{"id":710,"date":"2025-08-10T14:35:43","date_gmt":"2025-08-10T14:35:43","guid":{"rendered":"https:\/\/davecarrera.com\/?p=710"},"modified":"2025-08-10T14:35:44","modified_gmt":"2025-08-10T14:35:44","slug":"why-wage-taxes-are-low-doesnt-mean-were-paying-less-tax","status":"publish","type":"post","link":"https:\/\/davecarrera.com\/index.php\/2025\/08\/10\/why-wage-taxes-are-low-doesnt-mean-were-paying-less-tax\/","title":{"rendered":"Why \u201cWage Taxes Are Low\u201d Doesn\u2019t Mean We\u2019re Paying Less Tax"},"content":{"rendered":"\n<p>You might have seen the claim:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p><em>\u201cUK workers today pay less tax on their wages than at most times since World War II.\u201d<\/em><\/p>\n<\/blockquote>\n\n\n\n<p>Technically, that\u2019s <strong>true<\/strong> \u2013 but it\u2019s also <strong>misleading<\/strong> if you think it means we\u2019re paying less tax overall.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>The Tax Wedge \u2013 What They\u2019re Talking About<\/strong><\/h3>\n\n\n\n<p>The \u201ctax wedge\u201d is the share of your gross wage taken by <strong>direct taxes on employment<\/strong> \u2013 mainly <strong>Income Tax<\/strong> and <strong>employee National Insurance<\/strong> \u2013 before you see your take-home pay.<\/p>\n\n\n\n<p>After World War II and well into the 1970s:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Top income tax rates were huge \u2013 up to <strong>83% on earned income<\/strong> and <strong>98% on investment income<\/strong>.<\/li>\n\n\n\n<li>Even middle earners paid much higher rates than today.<\/li>\n<\/ul>\n\n\n\n<p>Back then, the wage tax wedge was much larger.<\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>What\u2019s Changed?<\/strong><\/h3>\n\n\n\n<p>From the 1980s onwards:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Successive governments (Labour and Conservative) cut <strong>headline income tax rates<\/strong>.<\/li>\n\n\n\n<li>But they increased <strong>indirect taxes<\/strong> like VAT, fuel duty, and council tax.<\/li>\n<\/ul>\n\n\n\n<p>By 2024:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The <strong>employee wage tax wedge<\/strong> hit its <strong>lowest level since the 1940s<\/strong>.<\/li>\n\n\n\n<li>In 2025, changes nudged it up slightly \u2013 but it\u2019s still around mid-1990s levels.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"614\" src=\"https:\/\/davecarrera.com\/wp-content\/uploads\/2025\/08\/uk_tax_burden_infographic-1024x614.png\" alt=\"\" class=\"wp-image-711\" srcset=\"https:\/\/davecarrera.com\/wp-content\/uploads\/2025\/08\/uk_tax_burden_infographic-1024x614.png 1024w, https:\/\/davecarrera.com\/wp-content\/uploads\/2025\/08\/uk_tax_burden_infographic-300x180.png 300w, https:\/\/davecarrera.com\/wp-content\/uploads\/2025\/08\/uk_tax_burden_infographic-768x461.png 768w, https:\/\/davecarrera.com\/wp-content\/uploads\/2025\/08\/uk_tax_burden_infographic-1536x922.png 1536w, https:\/\/davecarrera.com\/wp-content\/uploads\/2025\/08\/uk_tax_burden_infographic-2048x1229.png 2048w\" sizes=\"auto, (max-width: 1024px) 100vw, 1024px\" \/><\/figure>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>The Catch \u2013 You Still Pay More Overall<\/strong><\/h3>\n\n\n\n<p>Lower wage tax sounds like good news \u2013 but here\u2019s the problem:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>While wage-specific taxes have fallen, the <strong>total tax burden<\/strong> is now at its <strong>highest since WWII<\/strong> \u2013 around <strong>37% of the UK\u2019s GDP<\/strong>, and forecast to hit nearly <strong>38%<\/strong> by 2028.<\/li>\n\n\n\n<li>The difference is that much more tax is now collected <strong>after<\/strong> you\u2019ve been paid \u2013 through VAT, duties, property taxes, and other indirect charges.<\/li>\n<\/ul>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<h3 class=\"wp-block-heading\"><strong>Bottom Line<\/strong><\/h3>\n\n\n\n<p>Yes, you keep more of your wages <em>before<\/em> you spend them.<br>But once you buy fuel, pay your council tax, grab a pint, book a flight, or renew your car insurance \u2013 the taxman takes his cut.<\/p>\n\n\n\n<p>The system has shifted:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Then:<\/strong> Tax taken heavily from wages.<\/li>\n\n\n\n<li><strong>Now:<\/strong> Tax spread across almost everything you spend or own.<\/li>\n<\/ul>\n\n\n\n<p><strong>Either way \u2013 the government\u2019s share of the economy is bigger than at almost any time in the last 80 years.<\/strong><\/p>\n\n\n\n<hr class=\"wp-block-separator has-alpha-channel-opacity\"\/>\n\n\n\n<p><strong><em>Hope isn&#8217;t what they promise you. It&#8217;s how you carry on when they don\u2019t deliver.<\/em> \u2014 Dave Carrera<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>You might have seen the claim: \u201cUK workers today pay less tax on their wages than at most times since World War II.\u201d Technically, that\u2019s true \u2013 but it\u2019s also misleading if you think it means we\u2019re paying less tax overall. The Tax Wedge \u2013 What They\u2019re Talking About The \u201ctax wedge\u201d is the share [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":712,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[182],"tags":[],"class_list":["post-710","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-thoughts"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.3 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Total Tax Burden Is Now at Its Highest Ever - The Other Side of Dave<\/title>\n<meta name=\"description\" content=\"Explore how the total tax burden is now at its highest since WWII and what it means for your take-home pay.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/davecarrera.com\/index.php\/2025\/08\/10\/why-wage-taxes-are-low-doesnt-mean-were-paying-less-tax\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Total Tax Burden Is Now at Its Highest Ever - 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