London, UK – Dan Neidle, founder of Tax Policy Associates, has sparked a discussion on the comparative tax and welfare systems of the UK, France, and Denmark, suggesting significant differences in how these nations tax various income brackets and provide benefits. Neidle, a prominent tax expert, highlighted his observations in a recent tweet, calling for a detailed comparison of tax burdens on median and top earners.
In his social media post, Neidle expressed a desire to see data equivalent to a UK tax chart for France and Denmark. He stated, "I expect we'd see: less tax on median earner. More tax on top decile. More welfare and benefit-in-kind at the higher deciles." This hypothesis points to a potential model where European countries might alleviate the tax load on middle-income individuals while increasing contributions from the wealthiest, alongside more extensive public services benefiting all citizens.
The UK's tax system, according to recent data from the Office for National Statistics (ONS) and parliamentary briefings, is broadly progressive, with higher-income individuals contributing a larger share of direct taxes. For instance, the top decile of earners pays a substantial portion of income tax. However, the overall tax burden, including indirect taxes, can notably impact lower-income households, and the Institute for Fiscal Statistics (IFS) has indicated that the UK's effective tax rate for top earners can be lower than in some high-tax European nations.
France operates with a substantial tax burden, particularly for high earners, largely due to extensive social charges that can exceed 20-25% of gross salary. While its income tax rates might appear lower than the UK's at some bands, these social contributions significantly increase the overall effective tax rate, funding a comprehensive social welfare system. This structure means that, at higher income levels, the total tax and social charge burden in France often surpasses that in the UK.
Denmark stands out with one of the highest income tax burdens across all household types and among the highest top marginal income tax rates in Europe, frequently around 56%. This high taxation funds a robust and comprehensive welfare state, providing universal access to services such as healthcare, education, and various public amenities. These "benefits-in-kind" are accessible to all citizens, including those in higher deciles, who contribute significantly more through their taxes.
Neidle's call for a detailed comparative analysis underscores the varied approaches to fiscal policy in developed economies. Such comparisons are crucial for understanding how different nations balance economic redistribution, the provision of public services, and the overall tax burden across different income levels, informing ongoing debates about tax fairness and social welfare models.