Income Tax Comparisons

[Famine]

I'd quite like to know how Income Tax works in other countries - I'm aware that the US has a fixed Federal rate and a variable State rate, but other than that it all escapes me somewhat.

I'm going to run through the UK's Income Tax (PAYE) rules with two examples. If people could provide a comparison with similar examples it'd be good. I'll use a median wage earner (£18,000 gross) and a high earner (£50,000 gross) to show how the UK's PAYE system works and what they take home each month.


The UK has four levels of taxation:
Personal Allowance (0%) - The first £4,895 pa.
Basic Rate (10%) - The next £2,020 pa.
Middle Rate (22%) - The next £29,379 pa.
High Rate (40%) - Everything over £36,295 pa.

Note that this DOESN'T mean if you earn over £36,295 pa you get charged 40% of everything, only that for every pound you earn over £36,295 pa, 40p goes to the Exchequer.

How does this pad out for the £18,000 gross (roughly US$33,000) earner?
£18,000 gross - £4,895 personal allowance = £13,105 TAXABLE income.
£2,020 of this is taxed at 10% = £202 pa.
£13,105 - £2,020 = £11,085 taxable at 22% = £2438.70

This earner has an Income Tax bill of £2640.70 pa, meaning that for £18,000 gross you earn £15,561.30 net, or about 87% of their gross wage.


For the £50,000 (roughly US$92,500) earner, things end up like this:
£50,000 gross - £4,895 personal allowance = £45,105 TAXABLE income.
£2,020 of this is taxed at 10% = £202 pa.
£29,379 of this is taxed at 22% = £6,463.38 pa.
£45,105 - (£29,379 + £2,020) = £13,706 taxable at 40% = £5,482.40

This earner has an Income Tax bill of £12,147.78 pa., meaning that for £50,000 gross you earn £37,852.22 net, or about 76% of their gross wage.


We're also subject to National Insurance which tends to come to about 6-8% of your gross wage (it's a little bit more complex than that, but it's a good rule of thumb). This can also be considered "tax" and is taken at source along with income tax, so I'll include this too.

Typical net wages (after tax + NI) in the UK:
£18,000 gross -> £14,481.30 net
£50,000 gross -> £34,522.22 net



I'd quite like to see what these gross figures turn out as when run through other income tax systems - US, Australia, France, Germany, Holland, Canada, in fact anywhere anyone can think of where they know these figures for a fact.

This is also put in the Opinions forum so people can pass their thoughts on how fair/unfair relative income taxation systems seem.

 

[///M-Spec]

In the US, we have a variable Federal Personal Income Tax and in most states, a variable State Income Tax. Alaska, Florida, Neveda, South Dakota, Texas, Wyoming and Washington states do not have state income taxes of any sort and rely on alternative sources of revenue to fund state services like state lotteries --which are simply taxes levied on people who are bad at math. New Hampshire taxes are limited to income from interest and divideneds only. Which I suppose is not very much since I've been to New Hampshire and there is nothing of interest there at all.

Federal income tax varies depending on if you are single, married and filing seperately, married and filing jointly or if you are head of a household. Based on your gross income and your filing status determines, a percentage is calculated and automatically withdrawn by your employers. Taxes for 2005 range from 10% to 35%. TABLES HERE. Presumably, these taxes fund those neat federal projects like revitalizing downtown Bagdad, paying farmers not to grow food and building missles that don't shoot.

State income tax is also graduated. TABLES HERE.

On top of that, everyone also pays Social Security taxes, which is based on your income, though honestly I have no idea how the rates are calculated. Looking at my pay stub which I happened to have near my desk, I'd guesstimate 4.5%.

For those of you not familar with Social Security, it is essential a federally mandated retirement fund for people apparently too dimwitted to save up for retirement on their own. The funny thing is people putting funds into SS today are not paying for their retirement. They are paying for people who are retiring RIGHT NOW, with the expectation that people who aren't even born yet will help pay for their retirement when it comes. Schemes don't run much better than this.

