Someone explain taxes to me

[vindicatorx]

He probably does what I do and claims 0 instead of claiming 1 like a lot of people do. We pay more in taxes per paycheck yet we get more back from our tax returns.

[Abysal]

Your work estimate how mcuh to take out. They usually overestimate it.

If you want to know the theory behind it, its to give the government a mechanism to destroy your lifestyle if it decides you owe money to it.

Actually, when you got hired you (should have) had the option to claim exceptions for yourself. You can claim more than the default if you want, it just means you'll probably owe taxes instead of getting a refund when you file.

[doodarday123]

The same is true for the rest of the UK not just England. You are also mistaken about the benefit system for the vast majority it does actually pay to work and the amount of benefit is less than working. Then there is the various benefits people can get whilst in work to help them on low pay and ease the transition into work.

The problem is typically the ancillary costs of working. ie: travel to work costs, childcare costs, dependant elderly relatives care etc. Plus the effects that some benefits are withdrawn as soon as someone starts working so that there can be initial shocks to the low income person's budget eg: not getting paid until the end of the month/week and getting losing the benefit too.

All of which often tip the balance. It is this balance that is being addressed by the coalition to try to make it a more streamlined system where there is a universal benefit that replaces several old different benefits, and this new one is tapered so that entering the workplace is always guaranteed to pay more (at least that's the theory).

It is the minority of cases however that fuel the political debate (the stereotyped "people sleeping with curtains drawn whilst others go out to work in the cold") when in reality that is not who are being most affected by the changes.

There are BIG changes needed to our system but don't for a minute be fooled that the conservatives are making the changes to benefit the poor they are making them to reduce spending, indeed its only because of the coalition and not a conservative majority that the more extreme suggestions have been shelved. Although some of those extremes (giving a tax rebate to millionares whilst cutting benefits to the poor) were inexplicably voted for by Nick "I've no spine" Clegg's lot.



Until the various caps kick in and then the percentage you pay falls as the income you earn rises. So that the highest earners much like the larger companies pay very low rates as they can take advantage of "tax efficiency" schemes unavailable to the average public.

The Conservatives give tax breaks to low paid private sector workers and large businesse to attract them into the country.

They freeze the bloated public sector pay and population to avoid tax wastage.


Best way to run an economy if you ask me.

[Austilias]

Success is punished, what's new? But then that is precisely to be expected in most Western Liberal Democracies where Robin Hood economic policies are praised and the belief that if you take more and more from the rich whether they earned it legitimately or not, all of societies woes and troubles will go away, is held proudly.

[Spectral]

Success is punished, what's new?

Weird, I don't feel punished when my income increases. I think there must be some sort of persecution complex that drives that sentiment.

[vindicatorx]

Success is punished, what's new? But then that is precisely to be expected in most Western Liberal Democracies where Robin Hood economic policies are praised and the belief that if you take more and more from the rich, whether they earned it legitimately or not, all of societies woes and troubles will go away.

Or we could just jump to conclusions like this guy did and not think there was a logical explanation like he claimed less dependents or look at the face they usually take out more taxes on overtime.

[Deleted]

Tax in England doesnt work like this at all.

You get tax free income up to your personal allowance, then pay a % on your taxable income.

This tax year for most people, the personal tax allowance is £8105. You dont pay any tax at all if you earn less than this. Every £ you earn after that is taxxed for most people at 20%. Then you also pay your % 12 national insurance.

Under no situation will you suddenly get taxxed for working a few more hours in a week.

if i cared enough i would post the pay slips here, but for a few reasons i wont. this was in 2008 or so, also an error on my part, i meant months not weeks. i dont really understand the tax system, all i know is one month the pay slip would have 0tax on it, months where i only earned a little, then the next month i would be paid 600 and it would tax me a little amount of NI tax.
i just guessed that you dont get taxed if you earn under a certain amount.

[Austilias]

Weird, I don't feel punished when my income increases. I think there must be some sort of persecution complex that drives that sentiment.

Your income increases but you lose more of what it should be as you are taxed more. A flat rate of tax for one and all is the only fair proposal, and it's not really what we see because again; "take more from the rich and all our troubles go away."

[Deleted]

Tax in England doesnt work like this at all.

You get tax free income up to your personal allowance, then pay a % on your taxable income.

