireland introduced more taxes those big corps would move away, so they would actually receive less...

You can't receive less than zero

Income taxes from employees of these megacorps is where Ireland makes the money back.

The definition of a parasitic economy. Other countries are well in their rights to pressure Ireland as hard as they can to end this theft.

I agree other countries can do what this wish but realistically what's the carrot for Ireland though?

As opppsed to the german economy?

You seem to have a very strange definition of theft. Other countries are perfectly entitled to do similarly, as Netherlands does.

Why is there not a focus on countries such as Bermuda here? They are the "tax havens" who make this possible in the first place.

>Why is there not a focus on countries such as Bermuda here? They are the "tax havens" who make this possible in the first place.

There is. Two wrongs don't make a right. The topic at hand is Ireland.

> Other countries are perfectly entitled to do similarly, as Netherlands does.

If every country acted the same way, there would not be a single functioning nation on earth. Their benefits only exist because other countries are losing out, which makes them parasites.

> there would not be a single functioning nation on earth

Holy hyperbole, Batman.

No, it would just mean that there would be a homogeneous corporate tax system, which is what people seem to always argue for.

'Parasites' is also a ridiculous description.

I am from Ireland and from talking to friends and family most people are pretty happy with it. We give them a pass on taxes and they employ thousands of high end engineers here. We then collect large income tax revenues from these workers and subsidise the rest of the country.

Perhaps all countries should adopt 0% corporate tax then, if it's so beneficial.

That would probably level the playing field between small companies and big companies, TBH.

https://data.worldbank.org/indicator/NY.GDP.MKTP.KD.ZG?locat...

You joke, but some types of taxes are objectively worse than others. An ideal tax would have to generate sufficient revenue, be non-distortionary, inexpensive, and fair.

We can argue about what's "fair" all day, but "inexpensive" is more objective: some taxes hamper more economic activity than others. A $1 tax on a stock trade will reduce exactly $1 of economic activity. It's so expensive, it's basically pointless. A land value tax, on the other land, is almost free. (And in some cases, negative!)

Most taxes fall somewhere between these two extremes, but corporate income taxes are one of the most expensive, which is why economists aren't big fans of them.

Yes, skim off trillions of potential tax revenues of other countries to earn a billion or two as a single country. Effectively a Prisoner's dilemma on an international scale.

Countries like Ireland and the Netherlands are nothing more than tax avoidance puppets of a few big companies. And the sad thing is that their governments think it's good what they do while it's a downwards spiral instead.

It's a representative democracy so no not really. We can vote on representatives but then they do whatever they want same as any other democracy.

Representative democracy is a kind of democracy. So yes really.

Actually, no. The Apple case [0] is still pending some more layers of appeals, but both sides accept that Ireland doesn't have complete carte blanche to set its own tax laws. The EU gets to participate in setting them too.

Of course, Irish citizens could vote to withdraw from the EU and set their own tax that way, but that's not likely - they generally accept that the benefits of participating in the EU are worth giving up a little sovereignty.

[0] https://en.wikipedia.org/wiki/Ireland_v_Commission

I'd love for Ireland to withdraw from the EU - that would make it much, much likelier that the rest of us could get a consensus on anti-profit-shifting tax reform with the biggest tax haven out of the union.

It's not the citizens of a pirate nation that are unhappy with piracy. It's the rest of us.

We can and there is a huge swell of support for Sinn Fein a nationalist left wing party (the political arm of the IRA). The two centre right parties FF & FG (FFG) that have held power since Ireland gained independence are very pro the current taxation policy and have up until now had an iron grip on power due to a culture of voting for whoever your parents voted for. This is slowly changing. Loads of Irish people don't want this. The only problem I see is that we have structured our whole economy around FDI and there are no realistic proposals to revamp our economy to a similar level of wealth through different means. Enough people in Ireland will continue to vote for FFG because they get preferable tax treatment on investments as landlords, backroom deal etc. Ireland is a corrupt mess tbh.

Perhaps they continue to vote for 'FFG' on the grounds that unlike SF, they're not apologists for mass murder and terrorism?