The monies I add to the SS fund allows it to turn around and cut checks to old codgers and blue-rinse wide loads so they can drive slow in the left lane on their way to the golf course while I sit at a desk and work all day. But the best thing about SS is that it's expecting to be broke by the time I retire. Whoo-hoo!


M

 

[ledhed]

All I know is that 31 % of my gross pay is gone to SS , state , local and federal taxes. I keep .69 cents of every buck I earn .

 

[Danoff]

Famine,

Here's a link to some data collected on who pays how much federal tax in the US.

http://www.taxfoundation.org/prtopincome.html

It shows that the top 1% of earners in the US (those with an adjusted income of over $285k - I believe that's per person) paid 33% of all income tax paid by anyone at an average rate of 27%.

The top 5% of earners (those with an AGI of above $126) paid 54% of all income tax at an average rate of 23%.

That's right, 5% of our population bears over half of the income tax liability.


The bottom 50% of earners in the US paid 3.5% of all of the income tax paid at an average rate of 3.21%.


Come again? The bottom half of our population pays roughly 3% in federal income tax accounting for about 4% of all income tax paid!!! That means that half of the people in this country (enough to make a majority) practically pay no income tax. No wonder they vote for more government - THEY DON'T PAY FOR IT .


What's even more depressing (which this chart doesn't show) is that the bottom 20% or so actually pay negative income tax. They get tax returns for more than was withheld from their paycheck - it's sort of an additional welfare program we offer here in the US (that most people don't even know about).

------------------------------------
That's federal income tax. We also pay social security and medicare.

Here's a link to the rates for those http://www.tiaa-cref.org/pubs/html/taxguide/tg11a.html

That link shows that people 6.2% of their income to social security on up to 90k. So if you make 200k you pay an effective 3% of your income to social security, but if you make 90k you pay an effective 6%. However, the company you work for is also charged 6% of social security on your behalf - which is why it says that the self-employment rate is 12%. Companies don't take that money out of their pocket of course, they simply pay you 6% less than you would have made - so we all pay an effective 12% to social security on income up to 90k. We just don't realize it because it effects the rate at which our employers choose to hire us.

Medicare is similar at 1.5%, but a net of 3% charged to you and your employer. There is no limit on the amount of income taxed for medicare.


So you can adjust those federal income tax tables up 3% for medicare and then another 12% for social security on up to 90k of income.


That means (according to both websites, and including the taxes charged to your employer - which are passed on to you)... if you made 90k AGI in 2002 you paid 36% in federal taxes before the state got ahold of you.

States have sales tax and income tax as well but some of that is deductable from your federal tax and so it gets very tricky to calculate how much you pay. It's not as much when compraed to the federal tax but probably amounts to an additional 10% here in california (income and sales combined). Which means someone making 90k in california loses almost half of their money to taxes - and that doesn't take into account property tax.

 

[Famine]

ledhed - So despite our 40% tax band, you're worse off than you would be in the UK?


I'm actually a little concerned though - I know how much I should be paying in tax, NI and pension contributions and if there's ANY discrepancy with what my paycheque says I make it someone's problem. Is this information not readily available in the US? If I were to up sticks and land in.... Minnesota, how much would my net income be if I earned $33,000 gross/$92,500 gross?

Edit: danoff got it covered, although I'm still head-scratching...

 

[Danoff]

Famine,

That's right the 33,000 lbs (don't know how to make that symbol) is roughly 90k in US dollars.

So our rate of 36% on someone making 90k is higher than your rate of 32% on someone making 90k (USD) . However, if you subtract back out 6% of the SS (because technically your employer paid it) and 1.5% of medicare for the same reason. Our rate goes down to 28.5% for someone making 90k which is a little better than the UK rate. It's hard to compare but I'd say that the US is a socialist country.


Now let's consider someone making 285k/year (USD) .

In the US that person would pay roughly 27.25% or 77.6k in income tax. Another (shall we say) 12% in SS on up to 90k which would be 10.8k. Another 3% in medicare which is 8.55k.

So the total tax liability comes to 97k (USD) or 34% .

