Tax question..Europe & UK

Well, Denmark/Scandinavia is probably not the "norm" as far as tax is concerned.

BASIC INCOME TAX means we're taxed at 38% PLUS an additional 8% on top of that for the Commune tax (ie: min. 46%). This leaves me howling, particularly as a small business owner!

My advice: rule DK out as a tax haven!

Actually, you cannot judge a tax haven based upon how it taxes its own citizens. All countries know that they can screw their own citizens long and hard via taxation, since people living in a location probably work there, live there, store assets there, and (on average) do not travel much. However, in order to attract foreign investment capital which will only arrive from offshore voluntarily, countries often provide sweet deals. For example, the UK taxes its own citizens heavily, and yet the City of London is a very effective tax haven for non-Brits.

Astaroth, you make a good point.
In Denmark, tax cuts for foreigners amount to 25% + 8% Commune tax, although specific criteria must be met (ie: it does not apply to all foreigners - myself included)..

UK tax rates http://www.hmrc.gov.uk/rates/it.htm, but there is also national insurance contributions too which are at a fixed rate. I'm classified as self employed so pay £2.30 a week for that, for people employed by a company I think it's marginally less as the company makes an NI contribution too. Also as self employed I pay class 4 contributions which are 8% of profits under £40k (I think) and 10% over.

In Canada, the basic national income tax starts @ 25%. In the Province of Alberta, there is a flat tax rate of 15%.
There is national health insurance here, called "Medicare". It is very comprehensive. ( I was born in the U.S. of A, and lived there till I was 26. At 17 my Mamma died, and it took me 7 yrs. to pay off the medical bills- something that would NEVER happen here).

The system here is very close to the one in Canada - with the top rate being 35%. There are also additional taxes such as VAT (18%). The indirect taxes hurt more than the direct taxes since they tend to eat out of your purchasing power.

On the other hand, there is a comprehensive Universal Health scheme which I support fully.

mlt. perfume, you won't be so fond of general health when you pay huge taxes for others to use them and without you getting anything out of it.

Here it's 19% VAT, 35% for EDP and 25% for EDT. Perfumes cost around 140$ and in the US they are 70$. So is gas(8$/gallon), jeans(150-200$/pair) and I can go on. What's the most amusing is that 1/3 of the gov budget of my country is made out of car taxation and gas taxation and they pay retired people out of them when we have the infrastructure of a 1920 country.

Oh, and here we even have 100% import taxes. Rubbish country.

But that's the basis of the whole principle of social justice, although I do believe everyone in general benefits from it indirectly. It would be a shame if people had to have access to health care based on their income rather than on their need.

There are ways of reducing the health care budget - but I don't want to bore everyone

Of course taxation will always be a burden, but there are ways of reducing taxes without having to reduce essential services however that requires governments with some backbone to stand up to big lobby groups and huge corporations - so we have a rather long wait before that happens.

mlt.perfume, I wouldn't have any problems with paying like 10 000$ an year for health if I'd have anything for free and a small part of this would go to the social plan thing for general health and others would have it for free until the cap runs out.

And social justice is the following thing... How about work more so that you afford health? I mean, if I'd work 16 hours per day to make enough to afford it and others would use my tax money while they have a part time job... How's this justice? If I'm a manager and make more money than my employees and the company goes bankrupt because of a mistake I made, will all the employees pay or will they sell my house? To be honest, South Koreea is the best example for this. They have no unemployment aid and they experience the lowest unemployment worldwide, while France for instance pampers all the lazy people and has a HUGE long-term unemployment rate.

Also, I don't see how it's fair to pay for others from other perspectives. I make 200 000$ an year, you make 50 000$. We basically use the same services from the gov. Why would I pay more for them? Don't I get the same thing for more money?

And you don't bore me. I like economical debates sometimes. You know, bottom line is this... I will always avoid taxes when they are stupid. For instance, starting this year almost my whole income is copyrights money because I don't pay stupid retirement stuff or health, while I benefit from the same stuff. I don't see why I wouldn't do this.

Hey, Delia...to comment just on this part of your post..Doing what you're suggesting is not a great idea because of something called "moral hazard". In a few words it means that once people know "it's for free" they'll stop using the good or service (here health services) in a responsible way. Basically, they'll use more than what they would if they had a co-pay. In the long run, this will increase the price of the insurance.

Don't take my word for it. Google "moral hazard" and "adverse selection" and you'll see how many studies there are on this topic.

Agreed. Societies should never provide incentives for destructive behavior. A good example as applied to health care is heart disease. We now know that most (not all) heart disease is preventable with proper diet, exercise, and possibly some medication. If peoples' health care were completely subsidized, they would feel much less pressure to protect their health in their day-to-day lives, since they are no longer incurring individual costs and are instead amortizing that cost across all society. This ends up costing everyone more in the long run.

you all make fair points (even though I may not agree with everything). I think there is a higher incentive to move to preventive health care in countries where there is universal health coverage. This is because of the high cost and the willingness of the government to reduce spending. I've seen loads of campaigns to combat smoking, heart disease, cancer and other life threatening habits/illnesses.