If you think that you don't know very much about recent Irish history. They all have significant blood on their hands, mostly due to their relationship with the Catholic Church.

Better yet, dump corporate tax altogether and simply enforce a global flat tax on all forms of personal income, both capital gains and salary.

The amount of human time and energy wasted on taxation is mind bogglingly stupid.

Politicians trying to influence the behavior of their minions by designing these convoluted "tax-based incentive" schemes is the whole problem in the first place.

Just tax all money that comes into anyones hands at say 30% and let the market decide what activity is most efficient for the world.

Then maybe the 500 million intelligent people working around the globe as tax authorities, tax attorneys, tax lobbyists, tax preparers, tax accountants, and tax consultants...could spend their time doing more useful things for humanity.

> Better yet, dump corporate tax altogether and simply enforce a global flat tax on all forms of personal income, both capital gains and salary.

Fraudsters skirted that by keeping their corporation's assets on the books and expensing everything, never actually receiving/spending anything themselves.

People are already incentivized to do that in the current system. How does removing corporate tax make that any different?

By removing the audit of the corporations.

No need to cook the books if the government already gave you everything that you'd otherwise have to lie to obtain!

Small sibgle owner companies do that a lot. Big multinationals? No

Because they don't have to. They would go back to that in a heartbeat if they had to. It's about maximizing shareholder's revenues, post-tax.

There would be no way to do that with a giant public company.

Instead of distributing profits to shareholders, is Microsoft going to buy 1,000,000 BMWs for their investors and hold them on their books as company cars to dodge taxes? Not practical.

There is no single change that could be made to tax policy that'd fix this. Instead, we have to find ways to empower the government and make them willing to take what's ours - ours in the sense that the people deserve that their representatives take hold of what belongs to the people. Individual changes to policy will force the artistic accountants to devise new workarounds.

>dump corporate tax altogether and simply enforce a global flat tax on all forms of personal income

No thanks, you have no right to tell us (Switzerland) how much taxes we have to pay. First fix your own US-tax-system.

EDIT: I think he meant that:

https://www.theguardian.com/politics/2021/apr/11/bidens-plan...

I think the author of your quote meant global as in "one form for all USA taxes related to income", not as in "international".

Agreed, trying to get the whole world to agree on a single tax rate (0 or otherwise) is unrealistic, and completely ignores the sovereignty of countries to design their tax system as they please. What needs to happen is a modernized way to calculate which percentage of global profits from each company are taxable in which country, and then leave it up to each country how to tax that (or not). The current system lets companies cook the books in a way where they can effectively relocate their profits to any country they want.

Absolutely that would be a fair a good thing.

> simply enforce a global flat tax

Enforced by whom?

Why would a developing country want to tax companies at the same level if they're trying to attract investments? Anyway, why should any country listen to any other country on what the tax rate should be?

Why should a company be forced to pay tax on foreign income if the country in which they supposedly made that income doesn't want to them to pay taxes?

The worst part is that this comment starts with "simply enforce"

> Why would a developing country want to tax companies at the same level

The point of removing corporate tax is to not tax companies at all. Remove the decision of how to position your country against others altogether.

You could enforce these things by creating a free-trade area for anybody who joins, and excluding or putting stiff tariffs on those who don't.

> You could enforce these things by creating a free-trade area for anybody who joins, and excluding those who don't.

Then you need those free trade agreements. Remember the last time when it was only between EU and US? Protests in many European countries and in the end Trump decided to break it off.

We're also in the UK, make sure you're taking advantage of any tax benefits you may be entitled to such as R&D tax credits. They are back datable.

FYI, Ireland has not been in the UK since 1921.

FYI, if you look at OPs comments you will see they said they are in the UK.

And Entrepreneurs' Relief on capital gains

Also worth mentioning in the case of Ireland the KDB, whereby you can get an effective 6.25% rate on your corporation tax for certain R&D heavy activities (software etc.). This would be advantageous I think for most smaller businesses HNers are typically involved in if they wish to operate in the EU.

