Eur 35000 Less Tax Of Eur 5 example essay topic

Around the world, education is funded in different ways, yielding different outcomes. In Europe, the state typically still pays for the institutional costs of instruction; students pay little or no tuition, but are responsible for living costs; and most universities are public. In many Asian countries (such as Japan, Korea, Taiwan, and the Philippines), most students attend private universities and colleges and pay the full cost of their education. Tuition is also charged in the small and relatively elite public higher education sector. In the United States, a mix of public and private institutions exists; 80 percent of students attend public colleges and universities, where they pay tuition amounting to something like a quarter or more of the actual cost of instruction, with public funds and other resources covering the rest. The remaining 20 percent study in private institutions, where students pay the bulk of the cost of education.

Many people scowl at the idea of reforming to a European model of school funding, believing that the taxes would be exponentially higher. However, this is not necessarily true. In most EU countries, the standard rate of tax is 20%. The higher rate is 42% for those whom earn over a certain variable gross yearly income. Employees pay tax, similar to the U.S. system under the Pay As You Earn (PAYE) system. This means that tax is deducted by the employer weekly or monthly depending on how frequently you are paid.

If you make more than the variable gross yearly income, tax is paid at the standard rate (20%) up to the cut-off point. Any income over the cut-off point is taxed at the higher rate of tax (42%). Unlike the U.S. system or taxation, this system seems more fair, especially because you are not paying tax on any wages that are paid towards healthcare or Old Age Pension (similar to social security). One nation that set the standard for the tax outline currently used in most countries is Ireland.

In Ireland, the healthcare tax is about 2% taken out of your paycheck, unless you make under EUR 400 (January 2005) per week - or self-employed people with income of EUR 20,800 or less per year. Also, most employers and employees (over 16 years of age) in Ireland pay social insurance contributions into Ireland's national Social Insurance Fund. In general, the payment of social insurance is required. The social insurance contributions in Ireland are referred to as PRSI (Pay Related Social Insurance).

There is a wide range of benefits that are available to people who have paid social insurance. Entitlement to these benefits is dependent on a number of conditions other than the social insurance requirements. The social insurance qualifying criteria vary, depending on what payment one is applying for. Again, both of these deductions are subtracted from your gross annual income and are not taxed. Why is the aforementioned information important? Simply because these are benefits that Europeans are getting at a fraction of the cost to Americans with pre-tax Dollars / Euro.

The next big thing to look at is education: Based on the Pay As You Earn system in most of the EU, a single household making EUR 35,000 annually pays about EUR 5,880 (20%) on their first EUR 29,400, and EUR 2,352 (42%) on the remainder of their income - EUR 5,600. That's gross tax of only EUR 8,232 for the year in Europe, whereas under the American system you are paying somewhere around $9000. Now the very interesting part - adding the tax credits! Because you are single, you get less of a credit than a married or widowed individual, however you still receive EUR 1,580 + your household's Pay As You Earn tax credit of EUR 1,270.

This means you were only taxed EUR 5,382 for the year. This is the money that you are paying to receive free - and superior - education from 1st grade until university graduation. The student incurs only living expense and textbook / supplies expenses. To further explain on the previous situation, the healthcare and social insurance is deducted and credits are given. EUR 1,135.84 is deducted from this example for PRSI, and EUR 700 for healthcare. EUR 35,000 less tax of EUR 5,382, PRSI of EUR 1135.84 and Health Contribution of EUR 700 equals EUR 27,782.16 - take home.

The average cost for tuition alone in the United States is around $3827 per year (not to mention the fact that you are paying for public schools whether or not you attend them). Combined with the annual premium for single health insurance coverage averaged $3,695, and the $9000 lost in taxes, the American making $35,000 is walking home with a little more than $18,400 - almost $10,000 less than the European student / worker ; and almost to add insult to injury, the EU student is getting a better education and on average living in a country with a lower cost of living. It is to be noted, however, that due to the exponential rise in enrollment at European universities combined with the failure to prepare for the budgetary impact of aging - referring to the fact that population projections for the EU indicate that the ratio of persons of working age (15 to 64) to those aged over 65 will decline from 4.1 in 2000 to 2.1 in 2050, meaning a fairly large decrease in taxable wages - is prompting a proposed tuition in European universities. The tuition is at an almost laughably low annual cost out of pocket to the student, at an estimated $1,600 a year. This does not signal a death for publicly funded higher education, just a slight change in a decades-old system.