Cover of MoneyWeek magazine issue no 452

America looks good

11 September 2009 / Issue 452

Is it time to buy US property? PLUS:

  • How to profit from blackouts in the US
  • Why the City should stop this merger boom
  • The mystery man who made $1.4bn from Marvel comics

Excerpt

We must get angrier about tax

I wrote an article for a women’s magazine recently. In it I noted that, if you earn £30,000 a year, your take-home pay comes out at around £10 an hour. I later got an email from the magazine’s sub-editing department, saying my figures didn’t match with their calculations.

I think I know why. It’s because they think that someone getting £30,000 a year pays income tax at 20% and so, after accounting for the tax-free allowance, takes home about £25,000. Assume 40 hours work a week and that gives you about £12 an hour.

The trouble is, no one pays tax at just 20%. Up to an income of £844 a week (or nearly £44,000) they also pay national insurance at 11%. So for £30,000, you end up at about £10 an hour. (See www.thesalarycalculator.co.uk if you want to see how much NI gets taken from your own salary.)

And that’s just the beginning. Take your post-payroll-tax earnings down to the shops and odds are another 50% will disappear in taxes of one sort or another before you get your purchases home.

• Read the full editor’s letter here: We must get angrier about tax