Don't forget your cap gains and consumption taxes

And death tax. And property tax for good measure

We don't have a death tax in the US. We have an estate tax that is exempt up to $11 million and can be spread out 15 years for businesses.

The proposed capital gains changes would ensure that most Americans will be targeted. If the cost basis doesn't recent on death many Americans will immediately get hit with taxes. With the top rate being upped to 43%, its gg for anyone who planned on leaving their loved ones money

I mean that's a bad characterization. Most Americans don't have savings to be inherited, so "many Americans" should be quantified first. The gains are only taxed when they are realized, so you don't owe taxes on inheritance - only when you sell the assets. You would not owe at the top rate unless your income (including realized gains) eclipses the threshold.

That's not a death tax. It's an income tax. You don't get out of it by dying.

Most Americans aren’t leaving their loved ones solid money after they are gone. Being on HN, it is possible you live in a bubble with far higher avg income and savings than the rest of the country.

And the "minor" difference that corporations are taxed on profits, whereas individuals are taxed on revenue

Isn't salary a deductible expense?

You're right - but it depends how and when you pay yourself... a balance of salary and dividends, where dividends are not deductible. For me I may have a good year followed by a weak year, so I use last year's profit to keep me going!

If you're in the UK and still using dividends as a significant method to self-compensate, you may benefit from speaking to a (better) accountant.

(Your circumstances may vary, this is not financial advice, YOLO, etc)

> If you're in the UK and still using dividends as a significant method to self-compensate, you may benefit from speaking to a (better) accountant.

I'm curious what you're eluding to here? Using dividends as a significant method to self-compensate (for single-person companies) seems to be a pretty common practice recommended by every UK accountant I've spoken to / used.

EDIT: Updated for clarification

It's the advice I've received too, but I'm also new to most of it. One downside (I think) is that I can't take advantage of the R&D tax credits with this approach!

There's roughly £12,000 tax free allowance on salaries and only £2500 on dividends. The common recommendation is to maximize your tax free allowance (pay yourself 12k PAYE) and then pay out anything else as dividends (though dividends legally require you operate at a profit).

Yep, totally understand that.

That's the standard common advice that I'm referring to and that the post I replied to seemed to suggest is not what a (better) accountant would recommend.

Unless I'm interpreting that post incorrectly.

It mostly depends if you intend to make significant pension contributions.

Let's say your company has £100K to play with and you want it all.

- You can pay yourself a £100K salary, of which take home pay will be about ~£67K

- You can pay yourself a £8,840 salary tax free in order to qualify for the state pension but minimize national insurance, and pay 19% corporation tax on the remaining £91,160, which leaves £73,839 to pay in dividends. Take home pay will be ~£69K. A win.

- Roughly (as this is more complicated). You can pay yourself a £48,840 salary, sacrificing £40K in to your pension completely tax free, pay corporation tax on the remaining ~£51K, and then pay it out as dividends. Take home will be about ~£47K with another £40K in your pension!

- More elaborate schemes are possible, where you use your personal pension to invest in commercial property which you then lease back to your company as a tax deductible expense.

Tax avoidance, helping the rich avoid paying for the society they benefit from since the year dot

Not only that but you get significant tax relief on your £40k pension contributions (about £8k I think) so takehome plus pension is about £95k from the £100k initially.

No, the £40K sacrifice (the max) would be from gross.

Tax 'relief' (it's a refund despite what anyone says) only applies if you pay from your post-tax income.

I am surprised such loopholes still exist in UK. In Australia if you setup a company and 80% of the company's income is only from your own personal services from a single client then your company has to pay tax on personal income tax rates. These sort of loopholes were closed many moons back.

How is it a loophole? The business owner paying themselves with dividends is only marginally better off than an employee.

Pensions are currently very generous but there's been an expectation for years that the government will crack down on them.

I don't think that's really such a huge loophole. Pension aside, it's a 2% difference in total tax burden that's probably going to be swallowed up by other company related admin expenses anyway.

I'm self employed and get the bulk of my income through dividends. As with the example above, I often end up paying roughly the same amount of tax as someone with the equivalent salary would.

