View Full Version : Tax freedom day

2nd Jun 2008, 12:57
Yesterday was the first day of this year when we started working for ourselves and not the Government. It's three days later this year and is predicted to be even later next year


2nd Jun 2008, 13:04
Oh no it wasn't. That's because you forgot to include VAT. So unfortunetly, the real tax-freedom day will be approx. 17.5% later than previously envisaged...?! :ok:

2nd Jun 2008, 13:12
Tax Freedom Day shows the income tax, national insurance, council tax and indirect taxes (such as fuel duty or VAT) paid by someone on average income, as a proportion of that income

I didn't forget anything! I was just refering to the Link where you'll find VAT is included

2nd Jun 2008, 13:56
Uhmmm, OK goudie, apparently it does take into account indirect taxes like VAT. But it's all based on someone on an average wage. Do more individuals earn at least this 'average wage' than those who don't...? I believe the latter case to be true. That there are actually far more individuals on less than this 'average wage'. Ergo, for most people, tax freedom day probably comes much later than 'officially' announced. Also:

http://www.adamsmith.org/images/stories/tfd_and_the_psncr.jpg (Read more here (http://www.adamsmith.org/tax-freedom-day-technical-information/)...): The amount of tax we pay is not the same as the amount which the government spends. Because the government is also a big borrower. While governments may aim to keep their finances in current balance, the heavy borrowing of the early 1990s will still have to be paid back in the form of higher taxes and/or a weaker economy.

Since Tax Freedom Day measures taxation only, public sector borrowing (which can be said to be a form of deferred taxation) is not in¬cluded until the time ac¬tually comes to repay the debt. This is in a sense unfair. It will make a squander-bug government, which borrows instead of raising taxes, look virtuous: while its fiscally more responsible successor, which attempts to pay off the public debt, will look like a high-tax government.

If Tax Freedom Day is to show the “true” long-term fiscal attitude of each year’s government, we need to adjust for this factor. It is thus of some interest to calculate Tax Freedom Day, taking into account not only government revenue, but also the broadest measure of government spending, i.e. PSNB (public sector net borrowing). The 'National debt' is a liability which falls on everyone's shoulders almost equally (those remaining alive and those yet to be born). And Gordon Brown and his chancellor have been very astute so as to ensure the rescue of Northern Rock and the £50 billion or more liabilities taken on by the taxpayer don't actually appear anywhere as such and there are also all those other £10s of billions private / public partnership projects underway.

Nah, if you were to lop off the top 20% of individuals and their 60-70% share of all wages, the average wage would more rightly reflect the reality. Which is that for the majority of those on average wages adjusted for all the high earners, Tax Freedom Day probably falls much later in the year. Probably so late in the year that it would be too embarassing to unveal...?! :suspect:

2nd Jun 2008, 14:35
Airship, you're far more knowledgable than me on the subject. I was just the messenger but I take your point.

2nd Jun 2008, 15:05
I'm not sure that anything I said can be backed up with real facts. Just that I feel like I've been paying far more tax than lots of others for...donkey's years. I can't afford to buy even a 1 bedroomed flat on my 'average wage' hereabouts. Yet, the marina here (as everywhere else on Mediterranean coasts) has become too small to accommodate all the luxury yachts whose owners wish to keep them here...so go figure?! :{

2nd Jun 2008, 15:10
Just completed my first time sheet for this tax year. HMG lifts just over a quarter of it in tax and national insurance, but I still have to donate another ten per cent to Welwyn-Hatfield Borough Council out of the take-home.

So I reckon Direct Tax Freedom Day will actually be sometime in mid-August. :{

Still, its the first time I've paid Income Tax in 27 years, so one mustn't grumble too much. ;)