![](https://i.imgur.com/CLvY2jA.png")
20-09-2023, 11:59 AM
By TiedInsurer.
Singapore has somehow convinced the world that the CPF system is not a tax, when in reality, it very much is.
What is CPF? At it's core, it's basically a retirement pension fund. Most countries have this.
In America, the average worker earns USD71.4k. 15.9% is income tax. 7.5% is Employer payroll tax. 7.1% is Employee payroll tax. So take home pay after taxes is 69.5%.
The employer and employee payroll tax is used to pay things like Medicaid, unemployment benefits, and retirement payouts.
Source for above:
https://taxfoundation.org/data/all/feder...abor-2023/
If the employer and employee payroll tax thing sounds familiar, it's because we have it too. We call it CPF. And we tax it at much much higher rates. The CPF is used for pretty much the same things. Medical bills, and retirement payouts.
If we consider CPF as a tax, then Singapore's tax rate is actually much higher. The median salary of Singaporeans in SG is $5,070 in 2022, including CPF contributions.
After deducting employer and employee CPF, the take home pay is $3,466.66. This $3,466.66 will attract income tax of $55.16.
So the actual takehome pay is $3,411.50. Which means our effective tax rate is 32.7%. Which is actually higher then the USA's 30.5%.
The main difference between our CPF scheme, and the Social Security scheme the USA has, is that for the USA, everyone gets the same retirement payouts when they are old.
In Singapore, if you're poor, sucks to be you, you get insufficient retirement payouts and can go and pick aluminium drink cans. That's it. Other then that, it's the same thing.
I repeat, it's the same thing. CPF is basically a payroll tax, and actually gets treated as such in accounting and payroll software.
Singapore has somehow convinced the world that the CPF system is not a tax, when in reality, it very much is.
What is CPF? At it's core, it's basically a retirement pension fund. Most countries have this.
In America, the average worker earns USD71.4k. 15.9% is income tax. 7.5% is Employer payroll tax. 7.1% is Employee payroll tax. So take home pay after taxes is 69.5%.
The employer and employee payroll tax is used to pay things like Medicaid, unemployment benefits, and retirement payouts.
Source for above:
https://taxfoundation.org/data/all/feder...abor-2023/
If the employer and employee payroll tax thing sounds familiar, it's because we have it too. We call it CPF. And we tax it at much much higher rates. The CPF is used for pretty much the same things. Medical bills, and retirement payouts.
If we consider CPF as a tax, then Singapore's tax rate is actually much higher. The median salary of Singaporeans in SG is $5,070 in 2022, including CPF contributions.
After deducting employer and employee CPF, the take home pay is $3,466.66. This $3,466.66 will attract income tax of $55.16.
So the actual takehome pay is $3,411.50. Which means our effective tax rate is 32.7%. Which is actually higher then the USA's 30.5%.
The main difference between our CPF scheme, and the Social Security scheme the USA has, is that for the USA, everyone gets the same retirement payouts when they are old.
In Singapore, if you're poor, sucks to be you, you get insufficient retirement payouts and can go and pick aluminium drink cans. That's it. Other then that, it's the same thing.
I repeat, it's the same thing. CPF is basically a payroll tax, and actually gets treated as such in accounting and payroll software.