$285k would be 150k GBP (UK pounds) . So the tax liability on that would be 52,147 pa then another 8% for the national insurance and the total would come to 64,147 which is 42% .

That's 10% higher in the UK than the US . So the UK goes easier on the low end and harder on the high end. Which means that whereas our top 5% of earners pay for half of our government, it's probably something like your top 3 or even 2% that pays for half of your government. The UK is even harder on the big earners (the businessmen who make the economy go).

Edit: Added some bold to make it easier to read.

 

[Max_DC]

2/3 of worlds tax literature/paragraphs are german.... so I would like to explain it, but nobody can ...

 

[Danoff]

I suspected that the UK national insurance was also levied on employers. I found this link

http://www.winters.co.uk/factsheets/national_insurance.html

Which indicates that employers in the UK pay an additional 12% in national insurance (above a certain rate). That 12% (above a certain income I think?) would go into your pocket if they didn't pay it, so you should adjust the numbers I reported for the UK up by 12% to make it comparable with my US numbers.

So that means the following:

Income (USD)------------US effective tax rate----------UK effective tax rate
------------------------------------------------------------------------------------------
90k-----------------------------36%---------------------------- 42%
285k---------------------------34%-----------------------------52%

The reason the tax rate goes down for the 285k earner in the US is because the 285k earner pays no more to social security than the 90k earner.


Edit: Changed the employer contribution to 10% rather than 12% to account for the low income threshold.

 

[Danoff]

Famine,

Do you guys have a sales tax? Or property tax?

 

[Famine]

I suspected that the UK national insurance was also levied on employers.

I already took NI into account. It works out at about 6-8% of your gross income, although it's not that simple.

The £50,000 a year gross earner (which is the $92,500 gross earner) would pay:
First £91 pcw = 0% = £0
Next £519 pcw = 11% = £57.09
Everything on top of that = 1% = £3.52 (1% of £351.54)
For a total of £60.61 pcw, or 6.3% of their weekly wage, not 12%.


Sales tax - I assume that's tax levied on purchased items? We have "VAT" ("Value Added Tax") of 17.5% on most items except for children's clothes.

Property tax... I'm not sure what the analogue is. What is the purpose/function of Property Tax?

 

[Danoff]

I already took NI into account. It works out at about 6-8% of your gross income, although it's not that simple.

But you didn't take the additional 12% that's levied on your employer. You pay 8% and your employer pays another 12% for you - that totals 20%. You employer would pay you 12% more if they didn't have to pay that tax - so its a tax you effectively pay even though it isn't reflected in your pre-tax income.

Sales tax - I assume that's tax levied on purchased items? We have "VAT" ("Value Added Tax") of 17.5% on most items except for children's clothes.

Sales tax is a tax levied on purchased items. We pay 8% here in California though it varies from state to state.

Property tax... I'm not sure what the analogue is. What is the purpose/function of Property Tax?

If you own a home here, you pay a certain amount of property tax to the city. It's an annual tax that's usually a percentage of your home's worth. They use it to fund public schools and other city services.

 

[Famine]

Ah, right. We have "Council Tax". It is levied in different amounts according to the local Council's own tariffs. Typically it's in the order of £800pa.

As for employer NI contributions, no, I didn't take that into account. But I'm trying to get a picture of what happens between your agreed salary and your take-home pay, making any deductions at source (NI, PAYE). So if I earned £18,000 gross I'd end up with about £1,200 net every month in the UK, before I started buying things and paying my bills. This is the only thing that concerns me right now.

 

[Danoff]

As for employer NI contributions, no, I didn't take that into account. But I'm trying to get a picture of what happens between your agreed salary and your take-home pay, making any deductions at source (NI, PAYE). So if I earned £18,000 gross I'd end up with about £1,200 net every month in the UK, before I started buying things and paying my bills. This is the only thing that concerns me right now.

Ok. I consider that part of the tax since it reduces your take home pay - but in order to be sure that you're comparing apples to apples you can take 12% (I actually only added 10%) off of the tax I calculated for the UK above and 6% off of the first 90k for the US.