This tax year for most people, the personal tax allowance is £8105. You dont pay any tax at all if you earn less than this. Every £ you earn after that is taxxed for most people at 20%. Then you also pay your % 12 national insurance.

Under no situation will you suddenly get taxxed for working a few more hours in a week.

heres some numbers from old payslips, 2 random ones from 2009, this is when i was in college on only working a few nights a week so income was low. but one month i got paid £436 total and £0.00 tax, even though it says "taxable pay £436" but then the very next month i earned £548 and was taxed £7.


can you explain why? as i said i dont really understand the tax system, im quite curious.

[Spectral]

Your income increases but you lose more of what it should be as you are taxed more. A flat rate of tax for one and all is the only fair proposal, and it's not really what we see because again; "take more from the rich and all our troubles go away."

This doesn't resemble punishment. Punishment isn't, "this is better, but not as much better as I'd like".

[Canpinter]

Your income increases but you lose more of what it should be as you are taxed more. A flat rate of tax for one and all is the only fair proposal, and it's not really what we see because again; "take more from the rich and all our troubles go away."

A Flat rate effects the poor far more then the rich, 20% for someone making 25,000 a year impacts quality of life far more then 20% for someone making 250,000

[Dakia]

Actually, when you got hired you (should have) had the option to claim exceptions for yourself. You can claim more than the default if you want, it just means you'll probably owe taxes instead of getting a refund when you file.

Yep.

Other than the mandated amounts for FICA, it really is up to the person receiving the income. The problem right now is that W4s are woefully inaccurate when attempting to estimate tax withholding. If a family member of mine follows the W4 instructions to the letter, he ends up at a 6. However, at a 6 he owes $3000 on his tax return. I have him adjust now to claim 2.

Do NOT follow the W4 to the letter of the instructions. Do not rely on your HR dept to help you through it. If you truly have questions and want to do tax planning, chances are that a tax service will walk you through W4s and further tax planning free of charge.

Also, withholding rates on overtime hours is rarely ever done right.

[Endus]

Success is punished, what's new? But then that is precisely to be expected in most Western Liberal Democracies where Robin Hood economic policies are praised and the belief that if you take more and more from the rich whether they earned it legitimately or not, all of societies woes and troubles will go away, is held proudly.

See, this is garbage.

Success isn't "punished". You pay more back because 1> you're one of the people who has more money, and 2> you benefit at least as much as anyone else from the governmental support systems your taxes are paying for.

You pay back into the system, because you owe the system and are making continuous use of it. If you don't want to pay into the system, stop making use of the services it provides. This means leaving the country and revoke your citizenship. If you're not willing to do that, you need to suck it up and pay your dues. It's like condo fees; they're the price of living in that condo. The condo management doesn't care if you never use the weight room or the pool; you wanted to live in a condo with those amenities, so you pay for their upkeep. If you don't like it, you don't have to live there.

It's funny, but the people making your argument never seem willing to put their money where their mouth is and actually go it solo. Your entire argument amounts to demanding a free ride from the government. You're bemoaning the illegitimacy of taking money whether you've "earned it" or not, but you never say anything about how you and those like you benefit from the protection of your military forces, the publicly funded roads and transit systems, the health of the nation that prevents epidemics and such that is managed through publicly funded medical services, the reduction in crime and fire damage/deaths due to police and fire departments, etcetera ad infinitum.

If you don't want to pay for that stuff, then move somewhere that doesn't provide you with that stuff. Until you do, you're the one demanding the free ride. At least the poor bastard on welfare has the lack of employment as an excuse for freeloading. Trying to freeload when you COULD pay the government back? Yeesh.

[Magpai]

The more you earn, the more of a percent you give. This exponential increase is how person A and person B vote themselves money out of person C's pocket, while granting politician D more power over the citizenry as compensation.

Edit: I think it's actually more quadratic than exponential, but it's some function like that.

---------- Post added 2013-02-05 at 01:34 AM ----------

See, this is garbage.

Success isn't "punished". You pay more back because 1> you're one of the people who has more money, and 2> you benefit at least as much as anyone else from the governmental support systems your taxes are paying for.