The big advantage for me is that I can have a very good year and a very bad year and pay an appropriate (smoothed out) level of income tax across both - which seems fair to me.

If you're paying dividends, you're not paying 40% income tax on that.

Microsoft employees are also paying 20-40% income tax remember.

Sure, so Microsoft still (not so) indirectly contributes to the tax coffers. But it's still pretty bad that the rich MS shareholders can benefit from schemes like these, while employees can't.

I'm not defending MS at all, but it's not correct to say "I'm contributing 40% plus corporation tax while Microsoft contributes nothing".

I'm not saying that, I'm saying the opposite. But perhaps you're referring to what someone else said.

Yeah, it would be so nice if a lot of small companies got organized and tried to do these tricks together, just to show the ridiculousness of it all.

You miss the part where small companies have to compete against each other so organizing together would be impossible whereas entities like Microsoft, Facebook, Apple, Google, etc. are basically unregulated monopolies in their respective fields so they get to steer the ship as they please.

It wouldn't be impossible at all, you can of course cooperate with competitors to lower your taxes while competing for customers. Not that you necessarily need to band together with your competitors for this, there are plenty of companies out there.

What is the minimum viable income to take advantage of these tax loopholes? Would I need to form an LLC or C-Corp (does it matter)? As long as big corps are cheating, let's be transparent about the data and how everyone can act the same way. I'm all for taxing Microsoft et. al. the correct amount but in the meantime let's democratize this action. Maybe it will prompt legal change for everyone.

I'd love to see a Playbook for Tax Loopholes for Everyone.

- minimum annual profit required

- legal steps to take

- recommended law firms

I don't think it would be particularly costly to set up an Irish company, figure out a structure and set up a company group with internal invoicing etc. If you can spend a few 100 k on administration a year I'm guessing it would be worth it.

We agree to share Linux, we can agree to share tax evasion tips and tricks and infrastructure.

Are you in the US? If you have a single person company you could have a simple single member LLC set up so profits would flow through to you without getting taxed at the company level.

Of course you'd also have to pay self-employment tax on top of the regular income tax though (can get around some of that by using an S Corp).

Which country is your corp registered in? In U.S. you can register and S. Corp to avoid being double taxed.

The disadvantage of an S. Corp is that you don't have any flexibility in evening out profit distributions between good years and bad years, right?

technically true, since every year you take a cash distribution of the profit, BUT you then roll that into the following year and all distributions are tax free... cuz you already paid taxes on it.

This is correct. If you know the income will arrive in the future, you should aggressively shop banks looking for a line of credit to even out your lumpy income. The interest paid to the bank for the LOC is tax deductible by the business.

Was about to comment exactly this.

And they keep making it worse for small companies too!

This is working as intended. The entire tax system is rigged to benefit multinationals, with employees and small businesses forced to pay the tab.

Which country are you in that your own payroll isn’t at least corporate tax deductible?

edit: ah, it looks like you are paying yourself via dividends.

Surely the amount you pay yourself is deducted from the amount you pay 20% corporate tax on before you are taxed?

Probably not. Dividends aren’t a deductible expense for a Corp.

Income is (which is why the rates are higher).

There you pay 40-50% incometax first

No one pays that much in a progressive tax system. Every time this discussion comes up people spout off these numbers but if you calculate out how much you actually pay it's probably in the 20-30% of total salary range. That's still high but it's just dishonest and makes people look like idiots when they throw around 40% etc. If you are truly paying 40% of your income in tax you are earning millions and are benefiting massively from the system already.

They are surely talking about Europe. Not US.

I live in Germany and pay between 20-25% of my income in income tax depending on how much I bill. I easily support a family of 4 on this. Rent, car, holidays, the lot.

According to Wikipedia, if you pay 25% income tax in Germany you make €50 k, which doesn't sound like a very comfortable family income, unless you live in the country side perhaps.

I believe, when you are employed, you must also pay pension insurance, unemployment insurance, health insurance and other. No way you will be at 20-25 percent in Germany.

When you count employer contributions, then you are quite close to 50%.