But if we're talking about costs, we must talk about the sometimes artificially inflated costs of private health care and the undue influence pharmaceutical companies have on such an industry.

In principle I agree with the notion of working hard for what you need - but the cost of some operations may run into thousands of dollars - money which some people may not have available should the emergency arise.

My idea was that only insured people would benefit the health according to how much their health insurance saved up. It'd be like a bank account. And 5% out of what you pay in an year it will go to a fund to treat uninsured people. When the cap runs out, no more free stuff. That way I wouldn't mind paying health taxes. Bottom line is that I don't see why I'd pay more for health than someone who makes less than me. I workout and eat healthy, if anything, I should pay less than people who eat like crap. And that part of my post was referring to an occurance in my life. Before I started getting my money in a less taxable ways, my health taxes were providing around 10 000$ in an year to the health system. I got a cold once and wanted some crap 20$ medicine and the cap ran out so I had to pay for it. Why pay 10 000$ if it's no use for me?

Astaroth, the problem is that certain drug companies make a ton of money out of promoting the fact that cholesterol is the thing that causes heart disease, when it's an indicator sort of. I'm not going into this because it's a whole other debate about nutrition in general.

mlt.perfume, the gov should make some long term, no interest loans for those cases in which the one who benefits the surgery pays back at least a part of it. I believe taxes are too high as they are. An average employee here loses like 40% out of his paycheck for taxes and everything has 19% VAT. Now, I think that's a bit too much. Add the inflation too because that's a way of taxation too sort of.

I agree 100% on the part that taxes are too high. In my opinion, VAT or any tax based on expenditure should not be higher than 13.5%. Rather than tax activities which are good for the economy - such as spending, tax should be focused on items which are deemed to be bad e.g. cigarettes, excessive pollution etc. The top rate of taxation on income here is 35% - a figure which in my opinion should gradually go down to 30%.

I emphasize the word gradually since the trend nowadays is that tax cuts are suggested regardless of what the effects may be. Tax cuts are promoted as a solution to all economic ails, which in most cases, they are not.

This isn't really true. Lots of research has been done on a condition called hypercholesterolemia, and the correlation between it and heart disease. It is worth reducing cholesterol levels in people. And the only problem I have with pharmaceutical companies making large profits is that this money doesn't usually find its way into the scientists' pockets. I would encourage increased competition between these companies, while still providing them with a strong profit motive. I'd rather have smart people becoming medical researchers than hedge fund managers, so I don't want to take the money out of drug research.

Concerning insurance (medical or otherwise), it is designed to protect people against catastrophic loss due to unforeseen statistical factors. It is not meant as a palliative against systematically destroying your financial or medical well-being by flagrantly ignoring current knowledge about the best way to live your life. I know lots of people who have had heart attacks and continue to eat unhealthy food and smoke cigarettes. I even know someone who has had a liver transplant which cost about $300K, but still goes to company holiday parties and drinks like a fish. People who attempt to lead healthy lives should not subsidize this sort of behavior by having to pay increased premiums.

This thread might start bordering on politics at some point, in which case it will attract the attention of moderators. It's probably best to keep this in mind ...

mlt.perfume, VAT basically hurts everyone. It makes goods either be of less quality to keep the low price, or sell less, which means the end-user gets burned by it. And this is the general population. And it's usually a deadweight loss situation. The economy loses more money than the government earns and it also hurts things if the money isn't put back by the gov at improving productivity and it usually isn't.

And tax cuts make investments return in the country and make more jobs. Look at it this way. Since my country got an unique 16% tax on income, instead of from 19% to 40%, more people declared their true income and also tons of investments came in. Now Nokia, Ford and tons of other companies opened manufacturing plants here. I believe that people should be allowed to do whatever they want with their money. I believe that pampering the society too much leads to less responsibility and it makes people see the bigger picture less.

Also, if I'd want to pay health for other people, it wouldn't be for people in the US, if I'd be American. I'd rather spend my tax money on some other poor country's citizens. Aren't social type things based on this helping the poor thing? Why would I pay the heart surgery on some fatty who stuffed himself with McDonalds when people on other places of the world starve? I mean, no offense, but social programs are the biggest hypocrisy in my opinion. There's a thing that you shouldn't cross.