I'll repost the calculations:

not taking into account the costs levied on the employer:

Income (USD)------------US effective tax rate----------UK effective tax rate
------------------------------------------------------------------------------------------
90k-----------------------------28.5%---------------------------- 32%
285k---------------------------31%-----------------------------42%

 

[ledhed]

Ah, right. We have "Council Tax". It is levied in different amounts according to the local Council's own tariffs. Typically it's in the order of £800pa.

As for employer NI contributions, no, I didn't take that into account. But I'm trying to get a picture of what happens between your agreed salary and your take-home pay, making any deductions at source (NI, PAYE). So if I earned £18,000 gross I'd end up with about £1,200 net every month in the UK, before I started buying things and paying my bills. This is the only thing that concerns me right now.

Dude you are so screwed ! only 1200 out of 18,000 ? say thats a misprint please . I live in a tax haven compared to that.

 

[Firebird]

Canada has four levels of (federal) taxation as well.

Taxable income of $35,000 or less is subject to 16%.
$35,001 to $70,000 is subject to 22%.
$70,001 to $113,804 is subject to 26%.
$113,805 and higher is subject to 29%.

Similarly, you're only charged the corresponding rate for the amount higher than the base amount, not for the whole thing. For example, the £18,000 earner, roughly translated to $42,000, assuming their gross income is the same as their taxable income (deductions include pensions, union dues, child care, disability, moving expenses, support payments, blah blah blah), will deduct the base amount of the tax bracket they fit under (the $35,001 to $70,000 bracket has a base amount of $35,000), and the appropriate taxation rate is applied to the result.

$42,000 - $35,000 = $7,000 x 0.22 = $1,540

The tax on the base amount is then added to determine gross tax amount.

$35,000 x 0.16 = $5,600
$1,540 + $5,600 = $7,140 gross tax amount

Tax credits are then calculated. They include a basic personal amount of $8,012, regardless of the tax bracket, an age amount for senior citizens, dependents, Canada Pension Plan (CPP; or, in Québec, QPP) contributions (which are the result of a relatively complex calculation; the maximum an employee can pay each year is $1,831.50), Employment Insurance (EI) premiums (another complex calculation; maximum of $772.20), pension amounts, diability amounts, tuition and education amounts, student loan interest, and a few other things.

Tax credits for a $42,000 earner should be the basic personal amount plus the maximum CPP and EI contributions, multiplied by 16%.

$8,012 + $1,831.50 + $772.20 = $10,615.70 x 0.16 = $1,698.51 tax credit

Tax credit is subtracted from the gross tax to obtain the net amount:

$7,140 - $1,698.51 = $5,441.49 net federal tax

Provincial tax is then calculated. It varies from province to province. I'll calculate it for an Albertan.

You take the taxable income calculated earlier ($42,000), and apply a tax rate of 10% to it (there's only one tax rate for provincial tax).

$42,000 x 0.10 = $4,200 gross tax

Similarly, tax credits are calculated using a base amount ($14,337) and various other deductions (and, again, we'll assume the maximum CPP and EI contributions are the only tax credits), and multiply the total tax credits by 10%.

($14,337 + $1,831.50 + $772.20) x 0.10 = $1,694.07 tax credit

Subtract tax credits from gross tax to get net tax:

$4,200 - $1,694.07 = $2,505.93 net provincial tax

Add up net federal and provincial taxes and you get your total tax.

$5,441.49 + $2,505.93 = $7,947.42 total tax


Similarly, for a $117,400 earner (roughly equal to £50,000):

(($117,400 - $113,804) x 0.29) + $24,689 = $25,731.84 gross federal - $1,698.51 federal credit
= $24,033.33 net federal
($117,400 x 0.10) = $11,740 gross provincial - $1,694.07 provincial credit
= $10,045.93 net provincial
Total tax = $34,079.26


So, for $42,000 gross, net income is $34,052.58, or 81% of gross.
For $117,400 gross, net income is $83,320.74, or 71% of gross.

