3 ms·

Wow 45%? What is this, the socialist state without any benefits of it? In Germany you pay less taxes (30%-42%) but you get free healthcare, education, 1 year ma

by zerr 10y ago

Wow 45%? What is this, the socialist state without any benefits of it? In Germany you pay less taxes (30%-42%) but you get free healthcare, education, 1 year maternity and paternity leave and tons of other similar benefits...

deleted 10y ago
[deleted]
deleted 10y ago
[deleted]
kxyvr 10y ago
It's actually worse. The numbers above do not include the cost of healthcare nor retirement past what FICA pays for in social security. Say we're working with the magical $100k number above. In my state, my healthcare premiums were $500/month, which are not tax deductible. That means, I lose another $6k in premiums, or 6% of the $100k. My out of pocket max was $3300. I never want to be in a position to not go to the doctor because of money, so I always budget for it. Though, the payments for qualified medical expenses in that $3300 are tax deductible. So, let's pretend that 3.3% is really 2% after tax savings. That means that I spend 8% of $100k income on healthcare. If I add that to the 45%, then we're at about 53% of the money gone. Again, the number is slightly lower because of graduated tax brackets, but, candidly, it's not that much lower. I lived a few years in Norway and have my company registered out there as well. I paid less in taxes there and got more in services. Other than culture, it's literally easier to start and run a company is many socialist countries. Simply, the taxes are lower; the services are higher; and the risk is lower because there's a safety net to fall back onto. That said, cultural does count for a lot and American culture is supportive of taking a risk as a small business. The U.S. is also the home to some of the world's largest companies, so opportunities to make contacts and contracts here can be higher.
- mahyarm 10y ago
  Employment law also makes it harder to hire employees. Every employee hire in places like Germany and such are huge risks to small corps, since it's very hard to fire bad employees who are net negatives, and they know it and abuse it. That is ironically probably the biggest barrier to starting a corp in Europe for me. Health care insurance costs although should be tax deductible, and there are things like FSAs and HSAs that help make health costs even more tax deductible. Are you talking about the costs for paying other things in health care costs, like the $XXs per doctor visit and so on? ----- America is ironically a high tax nation, but these things usually reduce tax and COL: 1. The mortgage interest tax deduction. That is easily a +$20k/yr tax deduction right there. There are other small tax deductions that can remove a few thousands here and there. 2. States like Washington or Nevada that have no state income tax. 3. Almost everything is significantly cheaper to buy in the USA 4. Sales tax / VAT is %0-%10 vs the common ~%20 that is common in the EU. Because the US is a mismanged mess governmentally, buying something online from another state is a common sales tax dodge. 5. Pay is significantly higher in the USA for software professionals. I once read it doesn't matter how much you spend, but really how much you make and that can make up for the tax rates.
matt4077 10y ago
Top tax rate is 45% + 2.5% 'solidarity surcharge' and that does not include healthcare, which is another 12%. Unemployment is another 3%, pension is around 20% (although you'll get it back eventually), "pflege" (nursing?) is 2.5%, VAT is much higher than most places in the US at 19% so that sums up to... 105.5% – the error being that most of these are only applied on the net that's left over after paying other taxes. And some of these are the marginal rates applied only to income above certain thresholds (that 'solidarity' tax get to 2.5% only on income > ´1.3 million) while others, like healthcare and unemployment, have upper limits. The best way to measure this is probably government spending/GDP (https://en.wikipedia.org/wiki/Government_spending#As_a_percentage_of_GDP https://en.wikipedia.org/wiki/Government_spending#As_a_perce...) which is about 46% for Germanys and 43% for the US, although you could argue that healthcare should be included in those numbers.

by zerr 10y ago

deleted 10y ago

[deleted]

deleted 10y ago

[deleted]

kxyvr 10y ago

It's actually worse. The numbers above do not include the cost of healthcare nor retirement past what FICA pays for in social security. Say we're working with the magical $100k number above. In my state, my healthcare premiums were $500/month, which are not tax deductible. That means, I lose another $6k in premiums, or 6% of the $100k. My out of pocket max was $3300. I never want to be in a position to not go to the doctor because of money, so I always budget for it. Though, the payments for qualified medical expenses in that $3300 are tax deductible. So, let's pretend that 3.3% is really 2% after tax savings. That means that I spend 8% of $100k income on healthcare. If I add that to the 45%, then we're at about 53% of the money gone. Again, the number is slightly lower because of graduated tax brackets, but, candidly, it's not that much lower. I lived a few years in Norway and have my company registered out there as well. I paid less in taxes there and got more in services. Other than culture, it's literally easier to start and run a company is many socialist countries. Simply, the taxes are lower; the services are higher; and the risk is lower because there's a safety net to fall back onto. That said, cultural does count for a lot and American culture is supportive of taking a risk as a small business. The U.S. is also the home to some of the world's largest companies, so opportunities to make contacts and contracts here can be higher.

mahyarm 10y ago
Employment law also makes it harder to hire employees. Every employee hire in places like Germany and such are huge risks to small corps, since it's very hard to fire bad employees who are net negatives, and they know it and abuse it. That is ironically probably the biggest barrier to starting a corp in Europe for me. Health care insurance costs although should be tax deductible, and there are things like FSAs and HSAs that help make health costs even more tax deductible. Are you talking about the costs for paying other things in health care costs, like the $XXs per doctor visit and so on? ----- America is ironically a high tax nation, but these things usually reduce tax and COL: 1. The mortgage interest tax deduction. That is easily a +$20k/yr tax deduction right there. There are other small tax deductions that can remove a few thousands here and there. 2. States like Washington or Nevada that have no state income tax. 3. Almost everything is significantly cheaper to buy in the USA 4. Sales tax / VAT is %0-%10 vs the common ~%20 that is common in the EU. Because the US is a mismanged mess governmentally, buying something online from another state is a common sales tax dodge. 5. Pay is significantly higher in the USA for software professionals. I once read it doesn't matter how much you spend, but really how much you make and that can make up for the tax rates.

matt4077 10y ago

Top tax rate is 45% + 2.5% 'solidarity surcharge' and that does not include healthcare, which is another 12%. Unemployment is another 3%, pension is around 20% (although you'll get it back eventually), "pflege" (nursing?) is 2.5%, VAT is much higher than most places in the US at 19% so that sums up to... 105.5% – the error being that most of these are only applied on the net that's left over after paying other taxes. And some of these are the marginal rates applied only to income above certain thresholds (that 'solidarity' tax get to 2.5% only on income > ´1.3 million) while others, like healthcare and unemployment, have upper limits. The best way to measure this is probably government spending/GDP (https://en.wikipedia.org/wiki/Government_spending#As_a_percentage_of_GDP https://en.wikipedia.org/wiki/Government_spending#As_a_perce...) which is about 46% for Germanys and 43% for the US, although you could argue that healthcare should be included in those numbers.