It is coming to the end of the year soon and we will need to file our taxes!
I was just looking at the tax brackets and see where I stand, and if I need to cut some taxes by doing a CPF top up or putting money into SRS. I always believe Singapore income tax is lesser than most of the developed countries. Curious, I went to take a look at the US income tax and made a comparison.
The first table below shows the Singapore tax brackets (2010):
The following table shows the US tax brackets (2010) Note that I have converted USD to SGD at a rate of 1.3:
Did you manage to spot the difference?
In Singapore, the first S$20,000 is not taxed. Whereas in US, you will be taxed for as little as first S$10,000 of your income, at a rate of 10%. Secondly, a Singaporean will only pay tax around S$4,000+ when he is taking in S$80,000. Comparing to an American who pays a tax of S$4,000+ when he earns S$33,000! No matter at which level you compare, Singaporeans are paying less income tax than Americans. I know what you are thinking – how about GST, ERP, etc? Those are consumption taxes which I think it is fair. The more you consume, the more you pay. A lower income tax, especially waiving the first S$20,000, do help to alleviate the financial problems of the poor.