You pay back into the system, because you owe the system and are making continuous use of it. If you don't want to pay into the system, stop making use of the services it provides. This means leaving the country and revoke your citizenship. If you're not willing to do that, you need to suck it up and pay your dues. It's like condo fees; they're the price of living in that condo. The condo management doesn't care if you never use the weight room or the pool; you wanted to live in a condo with those amenities, so you pay for their upkeep. If you don't like it, you don't have to live there.

It's funny, but the people making your argument never seem willing to put their money where their mouth is and actually go it solo. Your entire argument amounts to demanding a free ride from the government. You're bemoaning the illegitimacy of taking money whether you've "earned it" or not, but you never say anything about how you and those like you benefit from the protection of your military forces, the publicly funded roads and transit systems, the health of the nation that prevents epidemics and such that is managed through publicly funded medical services, the reduction in crime and fire damage/deaths due to police and fire departments, etcetera ad infinitum.

If you don't want to pay for that stuff, then move somewhere that doesn't provide you with that stuff. Until you do, you're the one demanding the free ride. At least the poor bastard on welfare has the lack of employment as an excuse for freeloading. Trying to freeload when you COULD pay the government back? Yeesh.

Translation: "You don't like the government's purpose behind structuring the tax codes the way they are and think government is too heavy-handed, but I'm unwilling or unable to argue with your actual points, so I'll just pretend you're saying all government services are bad and argue against that position instead."

[Endus]

Translation: "You don't like the government's purpose behind structuring the tax codes the way they are and think government is too heavy-handed, but I'm unwilling or unable to argue with your actual points, so I'll just pretend you're saying all government services are bad and argue against that position instead."

He spoke in broad generics, I responded with broad generics. He didn't HAVE "actual points".

Unless the tax rate scales faster than your income, meaning your net income lowers as your gross increases, then we're not in a situation where "success is punished".

Nor are flat taxes justifiable, since they really do punish the poor, who are struggling to afford basic necessities.


The only way I could see a flat tax working is if there were a guaranteed income providing a solid untaxed baseline for everyone, and then additional income was taxed at a relatively heavy flat rate on top of that.

[Austilias]

See, this is garbage.

Success isn't "punished". You pay more back because 1> you're one of the people who has more money, and 2> you benefit at least as much as anyone else from the governmental support systems your taxes are paying for.

You pay back into the system, because you owe the system and are making continuous use of it. If you don't want to pay into the system, stop making use of the services it provides. This means leaving the country and revoke your citizenship. If you're not willing to do that, you need to suck it up and pay your dues. It's like condo fees; they're the price of living in that condo. The condo management doesn't care if you never use the weight room or the pool; you wanted to live in a condo with those amenities, so you pay for their upkeep. If you don't like it, you don't have to live there.

It's funny, but the people making your argument never seem willing to put their money where their mouth is and actually go it solo. Your entire argument amounts to demanding a free ride from the government. You're bemoaning the illegitimacy of taking money whether you've "earned it" or not, but you never say anything about how you and those like you benefit from the protection of your military forces, the publicly funded roads and transit systems, the health of the nation that prevents epidemics and such that is managed through publicly funded medical services, the reduction in crime and fire damage/deaths due to police and fire departments, etcetera ad infinitum.

If you don't want to pay for that stuff, then move somewhere that doesn't provide you with that stuff. Until you do, you're the one demanding the free ride. At least the poor bastard on welfare has the lack of employment as an excuse for freeloading. Trying to freeload when you COULD pay the government back? Yeesh.

See now this all sounds nice, but doesn't really make any case whatsoever for someone who is legitimately wealthy having to pay more taxes than someone who is not. Someone earning $20,000 a year has just as much right to make use of government infrastructure as someone making $200,000 a year. Someone who earns $20,000 is entitled to precisely the same treatment from the military forces, as someone who earns $200,000. Someone who earns $20,000 can make use of the roads just as much as someone who earns $200,000. Someone earning $20,000 a year has just as much right to national healthcare as someone earning $200,000. Etcetera ad infinitum, as you say.

Everyone has to pay for what the government provides; why someone should pay more for making better, more intuitive and more efficient use of that which is provided however, is not a question for which there is a satisfactory answer. No taxes for the rich? Would never suggest it. No taxes for the poor? Absolutely not. Equal tax rates for all? Good move.

