How much tax do we pay in total?
In the UK, what is the total tax that taxpayers pay and what is our total income that we pay that tax from?
Taking the second question first, HMRC publishes tables with total taxable income by gender, region and country - and in aggregate for the whole of the UK together. The total income received by taxpayers was £870 billion in the year ended April 2008. A more up to date figure does not seem to be available, but I should revisit it.
The HMRC total tax take was £447 billion in the year ended April 2011. The total tax take includes all taxes, and includes therefore income tax (on employed income, self-employed income, rents, dividends, interest, pensions and annuities), VAT, fuel duty, tobacco duty, spirit duty, beer duty, wine duty, cider duty, air passenger duty, customs duties, insurance premium duty, bank payroll tax (new), landfill tax, petroleum revenue tax, climate change levy, aggregates levy, stamp duty, betting and gaming duty, inheritance tax, capital gains tax.
Government spending was, of course, about £150bn more than this, so about £600bn. The overspend is commonly known as the 'deficit' and usually identified with the total debt outstanding which is around £900bn.
On top of this we must include council tax and non-domestic rates (business rates) collected by local authorities (table 5). Council tax due in England was £22 billion in the year ended April 2010 and non-domestic rates were £19.98 billion. We would have to add in Northern Ireland, Scotland and Wales to get a truer picture. Total tax take was therefore £489 billion.
It may be objected that individuals don't pay all the taxes I have included in the £489bn. For example individuals don't pay corporation tax, non-domestic rates, bank payroll tax, landfill tax, aggregates levy and customs duties which are paid by importers. As Milton Friedman points out, corporations don't pay tax, people do. Friedman didn't put it this way but it is clear to me that corporations don't pay tax because they are legal fictions, a linguistist abstraction for an association of people. Only people can pay tax, because only people are material. Any tax paid by a corporation is simply an appropriation of currency before it reaches shareholders but after employees, creditors and bondholders are paid. Any tax paid is a reduction of income available to shareholders as dividends or a reduction of currency available to reinvest for increased future dividends.
This corporation tax and other corporate taxes are paid out before they reach the individual, much as income tax is, they are effectively taxed at source. So it is fair to compare the total income of individuals and the total tax take (from all sources) although it might be strictly better accounting practice to gross up the total income to include these other taxes.
So taxpayers pay - in cash terms - about £489bn of tax on total income of £870bn - or 56%. A more accurate figure could be obtained by finding the total income for 2011 rather than 2008.
If we take account of the deficit then taxpayers pay about £600bn on income of £870bn - or 73%. I'll just repeat that - taxpayers are paying out nearly 75% of their total income as tax. It may be objected that the deficit is not taxation. But of course it represents future taxation, as it can only be paid from future taxes.
It is fair to say that this is an average, but it does reflect the degree of control individuals taken as a whole have over their income - only about 1/4rd of it is under their control, the rest is syphoned off and redirected by central planners.
The assessment of taxes paid out does not include road tolls, car tax, nor other compulsory insurance & costs (car insurance, MOT).
Taking the second question first, HMRC publishes tables with total taxable income by gender, region and country - and in aggregate for the whole of the UK together. The total income received by taxpayers was £870 billion in the year ended April 2008. A more up to date figure does not seem to be available, but I should revisit it.
The HMRC total tax take was £447 billion in the year ended April 2011. The total tax take includes all taxes, and includes therefore income tax (on employed income, self-employed income, rents, dividends, interest, pensions and annuities), VAT, fuel duty, tobacco duty, spirit duty, beer duty, wine duty, cider duty, air passenger duty, customs duties, insurance premium duty, bank payroll tax (new), landfill tax, petroleum revenue tax, climate change levy, aggregates levy, stamp duty, betting and gaming duty, inheritance tax, capital gains tax.
Government spending was, of course, about £150bn more than this, so about £600bn. The overspend is commonly known as the 'deficit' and usually identified with the total debt outstanding which is around £900bn.
On top of this we must include council tax and non-domestic rates (business rates) collected by local authorities (table 5). Council tax due in England was £22 billion in the year ended April 2010 and non-domestic rates were £19.98 billion. We would have to add in Northern Ireland, Scotland and Wales to get a truer picture. Total tax take was therefore £489 billion.
It may be objected that individuals don't pay all the taxes I have included in the £489bn. For example individuals don't pay corporation tax, non-domestic rates, bank payroll tax, landfill tax, aggregates levy and customs duties which are paid by importers. As Milton Friedman points out, corporations don't pay tax, people do. Friedman didn't put it this way but it is clear to me that corporations don't pay tax because they are legal fictions, a linguistist abstraction for an association of people. Only people can pay tax, because only people are material. Any tax paid by a corporation is simply an appropriation of currency before it reaches shareholders but after employees, creditors and bondholders are paid. Any tax paid is a reduction of income available to shareholders as dividends or a reduction of currency available to reinvest for increased future dividends.
This corporation tax and other corporate taxes are paid out before they reach the individual, much as income tax is, they are effectively taxed at source. So it is fair to compare the total income of individuals and the total tax take (from all sources) although it might be strictly better accounting practice to gross up the total income to include these other taxes.
So taxpayers pay - in cash terms - about £489bn of tax on total income of £870bn - or 56%. A more accurate figure could be obtained by finding the total income for 2011 rather than 2008.
If we take account of the deficit then taxpayers pay about £600bn on income of £870bn - or 73%. I'll just repeat that - taxpayers are paying out nearly 75% of their total income as tax. It may be objected that the deficit is not taxation. But of course it represents future taxation, as it can only be paid from future taxes.
It is fair to say that this is an average, but it does reflect the degree of control individuals taken as a whole have over their income - only about 1/4rd of it is under their control, the rest is syphoned off and redirected by central planners.
The assessment of taxes paid out does not include road tolls, car tax, nor other compulsory insurance & costs (car insurance, MOT).
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