Other common taxes include:
- property taxes (municipal taxes which vary widely across areas of a city, usually depending on the value of the land and building)
- Goods and Services Tax (GST, a federal tax; 7% on most goods and services in British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Québec, Prince Edward Island, the Yukon, the North West Territories and Nunavut)
- Harmonized Sales Tax (HST; 15% on goods and services in New Brunswick, Nova Scotia and Newfoundland and Labrador. 7% goes to the federal government, while the other 8% goes to the respective provincial government)
- Provincial Sales Tax (PST; base rates of 7% in BC, Saskatchewan and Manitoba, 7.5% in Québec, 8% in Ontario and 10% on PEI. The PST in Québec and PEI are applied to the total sale price AND GST (in effect, a tax on a tax). All other provinces apply the tax to the sale price only. Alberta and the territories do not charge PST)

 

[Famine]

Dude you are so screwed ! only 1200 out of 18,000 ? say thats a misprint please . I live in a tax haven compared to that.

A month...

Ok. I consider that part of the tax since it reduces your take home pay

That doesn't make any sense. The employer deduction doesn't come out of your gross wage. It's taken account of before your gross wage. It doesn't affect the net value of your wage.

In other words:
Money allocated for position - employer deductions = advertised & contracted (gross) wage.
Gross wage - employee deductions = Net wage.

I'm only bothered about a comparison between employee gross (contracted) wage and net (post NI & PAYE) wage. If our £18,000 gross earner was picked up and plonked in Minnesota, or Alberta, or Niigata, or Toulouse, how much would he be taking back to the wife net?

 

[ledhed]

A month...



That doesn't make any sense. The employer deduction doesn't come out of your gross wage. It's taken account of before your gross wage. It doesn't affect the net value of your wage.

In other words:
Money allocated for position - employer deductions = advertised & contracted (gross) wage.
Gross wage - employee deductions = Net wage.

I'm only bothered about a comparison between employee gross (contracted) wage and net (post NI & PAYE) wage. If our £18,000 gross earner was picked up and plonked in Minnesota, or Alberta, or Niigata, or Toulouse, how much would he be taking back to the wife net?

Between 12 ,000 to 14,000 ..I think max taxes for the worst bracket may approach 50 % of your gross pay..but you would STILL be bringing home 9 ,000 and plotting a rebellion . ( or simply voting republican ) . your 18,000 earner is simply getting an allowance from his dad ( the government ).... do they at least give you some KY jelly ? 💡 No wonder people emigrate as soon as they start making any seriouse cash.
Its time for you guys to throw some tea in the ocean....it worked for us ..

 

[Danoff]

That doesn't make any sense. The employer deduction doesn't come out of your gross wage. It's taken account of before your gross wage. It doesn't affect the net value of your wage.

In other words:
Money allocated for position - employer deductions = advertised & contracted (gross) wage.
Gross wage - employee deductions = Net wage.

I'm only bothered about a comparison between employee gross (contracted) wage and net (post NI & PAYE) wage. If our £18,000 gross earner was picked up and plonked in Minnesota, or Alberta, or Niigata, or Toulouse, how much would he be taking back to the wife net?

I understand that you're not worried about what your employer has to contribute on your behalf - but it does make a difference in your net pay.


A company has 500k to spend on employees.

They need a team and want to figure out how many people they can afford.

Let's pretend that employees cost 20k in overhead (not including ss and medicare) per year. That's really low but hey, it's an estimate. Now the employer has to pay 6% to social security and 1.5% in medicare in addition to some other required disability insurance and pension plan and whatever else the government forces them to provide.

All of that stuff adds to overhead. So let's say there's a total of 10% (to make the math easier) of stuff added to each employee.

If they pay their employees a 50k salary. That's 74k to the company. They can afford 6 people.

Let's pretend the government didn't charge employers 6% SS and 1.5% medicare. Now it's a total of 2.5% overhead (for like disability and whatever).

So now the net to the company is 71k/employee to the company. Now they can afford 7 employees.

Alternatively they figure they need 5 employees. That means they have 100k to spend on each. That's 80/employee after basic overhead. If the government charges 6% SS and 1.5% medicare they can offer 74k per person. If the government does not charge those things they can offer 80k per person.