To put it more simply via an analogy; two people are given a hammer by the state, both of which being exactly the same. One of those people devotes himself to mastering this tool; learning the art of carpentry and providing goods for a good deal of people who want them. The other person, sees little sense in undertaking any serious study, thinking it a pointless waste of time, and instead uses said hammer in freelance, poor quality DIY work. The state however, decides to take more from the carpenter. Not exactly fair.

[Magpai]

A Flat rate effects the poor far more then the rich, 20% for someone making 25,000 a year impacts quality of life far more then 20% for someone making 250,000

The purpose of taxation should not be to equalize quality of life, or make any effort at all in that direction.

[Mormolyce]

I am asking about taxes taken from paychecks.

(These numbers are slight estimates and not exact)

So I get paid weekly. In a 30 hour week, making 10.50 an hour, I only get $275 from the $315 I was supposed to make. Around 12% taken out.

My boyfriend who gets paid every two weeks, clocked in 88 hours, 8 of them being overtime, making 10.50 an hour, only gets around $750 of the $950ish he earned. Over 20% is taken out.

Why the huge difference?

Because you're poorer?

Think about it this way: living expenses (on a survival level) are more or less fixed so earning more money increases your ratio of discretionary income to total income. The increasing tax brackets in part compensate for that. I mean if you earn your $315 a week and your cost of living is $250 a week, you can afford to pay a lot less % of tax than someone who earns $800 a week and still has cost of living at $250.

For you, a 20% tax rate would be $63, and your discretionary income is only $65. Meanwhile for the guy earning $800 a week, a 20% tax rate would be $160 - sure he pays a lot more but his discretionary income is $550. So you're paying 97% of your discretionary income and he's paying 29% of his.

P.S. My effective tax rate is like 35% plus... wanna swap? :P

---------- Post added 2013-02-05 at 01:45 AM ----------

The purpose of taxation should not be to equalize quality of life, or make any effort at all in that direction.

The purpose of taxation is to raise money for the government, nothing more or less. However any sensible system of taxation only asks people to contribute according to their means.

[Deleted]

The more you earn, the more of a percent you give. This exponential increase is how person A and person B vote themselves money out of person C's pocket, while granting politician D more power over the citizenry as compensation.

Edit: I think it's actually more quadratic than exponential, but it's some function like that.

---------- Post added 2013-02-05 at 01:34 AM ----------



Translation: "You don't like the government's purpose behind structuring the tax codes the way they are and think government is too heavy-handed, but I'm unwilling or unable to argue with your actual points, so I'll just pretend you're saying all government services are bad and argue against that position instead."

Err How could Endus actually argue against an "actual point" when the guy he quoted gave NO SPECIFIC POINTS!! Just the vague "Success is punished, what's new?"

Really if you're going to call someone out (and a well liked forum moderator at that) on not arguing a point you should at least have a point to make yourself!! I'd have given you a warning for that post back in my day.

[Magpai]

He spoke in broad generics, I responded with broad generics. He didn't HAVE "actual points".
Nor are flat taxes justifiable, since they really do punish the poor, who are struggling to afford basic necessities.

Please. Almost half the country doesn't even pay income tax. And there's tax plans out there which make your income tax scale linearly, but with a constant chunk taken off, i.e. your tax could for example 0.15I - 1,500 where I is income. Minimal impact on the "poor". But it gets rejected.

It's not about the poor. It's about people who are perfectly capable of LIVING off their income and living fairly comfortably wanting anyone richer than them to pay as much as the government can squeeze from them.

---------- Post added 2013-02-05 at 01:48 AM ----------

The purpose of taxation is to raise money for the government, nothing more or less. However any sensible system of taxation only asks people to contribute according to their means.

"From each according to his means" is not the only sensible system.

---------- Post added 2013-02-05 at 01:49 AM ----------

Err How could Endus actually argue against an "actual point" when the guy he quoted gave NO SPECIFIC POINTS!! Just the vague "Success is punished, what's new?"

Really if you're going to call someone out (and a well liked forum moderator at that) on not arguing a point you should at least have a point to make yourself!! I'd have given you a warning for that post back in my day.

Well then it's easy to see why you're not a mod, since any forum worth a shit doesn't "warn" people for disagreeing with a "well-liked moderator". And it really doesn't matter, he fabricated a position on the quotee's behalf either way.