Amount of tax paid?

[Moonhawk]

Has anyone come across a calculation that suggests what the average amount of tax paid per £1 in the UK?

For example if I earn £1.

Around 20% will go on income tax with a little more on NI.

That probably leave me with about 78p.

I then go out and spend that 78p on something. 20% of that 78p then goes on VAT leaving 62p to go to the company.

But then the company that money goes to has to pay it's staff who also pay income tax. It also has to pay corporation tax etc.

As the £1 cascades through the system - more and more of it is taken out in tax at each iteration - so what are we actually looking at? Is the figure ultimately close to 100%? (i.e. unless it is put into some sort of savings scheme, taken out of the country or stuffed under a matress - will the entire £1 will eventually be consumed by tax at some level?)

[BoRED S2upid]

Depends which company you spend your pound with and if they pay tax or have many staff. You could probably do an economics PhD on the question.

[ATG]

It doesn't really make sense to try and track a pound round the economy while picturing tax being removed from it. You can look at what proportion of your income or any other entity's income gets paid to the tax authorities, and you can also look at total public sector spending as a proportion of the entire economy. The latter is probably closest to what you're after. It's roughly 40% of the UK economy.

[PugwasHDJ80]

Moonhawk said:

Has anyone come across a calculation that suggests what the average amount of tax paid per £1 in the UK?

For example if I earn £1.

Around 20% will go on income tax with a little more on NI.

That probably leave me with about 78p.

I then go out and spend that 78p on something. 20% of that 78p then goes on VAT leaving 62p to go to the company.

But then the company that money goes to has to pay it's staff who also pay income tax. It also has to pay corporation tax etc.

As the £1 cascades through the system - more and more of it is taken out in tax at each iteration - so what are we actually looking at? Is the figure ultimately close to 100%? (i.e. unless it is put into some sort of savings scheme, taken out of the country or stuffed under a matress - will the entire £1 will eventually be consumed by tax at some level?)

A frequent calculation- total government spend per GDP as a % gives you what you need:

http://en.wikipedia.org/wiki/Government_spending#A...

we're in the high 40s at the moment- USA for example is 8% less.

The difference is mainly spent on welfare!

[lukefreeman]

• awaits the powerfully built directors spouting off about how they spend 40p out of every £1 on tax *

[Sheepshanks]

Moonhawk said:

For example if I earn £1.

Around 20% will go on income tax with a little more on NI.

That probably leave me with about 78p.

It's not "a little more on NI" - standard rate of NI is 12%.

[Jarcy]

lukefreeman said:

*awaits the powerfully built directors spouting off about how they spend 40p47p out of every £1 on tax *

Corrected that for you.

[marshalla]

lukefreeman said:

*awaits the powerfully built directors spouting off about how they spend 40p out of every £1 on tax *

The smart ones avoid it.

[soad]

marshalla said:

lukefreeman said:

*awaits the powerfully built directors spouting off about how they spend 40p out of every £1 on tax *

The smart ones avoid it.

No morals.

[simoid]

PugwasHDJ80 said:

A frequent calculation- total government spend per GDP as a % gives you what you need:

http://en.wikipedia.org/wiki/Government_spending#A...

we're in the high 40s at the moment- USA for example is 8% less.

The difference is mainly spent on welfare!

Not government tax take as a %age of GDP we're after here?

[PugwasHDJ80]

simoid said:

PugwasHDJ80 said:

A frequent calculation- total government spend per GDP as a % gives you what you need:

http://en.wikipedia.org/wiki/Government_spending#A...

we're in the high 40s at the moment- USA for example is 8% less.

The difference is mainly spent on welfare!

Not government tax take as a %age of GDP we're after here?

isn't it effectively the same?

I guess government spending doesn't take into account spending on the deficit, but we should worry more about what the government is spending as we're going to have to pay for it at some point, be it now or in the future!

[simoid]

PugwasHDJ80 said:

isn't it effectively the same?

I guess government spending doesn't take into account spending on the deficit, but we should worry more about what the government is spending as we're going to have to pay for it at some point, be it now or in the future!

In the long run, yes, but I took the OP to be talking in 'current terms'.

Try telling the bold to the Greeks