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Are you sure the numbers for the UK include national insurance contributions? Between employee contributions (which are basically an income tax with a weird regressive structure) and employer contributions (similar to US payroll tax) i would expect that figure to be higher.

Nb income based taxes are only the start anyway property tax aka Council tax is quite a burden on lower income households in the UK.




Yes, they do. (EDIT: In addition to the breakdown, look through the report I linked above, it splits out the employee and employer social security contributions in several of the tables and diagrams, which for the UK are the employee and employer national insurance contributions)

The median salary in the UK in 2015 was roughly 27,500 GBP.

Let's do the numbers as percent of wages first. This won't match perfectly with the OECD numbers as I haven't matched up the personal allowance rates etc. by tax year.

But currently, 27,500 means your taxable income is 16,500 (after subtracting the personal allowance). On this you'd pay 20% income tax, or 3,300 and 8.5% employee national insurance for roughly 2,332. Your total tax would be 28.5% of your taxable income, but only 20.5% of income once you factor your personal allowance back in.

If w're looking at employer contributions, I don't know exactly what they stand at this moment, but it used to be 12.5% of gross salary. If we adjust the numbers above, that means 3437.5 in employer contributions for a total tax wedge of ~29.3%. Note that I have not taken into account the lower earnings threshold etc. for employer national insurance contributions, which I believe you should, so I think the total would actually be lower, but even so even when applying it to the full amount you actually still end up below the OECD figure.

Both of the above excludes council tax. Council tax is of course tricky because it depends on the property you live in and your council, and whether or not you live in the property alone.

Now in my property that adds 1600/year for a family. Though you wouldn't live here if you were a single earner family on an 27.5k salary, that'd drive the total tax wedge up to 34.5%. As a single, you'd get half off, and end up with a total tax wedge of 31.9%. Looking at the gross wage percentages, it'd bring taxes to 26.3% (couple) or 23.4% (single) respectively.


Good point. I'd forgotten how much the recent raises in personal allowance had decreased the effective tax rate.




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