In one scenario it's the difference between someone working and not. In the other scenario it's a 4k raise. There's a combination of both of those going on in the economy and other factors. But you get my point - it does affect your take home pay.

 

[Danoff]

Firebird, what's the minimum you can put into CPP and EI?

 

[Famine]

I understand that you're not worried about what your employer has to contribute on your behalf - but it does make a difference in your net pay.


A company has 500k to spend on employees.

They need a team and want to figure out how many people they can afford.

Let's pretend that employees cost 20k in overhead (not including ss and medicare) per year. That's really low but hey, it's an estimate. Now the employer has to pay 6% to social security and 1.5% in medicare in addition to some other required disability insurance and pension plan and whatever else the government forces them to provide.

All of that stuff adds to overhead. So let's say there's a total of 10% (to make the math easier) of stuff added to each employee.

If they pay their employees a 50k salary. That's 74k to the company. They can afford 6 people.

Let's pretend the government didn't charge employers 6% SS and 1.5% medicare. Now it's a total of 2.5% overhead (for like disability and whatever).

So now the net to the company is 71k/employee to the company. Now they can afford 7 employees.

Alternatively they figure they need 5 employees. That means they have 100k to spend on each. That's 80/employee after basic overhead. If the government charges 6% SS and 1.5% medicare they can offer 74k per person. If the government does not charge those things they can offer 80k per person.


In one scenario it's the difference between someone working and not. In the other scenario it's a 4k raise. There's a combination of both of those going on in the economy and other factors. But you get my point - it does affect your take home pay.

I understand the concepts, but it only affects take-home (net) pay in that it determines whether or not you get any. It has no effect on deductions from Gross to make Net at all. The deductions from advertised (gross) pay to take-home (net) pay is all I care about.

What I'm essentially saying is that in Bermondsey, UK, there is a position advertised for £18,000pa (and another for £50,000pa). In Atlanta, Georgia, USA, there is a position advertised for £18,000/$33,000pa (and another for £50,000/$92,500pa). How the company calculated they can afford to advertise the post doesn't concern me. I want to know which of the two post holders ends up with the highest NET salary?

At the moment, it looks like the guy in the UK in both cases.

 

[Danoff]

So I got interested in government revenue and went digging.

Did you know that the US government only gets 51.5% of its revenue from income tax???

That shocked me!

Here's a link to the income sources

http://www.irs.gov/pub/irs-soi/02db01co.xls

10.5% of the revenue comes from corporate taxes.
35% comes from employment taxes (like I was talking about earlier, the employer contribution to SS (etc.) on your behalf)
1.5% is estate taxes
2.6% is excise tax.

Here's Canada
http://collection.nlc-bnc.ca/100/200/300/fraser/tax_facts_12/01TxFxch1.pdf

They get something like 40% of their taxes from income tax (at least they did in 1999). They make up for it with a national sales tax.

 

[Danoff]

I understand the concepts, but it only affects take-home (net) pay in that it determines whether or not you get any.

No. Look at my second example.

At the moment, it looks like the guy in the UK in both cases.

How do you get that? I calculated the tax for someone making 90k in both countries and the tax rate is lower in the US.

 

[Famine]

No. Look at my second example.

I did. It changed the level of advertised (Gross) pay. That is superfluous to what I'm interested in.

How do you get that? I calculated the tax for someone making 90k in both countries and the tax rate is lower in the US.

£90k isn't £18k. And you added on a form of taxation for the UK which is irrelevant to what I'm asking.

Again:
Money allocated for position - employer deductions = Gross (advertised) salary.
Gross (advertised) salary - employee deductions = Net (take-home) salary.

It's the second part ALONE I'm interested in. And, as ledhed responded:

I keep .69 cents of every buck I earn .

for £18,000 gross you earn £15,561.30 net, or about 87% of their gross wage.

 

[Danoff]

I did. It changed the level of advertised (Gross) pay. That is superfluous to what I'm interested in.

That affects your net pay. But I understand (as I have said before) that you're not interested in that. You want to keep the scope of this thread narrow and that's fine. But you can't say that the employer taxes don't affect net pay.

