Tuesday, March 04, 2008

Tax is taxing

There's an interesting post over at Stumbling and Mumbling about the relative tax rates of the UK and USA.
George Bush is a stronger believer in income equality than Gordon Brown.

These figures (pdf) from the CBO (via Greg Mankiw and the Kruse Kronicle) show that the poorest fifth of Americans paid an average of 4.3% of their income in federal taxes whilst the richest fifth paid 25.5%.

How do these figures compare to the UK? Table 16A here gives the answer. The poorest quintile in the UK paid 36.5% of their income in tax, whilst the richest fifth actually paid less - 35.5%.
Britain's tax system, then, is regressive whilst the US's is progressive.

Now, whilst there are caveats (which Master Dillow admits), the end result still seems to be the same: that in the UK the poor are more highly taxed, as a proportion of income, than the rich.

It is worth thinking about this whenever Labour bang on about helping the poor and all of that similar bullshit rhetoric.

The best way to help the poor is to allow them to work and to stop stealing their fucking cash.

1 comment:

Mark Wadsworth said...


The only tax which is actually regressive is 'Federal Excise Tax', unsurprisingly enough, and 'Social Security' is pretty flat (as a %age).

Ergo, if it's 'untaxing the poor' that you want to achieve (and that seems very sensible - if you taxed them less you'd be able to reduce their benefits as well), these two (by analogy, VAT/import duties and National Insurance) are the ones that should go first.

It would be interesting to see total effect of federal and state taxes, as state taxes include a much larger Sales Tax element (=VAT) = regressive.