I pay easily 40%+ effective tax on my income in NL. Not sure why you’re so dismissive of the poster.

Congrats you are earning a lot. You should be grateful to be in such a privileged position few can dream of.

Not really, I wish I were. Here’s the NL tax brackets:

* € 0 - 68.508 37,10%

* € 68.508+ 49,50%

There is no tax free allowance in NL? Do you pay extra for healthcare or is it paid for out of that amount?

Healthcare is paid from post-tax income. As a single person, I pay approx. €150 monthly. There is also a deductible of €385-885, and choosing a lower amount means you pay more per month too.

There is no tax free allowance. There is general/labor tax credit, but it’s incredibly minimal and reduces with income:

* €2.837 for those with a taxable income under €21.043

* €2.837 - 5,977% x (taxable income - €21.043) for people with an income between €21.043 to €68.507

* €0 for people with an income over €68.507

TIL. I thought absurdly high tax rates were a nordic specialty. NL seems very wealthy whenever I visit. Are median incomes substantially higher than surrounding countries?

The Netherlands is a tax haven for corporations. Individuals bear the brunt of ensuring a high QoL. Median income in 2021 is €36.500, so quite low tbh.

The only kind of income you can avoid taxes on is capital gains - i.e. investing in stocks or real estate. Obviously this is not feasible for the general population, and as such, most people spend their entire monthly income on rent/mortgage, kids, and living expenses. There is no concept of saving, because the assumption is that you can accumulate enough pension to live off of.

I have known many Dutch people over the years who have gotten a lot of benefits from the state from unemployment to housing. Some of it clearly fraudulently too. Seems to be unsustainable.

While I do not condone benefits fraud, it’s just a drop in the pond.

Government projects are quite corrupt, and often go way over budget. Of course, this is a global problem as well.

The main problem is corporate tax evasion. Pretty much every multinational funnels money via NL, while paying almost nothing.

For example - IKEA, Walt Disney, FAANG, Uber, and innumerable more are all Dutch BVs for most global activities.

Sorry I agree with you. I didn't mean fraud was a big cost, only that social spending (including non-fraudulent) seems to be very high and not tightly controlled (which as a side effect allows for easy fraud). From the outside society seems very stratified. Plenty of Telsa's in Amsterdam and people with expensive tastes. NL is obviously a very wealthy place even compared to neighbouring countries but also has a large less wealthy population. This is another angle to the problem (in addition to the corp tax regime) because it unfairly puts the tax burden on people like yourself.

Social spending is quite high, but I’d like to believe that atleast it’s enriching the average person and not only corporate execs.

The reason there’s so many Teslas is because up until 2021, you could get significant tax benefits, if you purchased an electric car via your employer for “work”. If you look past Teslas, you’ll see that most people own average family cars.

Amsterdam does have people with “expensive tastes”, but that’s not representative of the rest of the country. It’s similar to what you’d see in New York or London vs. the rest of their respective countries.

Most of the wealthy people I know own businesses (and as such benefit from the lower taxes), or own lots of rentable real estate.

>you could get significant tax benefits

This is a significant piece of information in this discussion.

Well, again, this only really helps people who are able to swing such an expensive car as a “work expense”. In absolute numbers, Teslas are a minority of 0.4% in the NL car market.

source - https://www.statista.com/statistics/780316/market-share-of-t...

€150/month for healthcare? Ya, that could work lost tax. Switzerland also pays for health insurance premiums post tax, but they are nowhere that cheap.

How much would you pay as a single person? And what does it cover? If you have a family, premiums increase significantly.

In NL, €150 doesn’t cover emergency care, dental, eyes, or various specialists. Medicines and treatments are also part of the deductible.

400 CHF/month. If it doesn’t cover emergency care, then what good is it? You can’t really call it health insurance.

Wow, 400 CHF is a lot! NL does guarantee emergency treatment will be provided, and the excess above the deductible will be paid by the insurer.

Aside, I’ve had friends who moved and found that Swiss income taxes are also much lower than NL in most cantons. Is that true in your case too?

