4 ms·

US way: You make $8k a month: You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k. You pay $500 in health and other benefits

US way: You make $8k a month: You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k. You pay $500 in health and other benefits (employer pays another $500) If you spend remaining $5.5k, you'll usually pay $250-$500 In sales taxes. In other words, you have $5k remaining to spend on shit that you probably don't need.

vidarh 10y ago
That comparison doesn't make sense. He states $6k gross salary, which means you need to start with $6k, not $8k, before adding on the employer contribution/payroll tax.
- alkonaut 10y ago
  Yeah - whether the "payroll tax" is seen as ever earned by me or not is just semantics. The employers expense is $8k in my case. I get that $8k minus payroll tax minus income tax to my bank account. The net is $4k. In this context if I'm asked how much I earn, the answer is $6k (i.e. before income tax but after payroll taxes). The fact that it's deducted first as $2k payroll then as $2k income tax doesn't change anything in terms of tax pressure however, and to include the total tax pressure obviously requires also including the VAT and other taxes (property, energy, ...)
  - vidarh 10y ago
    It's just semantics, but it confuses matters because most people don't include the payroll tax amount when talking about tax rates. I agree it plays into the tax pressure, but it makes it necessary to be very precise when describing it or you end up with confusion like the one above...
    - alkonaut 10y ago
      Indeed, that's why I tried to list it as clearly as possible. Obviously we could essentially make income tax 0% in Sweden over night, by just moving it to payroll tax. But no one would argue Sweden was some kind of tax haven. So income taxes are relevant when discussing salaries (because really what you take home is the key figure). But for tax pressure you can't discuss just income taxes. I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently)
      - vidarh 10y ago
        > Obviously we could essentially make income tax 0% in Sweden over night, by just moving it to payroll tax. But no one would argue Sweden was some kind of tax haven. Denmark is an example of the opposite of this: Employer social security contributions make up 0.8% of total tax wedge, and they've rolled all of the employee contributions into the income tax, which makes Danish income tax look really high compared to most other European countries that have much higher employer contributions, and presumably contributes to the idea that the Nordic countries are particularly high tax, while Denmark overall is actually roughly average for OECD. > I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently) He clearly misinterpreted you and though $8k was your gross salary, rather than gross salary + payroll tax, hence my original comment to him.
dilemma 10y ago
>you have $5k remaining each month for when you decide to quit your job and start your own company, giving you autonomy that is the #1 factor for happiness and an all around healthy life.
- nommm-nommm 10y ago
  Ehhhh... Personal preference, I don't want autonomy at work. I'm much happier being a cog in the machine, going to work at 9, leaving at 5. I'm a software engineer and work is a means to an end for me, to feed my family, give me financial security, and enable me to do the things I want to do when I'm not at work. For the most part I enjoy what I do but I would strongly prefer to spend less time at work and have more "me" time. I certainly don't want the responsibility and stress of my own business. The epitome of happiness is certainly not starting your own business for most of Americans.
alkonaut 10y ago
> You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k. How did the employer paying an extra k mean you make more? I think it's only relevant to talk about 2 figures: a) the expense to the employer and b) your take home (net) salary. Everything in between there is "taxes" and who pays them and when is less important. If the employer needs $9k to hire you that's what it costs. Then the tax man takes $1k payroll, you get $8k, pay $2k income tax. That leaves you $6k after all payroll and income taxes from a starting $9k making the income+payroll taxes 33%.
- harryh 10y ago
  Because of tax incidence. https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence Just because your employer is the one writing the checks doesn't mean that the tax burden is really falling on them. The employer side of FICA, for example, is essentially a tax on employee's income.
magic_beans 10y ago
8k a month!!! That's a damn nice salary. Even BEFORE taxes I don't make as much as $5k a month.

vidarh 10y ago

That comparison doesn't make sense. He states $6k gross salary, which means you need to start with $6k, not $8k, before adding on the employer contribution/payroll tax.

alkonaut 10y ago
Yeah - whether the "payroll tax" is seen as ever earned by me or not is just semantics. The employers expense is $8k in my case. I get that $8k minus payroll tax minus income tax to my bank account. The net is $4k. In this context if I'm asked how much I earn, the answer is $6k (i.e. before income tax but after payroll taxes). The fact that it's deducted first as $2k payroll then as $2k income tax doesn't change anything in terms of tax pressure however, and to include the total tax pressure obviously requires also including the VAT and other taxes (property, energy, ...)
- vidarh 10y ago
  It's just semantics, but it confuses matters because most people don't include the payroll tax amount when talking about tax rates. I agree it plays into the tax pressure, but it makes it necessary to be very precise when describing it or you end up with confusion like the one above...
  - alkonaut 10y ago
    Indeed, that's why I tried to list it as clearly as possible. Obviously we could essentially make income tax 0% in Sweden over night, by just moving it to payroll tax. But no one would argue Sweden was some kind of tax haven. So income taxes are relevant when discussing salaries (because really what you take home is the key figure). But for tax pressure you can't discuss just income taxes. I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently)
    - vidarh 10y ago
      > Obviously we could essentially make income tax 0% in Sweden over night, by just moving it to payroll tax. But no one would argue Sweden was some kind of tax haven. Denmark is an example of the opposite of this: Employer social security contributions make up 0.8% of total tax wedge, and they've rolled all of the employee contributions into the income tax, which makes Danish income tax look really high compared to most other European countries that have much higher employer contributions, and presumably contributes to the idea that the Nordic countries are particularly high tax, while Denmark overall is actually roughly average for OECD. > I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently) He clearly misinterpreted you and though $8k was your gross salary, rather than gross salary + payroll tax, hence my original comment to him.

dilemma 10y ago

>you have $5k remaining each month for when you decide to quit your job and start your own company, giving you autonomy that is the #1 factor for happiness and an all around healthy life.

nommm-nommm 10y ago
Ehhhh... Personal preference, I don't want autonomy at work. I'm much happier being a cog in the machine, going to work at 9, leaving at 5. I'm a software engineer and work is a means to an end for me, to feed my family, give me financial security, and enable me to do the things I want to do when I'm not at work. For the most part I enjoy what I do but I would strongly prefer to spend less time at work and have more "me" time. I certainly don't want the responsibility and stress of my own business. The epitome of happiness is certainly not starting your own business for most of Americans.

alkonaut 10y ago

> You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k. How did the employer paying an extra k mean you make more? I think it's only relevant to talk about 2 figures: a) the expense to the employer and b) your take home (net) salary. Everything in between there is "taxes" and who pays them and when is less important. If the employer needs $9k to hire you that's what it costs. Then the tax man takes $1k payroll, you get $8k, pay $2k income tax. That leaves you $6k after all payroll and income taxes from a starting $9k making the income+payroll taxes 33%.

harryh 10y ago
Because of tax incidence. https://en.wikipedia.org/wiki/Tax_incidence https://en.wikipedia.org/wiki/Tax_incidence Just because your employer is the one writing the checks doesn't mean that the tax burden is really falling on them. The employer side of FICA, for example, is essentially a tax on employee's income.

magic_beans 10y ago

8k a month!!! That's a damn nice salary. Even BEFORE taxes I don't make as much as $5k a month.