From: Max M (maxmcorp@worldonline.dk)
Date: Mon Nov 11 2002 - 15:56:11 MST
Dehede011@aol.com wrote:
> If I am a wealthy manufacturer I have to pay a 25% Value Added Tax
> before profit and then after my profit is taken I have to pay a top of
> 68% in
> Income Taxes. I calculate that to be 85% of every dollar I take in --
> did I
> do that right?
Not exactly. When you earn your salary you pay about 68% in tax of the
last earned $, I cannot remember precisely where the 68% tax kicks in,
but I do believe that it is for everything that you earn over $50.000.
Up until that income you pay about 50%. So a good guess would be that
people with a high income pays around 55% in taxes of their income.
Then when you try to spend your money, you pay 25% VAT on top of every
purchase. On top of what you paid in income tax. Roughly corresponding
to an income tax of 77% when added up.
That is why we still work hard here. To have a little bit more left
after taxes.
> Every American that I meet, who has spent time in Europe and
> fallen in
> love with the joint, just gushes over how many of you ride bicyles
> instead of
> driving. It is easy to see why.
You are completely right there. A positive side effect is that europeans
tend to be slimmer than us citizens ;-)
But a medium sized family car costs about $40,000.00 here, so that is a
pretty hefty expense for a family.
> But businessmen either pass taxes along to their customers or
> go out
> of business. So if I were a Dane whose profession required him to drive
> would have to pay the 250% tax on top of the manufacturers price. Also
> folded into the initial price would be the 68% tax on the manufacturers
> earnings plus the 25% Value Added Tax. In addition that tax would be
> added
> at every level of manufacturing.
Companies can buy cars withour taxes. The tax system is totally
convoluted here as the politicians are trying to have millimeter
precision. Which of course have the effect that the companies with the
best accountants pay the least in taxes.
> In the U. S. when a state adds too many taxes to a product the
> state
> citizens, if they are sufficiently close to the border, go out of
> their state
> to make puchases.
> Do you have that sort of problem in Denmark or are you
> protected by
> the adjoining countries having pretty much the same tax structure as
> you do?
The EU is making the differences smaller, so most likely the taxations
will move to real estate instead. Houses are harder to move cross border.
regards Max M Rasmussen, Denmark
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