Sweden has income tax, and that's pretty much it. There's four levels:
- Anything less than X is tax free
- Above that, anything less than Y is taxed at (about) 30%
- Above that, anything less than Z is taxed at (about) 50%
- Above that it's all taxed at (about) 55%
(details not important for these purposes)
Simple, right? I've made a spreadsheet that manages to compare UK to Sweden taxes, and after the complication of National Insurance (NI) tax being separated from income tax, and regressive, it's pretty simple.
The UK has very similar structure (though with lower percentages), but doesn't stop there. Unlike Sweden there are other limits where the UK takes away tax breaks and benefits as income increases. This becomes de facto progressive taxes (don't read me wrong, I'm not against progressive taxes), but added in a way that makes it very hard to get a real number for "how much more will I get in pocket if my income increases by X?" or "What is my net tax percentage at income X?".
Examples:
- At an undefined low income you can queue for council housing (I don't know much about this)
- At an undefined low income you can get a discount on your council tax (Sweden doesn't have council tax at all)
- If you earn more than £45k then any capital gains is taxed at 20% instead of 10% (with complicated formula to not make in-pocket go backwards)
- If either parent of a child earns more than £50k the child benefits start going away, to be completely gone at £60k. This is taken back as income tax.
- Between £100k and £120k the tax-free allowance disappears
- That's £11k * 40% = £4'400
- Between £150k and £210k the annual pension allowance decreases from £40k to £10k
- This is a tax increase of £30k * 47% = £14'100
Sweden has a bunch of ceilings, but things aren't taken away at higher incomes.
So which is better? I don't know. UK has the drawback that it's harder to get a clear answer (and you only find out about new rules when your salary increases to that limit), so tax system transparency is worse, and doing your taxes is harder.
Sweden has the drawback that e.g. there's no reason to give child benefits to someone earning a million SEK per year.
Bottom line though is that it's way harder than I expected to compare cost of living, or even tax rates, between countries. Maybe I was being naive.
So which is better? I don't know. UK has the drawback that it's harder to get a clear answer (and you only find out about new rules when your salary increases to that limit), so tax system transparency is worse, and doing your taxes is harder.
Sweden has the drawback that e.g. there's no reason to give child benefits to someone earning a million SEK per year.
Bottom line though is that it's way harder than I expected to compare cost of living, or even tax rates, between countries. Maybe I was being naive.