Astaroth, the bigger heart risk thing is the huge consumption of unsaturated fats. Those things that clog arteries are made out of unsaturated fat.
http://www.youtube.com/watch?v=awA2fsa94MI
http://www.youtube.com/watch?v=H3ZnrE3dQdw
Blah, I read a book with a great study on it, but I don't have time to look for it now. If you want to debate this though, we should get a new thread. And we didn't discuss politics so far. It's more like economics and social aspects. We didn't mention any parties, did we? :P

lol I agree 100% with your take on lower taxes, but it's not just that which is attracting people to Romania - it's also the fact that it has good relations with most countries, good transport links, people willing to work and other things.

But the government here is also using the same strategy of reducing taxes in order to reduce people from evading tax.


hehe parties? Well, I'm usually on the centre-left

mlt.perfume, my country has a 1920 transport system. I doubt that's what investors want. And we have good relations with most countries, except Russia. :P And our biggest trade deficit is with them because we have to buy natural gas from them, considering the EU is a bunch of pussies and don't want to build pipelines to bring the gas from somewhere else. I'm a libertarian, on most aspects.

lol I agree with your take on the European Union. But I'll stop there when it comes to the EU - on foreign affairs I disagree with most people on the left.

The EU thinks that they need to pump welfare and crap like that to solve everything... Don't get me started on the EU. :P

Hey, why not get you started?! Maybe it will be fun!

lol Delia and I are probably in agreement when it comes to the EU - although most probably for different reasons

The fact that the EU supports a welfare state directly helps the United States. It chases some of the most productive workers out of Europe, where they would be paid depressed salaries, be exorbitantly taxed, and do not really need the "safety net" the welfare state provides. They eventually find their way into American cities, where they can enjoy more of the fruits of their labor and have fewer restrictions on how wealthy they can become. As a result of this European brain drain, we Americans enjoy the benefits of many of the world's best doctors, scientists, and engineers. I saw this during both my stints in graduate school. Both programs were loaded with European graduate students.

This is just one of the hidden costs of enforced wealth redistribution that Europeans do not often consider when they tout the benefits of the welfare state. In the same way that high capital gains tax rates push capital offshore, if a nation financially punishes its most productive citizens by heavily taxing their income, they will move offshore to work.

I think Lincoln said something like this: a government big enough to give people what they want is also big enough to take everything from those who have anything.

Astaroth, don't worry they just import muslims thinking that they will replace everything, but they lack the proper ideas in integrating them society wise. I had a debate with an American guy I know about how bad the US immigration is related to this. Instead of making things easier for highly qualified, productive people, they make things easy for unqualified people. Also, highly qualified people have certain living standards already and will come with money from another country which helps the economy too.

Delia, people are not "imported"..at least not anymore. And even if I know you use it as a metaphor, some might feel insulted.
As for US...could it be that they have enough high skilled labor and could benefit more from low skilled labor force migration? Although, I don't think this is the official position.

The brain drain is not entirely due to taxation. We must keep in mind that most research centres are in the United States so obviously people will want to go to the US to work there. The US has always been touted as the land of opportunity - and rightly so - however I doubt this is due to the lower levels of taxation.

Let's not be naive and think that the gov really cares about a balance in it and about the citizens. They care mostly about corporations. And the more highly qualified people, the smaller the wages and the happier the corps will get. And usually the demand for high qualified people is usually bigger than the number of those people, hence the obscene wages some of these people have. :P

And if people get insulted by that, they're rather insecure, but heh.

I was talking about economic efficiency not "care". I like to think that governments do care about that. Or at least try. But, to tell the truth I might be naive.
US have a number of visas reserved for people with Masters, Ph.D or special contributions to the science. So, they do encourage high skilled people migration, to some degree.
Why would you think that people who believe in human rights, politically correctness and decency in general, are insecure? You know, not that long ago people were "imported". Their descendents (but not only) would probably feel offended. Anyways...

You need to move the causality further back in time. Research centers are intentionally located where they can attract talent and retain profits from patents. The most talented academics are going to position themselves in countries where they can earn large salaries and keep most of what they earn from outside contracting work. Also, all other factors being equal, you are more likely to end up working in the same country where you finished your research work. Companies do not like to spring for international airfare during an interview process, particularly if there are local job candidates. Most of my friends who earned their PhDs or took postdoctoral appointments overseas learned this the hard way.

I don't believe that people who believe in human rights or decency are insecure. If you find a metaphor really offensive, then you are insecure. And political correctness is hypocrisy, in my opinion. I'll take people who speak their mind over political correct people any time.

And the brain drain is happening because of the taxing levels and politics who emphasize mediocre people. Also, keep in mind the stupid attitude that the EU has, due to which it takes years to do something.

Bebe Delia, this is simply too wise for me. I'd better be quiet for a while and just reflect on these amazing revelations and then start taking care of my insecurity.

And you can take the import stuff literally too. It's workforce for money. They don't come here for anything else than money, the EU doesn't let them in for anything else than them working. They don't come to be part of the society and so on... But this is another discussion.

Good luck on reflecting.