Stumbling and Mumbling (Chris Dillow): Progressive Taxes: USA vs UK
Last week I posted about the American federal tax rates wherein I noted that the top quintile pays 25.5% of all federal taxes while the bottom quintile pays 4.3%. Chris Dillow writes:
How do these figures compare to the UK? Table 16A here gives the answer. The poorest quintile in the UK paid 36.5% of their income in tax, whilst the richest fifth actually paid less – 35.5%.
Britain's tax system, then, is regressive whilst the US's is progressive.
You might object that I'm not comparing like with like. I'm including indirect taxes, whilst the US figures exclude local sales taxes (though they include excise duties).
However, if we look only at income tax and national insurance, the UK system is still less progressive than the US's, at the federal level. The bottom fifth pay 6.2% in direct tax (net of credits) whilst the top fifth pay 23.7%. The ratio of these tax rates is 3.8, compared to 5.9 for the US federal tax takes.
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