£50,000 gross -> £34,522.22 net

That's 31% tax.

In the US if you made 90k (~£50,000) you'd pay 28.5%

At the moment, it looks like the guy in the UK in both cases

The fed tax rate for 90k is better in the US.

 

[Firebird]

Firebird, what's the minimum you can put into CPP and EI?

Nothing, assuming you don't work.

EI premiums are calculated as 1.98% of your income up to $39,000 (said to be your "maximum insurable earnings"; 1.98% of $39,000 is $772.20, the maximum contribution). If you make less than $39,000 you pay 1.98% of what you earned. If you make more than $39,000 you pay the maximum of $772.20, no matter how much more than $39,000 you made.

CPP contributions depend on how much you're paid and how often you're paid (biweekly, weekly, monthly, etc). It's based on a "maximum pensionable earnings" of $40,500.00, minus a basic exemption based on your pay period length.

The number of times you were paid in a year is multiplied by the basic exemption corresponding to the length of your pay period to determine the total exemption.

Basic exemptions are as follows:
Weekly ----------> $67.30
Bi-weekly --------> $134.61
Semi-monthly ---> $145.83
Monthly ----------> $291.66
10 periods ------> $350.00
Annually ---------> $3,500.00

After subtracting the basic exemption from the maximum pensionable earnings CPP contributions are levied at a rate of 4.95% up to a maximum of $1,831.50 (=(($40,500-$3,500) x 0.0495)).

For example, let's say a person worked for about four months and was paid on a bi-weekly basis a total of eight times. Their basic exemption is therefore $134.61 x 8 = $1,076.88. Their CPP contributions are then equal to their gross income or $40,500, which ever is less, minus the basic exemption, multiplied by 4.95%.

 

[Famine]

That affects your net pay. But I understand (as I have said before) that you're not interested in that. You want to keep the scope of this thread narrow and that's fine.

It's an issue that moves me...


I essentially want to know what the difference is between a guy who says "I earn £18k" in the UK and the guy who says "I earn $33k" in some random parts of the US, or the guys in France, Holland, Belgium and Germany who say they earn E28k, or the Japanese dude on "3.6 million yen". These are the values the employer sets on their services after the employer has made their deductions. I just want to compare what the employee's personal deductions are and what £18k/$33k/E35k/Y3.6m comes out as in real terms when they take it home...

 

[ledhed]

In my business an employee cost approximately 37 % to 43 % of his wages. Cost to me include benifits and taxes / matching deductions . Thats on the low side for the construction business , I know of rates approaching 63 % of gross wages .
A married guy that makes $ 33 ,000 and owns a home loses about 28 to 31 % of his gross wages to taxes. A single guy with no home and no deductions save himself will lose around 38 % .

 

[Famine]

A married guy that makes $ 33 ,000 and owns a home loses about 28 to 31 % of his gross wages to taxes. A single guy with no home and no deductions save himself will lose around 38 % .

So that's quite a bit compared to the ~20% loss round these parts...

 

[Danoff]

In my business an employee cost approximately 37 % to 43 % of his wages. Cost to me include benifits and taxes / matching deductions . Thats on the low side for the construction business , I know of rates approaching 63 % of gross wages .
A married guy that makes $ 33 ,000 and owns a home loses about 28 to 31 % of his gross wages to taxes. A single guy with no home and no deductions save himself will lose around 38 % .

So that's quite a bit compared to the ~20% loss round these parts...

I don't think you guys are talking about the same thing. There are no federal income tax brackets as high as 38%. Ledhed is talking about total tax paid (I think) including sales tax, property tax, SS, probably some state taxes - the whole bundle. Famine on the other hand is (I think) not taking into account sales tax or property tax or that sort of thing when he quotes 20%.

 

[Famine]

"Sales tax" (VAT) varies, depending on what you buy. "Property tax" (Council tax) varies depending on whether or not you HAVE a house, where it is, what bracket it's in... I can't take those into account as they are so variable and are not deducted at source from your contracted salary.