MEPX
Chapter 5 of 10All chapters
  1. 1Choosing under scarcity
  2. 2How prices behave
  3. 3Inflation and real terms
  4. 4Shopping decisions
  5. 5Income and tax
  6. 6Borrowing
  7. 7Saving and compounding
  8. 8Housing costs
  9. 9Work and wages
  10. 10Making better decisions

Chapter 5 of 10

Income and tax

What arrives, and why.

Gross and net

Gross pay is before deductions, net is what reaches your account. Income tax, social contributions and pension deductions explain most of the gap.

  • Progressive systems tax each band separately, so a raise never lowers take home pay.
  • Benefit withdrawal, not tax, is what creates real cliff edges.

Indirect tax

Sales tax and VAT are included in the shelf price in many countries and added at the till in others, which is why advertised prices are not comparable across borders.