Re:Pooling and Sharing of wealth make everyone's wealth grow...
by vidarh on Saturday September 02, 2023 @05:49AM
(#37359990)
To take a simple example:
Let's say a country has only a single 20% tax band that kicks in at 20k.
If you earn 40k, your marginal tax is 20%, but only 20k of your earning is above 20k, so you pay 20% * 30k = 4k in tax for an effective rate of 10% (4k of 40k).
Most countries will multiple tax bands plus deductions which complicates this, and most places very few people have enough of their income taxed at their marginal rate for their effective rate to approach their marginal rate.
Let's say a country has only a single 20% tax band that kicks in at 20k.
If you earn 40k, your marginal tax is 20%, but only 20k of your earning is above 20k, so you pay 20% * 30k = 4k in tax for an effective rate of 10% (4k of 40k).
Most countries will multiple tax bands plus deductions which complicates this, and most places very few people have enough of their income taxed at their marginal rate for their effective rate to approach their marginal rate.