True story. A UK solicitor with 5 years professional experience decides to go back to work after maternity. Her employment agency gives her two leads in north London who would love to have her apply. Both Jobs pay 34,000 pounds (about 50,000 dollars) per year as a starting salary. So, she does the math to see what her take home pay is. First, she deducts UK taxes for an “after tax” salary of 17,000 pounds (24,000 dollars). That breaks down to a monthly salary of 1,400 pounds / 1,000 dollars. Then she deducts daily travel to London—about 80 miles round trip by train or car (cost for either is about 20 pounds a day—total of 400 pounds / 600 dollars). Then she deducts full time childcare for a one year old (700 pounds / 1,200 dollars)--and to get an accurate impact on the family finances-- she deducts an additional 200 pounds / 300 dollars for after school care for her older stepson. Her final, net salary is 100 pounds / 150 dollars per month without calculating any other expenses such as wear and tear on the car, clothing, professional books or even a basic cafeteria lunch. If she were to file for “job seekers allowance” and decline any real opportunity to work she would get 70 pounds per week or 280 pounds a month. If she were to empty her savings, sell any property she owned and claim full welfare benefits with one child, she could get a free house and anywhere up to 800 pounds per month from the government. If she were a refugee from a war torn country or a poorer part of the EU she could come and get the same deal with few restrictions. Because of taxes on personal income, transport and fuel, her actual “disposable income” falls in between that of a citizen of Romania and the Philippines. Some would say the next step is for the government to add free child care as a benefit and to subsidize the trains. However, when you are at a 50% tax rate already, where does it stop except with personal and national bankruptcy? Who do you force to work for almost nothing except to increase tax receipts? What corporation or wealthy individual will stand for sustained taxes above 50% without fleeing the country?
Posted on: Fri, 01 Nov 2013 13:20:11 +0000
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