I haven’t lived in Switzerland for awhile but ya, their taxes are somewhat low, though I think their VAT must be high (hard to tell if it’s taxes or just a high COL).

As an American, it gets harder to live in Switzerland because of the lower tax rate and high COL once you break through the foreign earned income exemption.

We pay for healthcare.

There is a free allowance for "foreign skilled workers". They pay 0 income tax over the first 30% of their income. It's total and utter bs. So if you earn 90K, you get 30K net, and get taxed as if you earned 60k

Society should be grateful he/she is so productive as to deserve it.

Because many people in Western countries do not fully appreciate how well off they are in global terms.

https://www.icalculator.info/netherlands/income-tax-rates/20...

   37.35% Income from €0.00 to €68,507.00

   49.5% Income from €68,507.01 and above

Therefore if you are (for instance) paying 40+% effective tax on your income in the Netherlands you're clearly earning north of €70k a year. To put that in context – “You Are The 1%: If You Make $35K/Year Income” https://www.diygenius.com/the-global-inequality-problem/

So that other person is being dismissive (though dismissive is the wrong word) of the poster because generally at these sorts of rates you're earning greater than 99% of the people on the planet.

If you're earning greater than 99% of the people on the planet and you simultaneously think there's an injustice being done to you by the tax man then I would humbly submit that you could do with a reality check.

And we're not just talking about in comparison to the so-called global south here, there are many many people in the EU and around greater Europe who would be thrilled to be earning north of €70k a year.

Income is usually relative to the person’s location. It’s not very useful to compare my situation to that of a person in the global south. Income correlates closely to cost of living.

I fully appreciate that I make more money than “a lot of the world”. But I don’t think it’s wrong to ask that corporations and high-net-worth individuals, also pay their fair share and not just leave the burden to people like me.

That is more the issue, well for me anyway; taxes are fine and the height is not really relevant but I do not want to be holding the bag here. If someone who earns a billion pays 5% why would I pay 40%? That is my only real complaint about taxes and I hear this from wealthy people: why would they if their friends do not? It is tax, not charity: except yes it is a lot of charity but it is anonymous so you cannot get charity kudos. So those who can avoid and you have a problem. Not sure how big the problem is in money, but I think many people would have a better feeling about forking over 40% if they knew the billionair around the corner is paying 60.

You can pay tax at a high rate and still be well off, there is no contradiction. In fact the highest tax rates tend to be in the most comfortable countries, in Northern Europe.

Nobody is saying "I would rather move to Sudan and lower my tax rate".

In the UK, if you're a contractor caught by IR35 and earn £600 per day, your effective tax rate is 40% if the client allows you to engage using your Ltd. company. If you use an umbrella you'll be even worse off. Net income from the arrangement would be £69,925 based on 190 days billed.

Yes, it's very hostile to independent contractors, especially with the new rules this year.

I'm not a conspiracy guy, but it's amusing to note that Rishi Sunak, under whom the changes came in this year, is related (son-in-law) to a cofounder of IT consulting behemoth Infosys.

What a load of horseshit, just take a look at a bunch of western european countries.

https://taxfoundation.org/taxing-high-income-2019/

Then there's a 21% sales tax for everything but food and medicine in the Netherlands aswell

Yup, it’s easier to just look at total tax revenue as a percent of GDP.

https://en.m.wikipedia.org/wiki/List_of_countries_by_tax_rev...

It’s not perfect as not all taxes are borne by the individual, but it’s gives you a ball park.

Netherlands 39%

Switzerland 29%

For fuel it's insane. We pay €1.80 // $2 for a liter of fuel. That's $7.5 per gallon. This includes:

- VAT - Excise - Kwartje van kok (was supposed to be temporary, already > 20 years there)

Here in France, as a contractor, if I bill a client 100 000€ annually and decide to get as much as possible in personal income, 30 000€ will go as social taxes (health, retirement ...) and for the remaining 70 000€ you will have to pay around 25% as income tax (if you don't have any children).

You will have an income of ~52 000€ for 100 000€ billed during the year. You're not earning millions and yet around 50% of revenue was paid for tax purposes.

