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Comparison of British and US Income Taxes 1930

Posted August 28, 2013 by admin with No Comments in 1920's

A TALE OF TWO INCOME TAXES

THE heavy burden of the British tax-payer is a matter of general knowledge.

But it is interesting to find a careful comparison, between the income tax paid by the Britisher and that paid by the American of the same financial standing. Such a comparison is made by the British journalist, P. W. Wilson, in the New York Times.

Of course, the tax schedules have their complications on both sides of the Atlantic, and there are various detailed adjustments to be made. But Mr. Wilson finds it possible to make certain broad comparisons. Take first the question of exemptions:

In the United States the limit of tax is $1,500 for single persons and $3,500 for a head of a family. It is a high limit and very favorable to the small man.

In Great Britain the limit of exemption for an unmarried man is $675 and for married persons $1,125. The married man may also claim exemption up to one-sixth of his earned income, but not exceeding $1,250. For a married man with a salary of 13,500, at which figure he is exempt in the United States, the exemption in Great Britain would be $1,125 added to $583 or $1,708, and he would pay on income amounting to $1,792.

Turning to the number of taxpayers, Mr. Wilson points out that in Great Britain about 4,600,000, or one in ten of the population, pay income tax; in the United States about 2,500,000 pay, or about one in forty-four. On the average in the last fiscal year the average rate of tax paid on British incomes worked out at about one-eighth or about 12 1/2 per cent. of income return. In the United States the average rate has been about one-twentieth, or 5 per cent. of income.

Allowing for the increases recently announced by Philip Snowden in his new budget, “Britain, with two-fifths of the population of the United States, pays three times the income tax.” Or, to put it on a basis of per capita population, “the United States pays $10 in income tax, and Great Britain, with a lower wealth per capita, pays about $35.”

Read complete Tax article here

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