25% is what I would expect. You're getting some of the other expenses back eventually (hopefully) in form of pensions, unemployment (if you ever need it) etc. Health itself is a service you are buying. I wouldn't call it a tax despite it being mandatory. I think taxes are too high and the system needs to be redesigned but I just think we need to be exact on our figures when we discuss this stuff.

it sure feels like taxes because it is based on your pay. In other countries like Switzerland it costs the same if you earn 5 or 10 k CHF.

In Germany health insurance for example is also based on income but it's capped. My point is that it is more nuanced than 40%. No one counts the money they get back from these programs when they need to use them in their calculation etc

His numbers aren't false for France. I don't have my last payslip on hand right now but it show cost for employer and it's roughly the double of what you get after taxes. Something like 3k€/month before tax turn into around 2100€ for you but your boss have social charges on top of it so for him it's more like a 4k€ cost.

I get what you're saying, it's not strictly income tax, but the end result is the same : it's a mandatory tax, based on what you earn. As for getting these expenses back, I hope I will have work and be healthy for as long as possible, and I'm happy to pay these taxes for poorer people to get access to healthcare or unemployment benefits. But I sure feel ~50% of my income is going into taxes without being a millionaire.

You can expect whatever you want, but no middle class person pays as little as 25% in Europe, only the wealthy and the desperately poor get away that cheap.

I'm middle class and that's about what I pay (effective tax rate) in Germany. It's a bit less actually.

As I wrote elsewhere, if you make below 50 k in Germany and your wife isn't working, I don't think that's a very comfortable life style.

I want for nothing.

Edit: I just want you be clear here. I think the tax rate is way too high even at 25% effective tax rate. The system is overburdening poor people no doubt about it but I also think we should not fudge the numbers by claiming we pay the top tax band rates as effective rate because it invalidates whatever else we say after that. It’s dishonest. IMO effective tax rate should be <5% and actually 0% for most of us.

As I wrote somewhere, most middle class people people in Europe pay way more than 25%, the average in Denmark being 45%. With payroll tax it would be more like 55%, and it really makes no sense NOT to count payroll taxes.

And 5% is not realistic, even if you eliminate all the pork, corruption and inefficiencies. You can't provide education and healthcare and maintain infrastructure for 5%.

I hate paying taxes but 20% would definitely not feel unreasonable for all those things, I'd pay that happily.

You get the money from other places than income tax on the poor

The poor are already an insignificant tax base, I thought you meant 5% for the middle class.

Middle class are the richer cohort of working class but they are still poor. We have a capitalist system. Unless you don’t have to trade time for money (ie are wealthy) you are poor. You might have a nice lifestyle but you have zero flexibility and options.

Unless you do not mind moving every 7-10 years.

1099 income works roughly the same way in the states.

In the US as a contractor making $100,000. You would pay $15,000 in social taxes. Around 25% in income tax depending on which state you lived in and still need to pay for health insurance. So taking home 50% of your pay after taxes and insurance is about what you would expect.

In the UK you pay a flat 40% over around £45k, no ambiguity whatsoever, then 45% over £150k. Not exactly millionaire status.

150k sounds very low when you take into account this tax rate and the property prices in London.

London property is considered abnormally expensive in the U.K., and £150k is only slightly less than the £157k which the Prime Minister earns.

Median U.K. income is £29,400: https://en.wikipedia.org/wiki/Income_in_the_United_Kingdom

To be fair, though, the prime minister's salary is generally a drop from whatever job they would be doing instead (making no comment on whether that's right or wrong). Same with judges, I believe.

You also lose your personal allowance between £100-125k, which bumps up the effective tax rate.

I pay an effective income tax of 45% (14.1% "arbeidsgiveravgift"[1] and 36% income tax after deductions).

And when I buy stuff I then have to pay 25% VAT (12% on groceries). So the effective tax is 59% except for groceries.

[1]: https://www.skatteetaten.no/en/rates/employers-national-insu...

Do you get payments from the Statoil?

Not directly, no. Gov't uses parts of the oil tax money to fund budget deficits, but they've limited themselves to how much.

https://www.regjeringen.no/no/tema/okonomi-og-budsjett/norsk...

I was under the impression you also got a dividend/basic income of a few thousand a year like in Alaska?

No, nothing like that.

Though you can get support if you're temporarily without a job[1], sick[2] or declared permanently unable to work[3].

These programs are of course partially funded by the oil tax money, by virtue of being part of the government spending.

[1]: https://www.nav.no/no/person/arbeid/dagpenger-ved-arbeidslos...

[2]: https://www.nav.no/no/person/arbeid/sykmeldt-arbeidsavklarin...

[3]: https://www.nav.no/no/Person/Pensjon/Uforetrygd

Or you live in Europe. The _average_ Danish taxpayer pays 45% in income tax. This is not counting payroll taxes that the company pays on top of that, or of course 25% on everything you buy. So the overall effective tax rate is more like 75% than 50%.

There used to be a slogan in Sweden, "half left", meaning people wanted to keep at least half of their gross pay.

https://www.usnews.com/news/best-countries/articles/2016-01-...

As an American citizen who paid $30k for healthcare last year and looking at college for two kids in less than a decade, I'd take the Danish deal laid out in that article pretty happily.

I live in Denmark, and frankly speaking I think most Europeans view the US as a kind of developing country. It can be nice if you're well off, but so can Rio or Capetown. Thinking about it Capetown is much nicer than most US cities.

People like to complain about taxes here, a lot, but where would we get the standard of living without it? Seems there is a disconnect. In the US, where, by the way, you pay quite a lot of tax still, you can end up living in a box or get worse health treatment even then. We do not get things for free: we pay taxes for it. It can be lower because we could cut corruption and inefficiency but it would still be a lot and people will still cry in forums.

Check Austria. Without any expenses a dev with a US salary will pay more than 40% in taxes and social benefits. Let's say you have 250k EUR, 12% of it you can take without any taxes (given no expenses, which is ~25k EUR), but then on 225k you pay 112.5k to the government. That's it. Then you take into account VAT and you realize they are really sucking you dry but all of the giants in collusion with Austrian banks avoid taxes easily.

Of course, you can game the system with fictitious useful expenses (travelling but saying you went to a dev conference etc.) but it's hard to really accumulate much if you live a somewhat normal life.

https://en.wikipedia.org/wiki/Taxation_in_Austria

What's the effective tax burden on a self-employed single person making $300k in, say, Massachusetts (5% income tax; not exactly the highest in the US)?

Based on 2020 US tax brackets, standard deduction, including the both sides of FICA (capped at the social security cap for the social security part) and the medicare extra tax they are paying, I am ending up at ~37-38% effective (not marginal; marginal is 43.8%) tax or so. This individual would in my mind be excused for claiming that they pay "40% in income taxes" and is not making "millions" (though obviously is not suffering financially).

In the Netherlands:

70k -> 24k tax / 34%

90k -> 35k tax / 38%

120k -> 51k tax / 42%

Yes. So you either pay income tax OR corporation tax plus dividend tax, but not both.

don't worry, Biden will fix that. Soon you'll be paying 30% and then 20-40%.

Invest your surplus then you won't have any profit to be taxed upon.

Which is what Microsoft is doing.

Alternatively lobby your government to replace corporation tax with a company payable tax on the labour a company uses - which is actually what tax is for: to release manpower for the government use.

Then Microsoft can't avoid it by profit shifting.

> company payable tax on the labour a company uses

Wouldn't that create a perverse incentive to hire less and overload the remaining employees? I say this because that's exactly what it does on my home country.

"Wouldn't that create a perverse incentive to hire less and overload the remaining employees? "

That rather depends whether there are more jobs than people that want them.

If there isn't then you need a public job Guarantee option to swing the balance of power.

We want the private sector to hire less and automate more. That's how we push forward productivity. What we want to remove from them is the "what about the jobs" argument. Then it all works.

Then give workers actual rights and the ability to unionize.

A quick google search shows Irish citizens can voluntarily join and leave unions. Of course there might be more to it and I have no idea how things work there.

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