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and probably pay a lot more taxes This is a misconception about the US. Compared to Europe, engineers tend to proportionally pay as much taxes, and sometimes e

by GuiA 9y ago

and probably pay a lot more taxes This is a misconception about the US. Compared to Europe, engineers tend to proportionally pay as much taxes, and sometimes even a bit more (!) in the US. You get tremendously LESS for your taxes though, both at the city/state level and national level.

adventured 9y ago
That's not a misconception. The US has a far more progressive tax system than Western Europe. People earning $40k to $80k in the US pay extremely little in taxes versus most comparable nations. If you're making $47,000 in the US, you're paying near a 10% effective federal income tax rate (before any deductions). That income level, which is the median US full-time income, is far higher than nearly every other median income on earth (except for a handful, such as Switzerland, Norway etc). At $80,000 in the US, you're paying a 16% effective federal income tax rate. If you're making $80k at a job in the US, you're also almost guaranteed to be getting a solid benefits package on top of that including healthcare. In systems with fully socialized healthcare, the middle class pays far higher taxes to cover their health insurance. That's why Scandinavia's tax systems are so regressive for example. In the US, the middle class is taxed far less, and they simultaneously get health coverage from their job. The top 20% are paying 95% of all income taxes in the US. Serious income taxation doesn't kick in until you get well above $100,000. All of these US engineers are getting nearly entirely / entirely subsidized health coverage, which is extremely lucrative and is not accounted for in the pay numbers. US healthcare costs twice as much as it does in eg Britain or Germany, so if your employer in the US covers the cost of that, as is typically the case with an engineer, that's worth another $10,000 to $30,000 per year depending.
- GuiA 9y ago
  Interesting, thanks for the write up. My post came from the fact that as an engineer in Silicon Valley about 45% of my salary goes in taxes, which is more than if I were an engineer in my native European country (where obviously the pay would be much less).
  - adventured 9y ago
    As a percentage comparison to your salary, what are you getting in benefits (including healthcare coverage)? If you're making $200,000 and getting $60,000 per year in total non-base-salary benefits, that makes a meaningful difference in the taxation percentage picture. In my experience, Europeans properly always talk about what they get for their taxes (eg healthcare), while Americans rarely discuss that they get an entire other compensation set to go with their salary and it's excluded from income comparisons (which is extremely relevant, because of how very expensive US healthcare is, ie that it's not cost comparable to other developed nations).
- woolvalley 9y ago
  Your not including the flat ~%15 social security / medicare taxes that you get, the ~%3-%9.5 state taxes. New york has city taxes if you live there making your high income. Also not including the ~%1 or more property tax rate, which doesn't really exist at the same level vs. places like the UK. That can add $2000-$10000 per year to your tax bill.
  - adventured 9y ago
    At $47k, Federal income tax + FICA + average state + local + deducations, you're looking at about 18%-20% all-in. The VAT tax also doesn't exist in the US, you're not accounting for that, and it's dramatically higher in most of Europe than the US sales tax. In the US we think a 6% or 7% sales tax is high; in Europe 15% to 20% VAT rates are common. We don't need to go over all of that however, we have the disposable income figures to reference. The US median disposable income figure is among the highest: http://www.pewresearch.org/fact-tank/2017/06/05/through-an-american-lens-western-europes-middle-classes-appear-smaller/ http://www.pewresearch.org/fact-tank/2017/06/05/through-an-a... The US is better of in terms of median income than all of Europe except for a few nations (that gets even more exaggerated if you select for full-time employment): https://mises.org/blog/if-sweden-and-germany-became-us-states-they-would-be-among-poorest-states https://mises.org/blog/if-sweden-and-germany-became-us-state... And per the OECD, when it comes to taxation progressiveness, the US is the leader among developed nations: https://taxfoundation.org/news-obama-oecd-says-united-states-has-most-progressive-tax-system/ https://taxfoundation.org/news-obama-oecd-says-united-states...

by GuiA 9y ago

adventured 9y ago

That's not a misconception. The US has a far more progressive tax system than Western Europe. People earning $40k to $80k in the US pay extremely little in taxes versus most comparable nations. If you're making $47,000 in the US, you're paying near a 10% effective federal income tax rate (before any deductions). That income level, which is the median US full-time income, is far higher than nearly every other median income on earth (except for a handful, such as Switzerland, Norway etc). At $80,000 in the US, you're paying a 16% effective federal income tax rate. If you're making $80k at a job in the US, you're also almost guaranteed to be getting a solid benefits package on top of that including healthcare. In systems with fully socialized healthcare, the middle class pays far higher taxes to cover their health insurance. That's why Scandinavia's tax systems are so regressive for example. In the US, the middle class is taxed far less, and they simultaneously get health coverage from their job. The top 20% are paying 95% of all income taxes in the US. Serious income taxation doesn't kick in until you get well above $100,000. All of these US engineers are getting nearly entirely / entirely subsidized health coverage, which is extremely lucrative and is not accounted for in the pay numbers. US healthcare costs twice as much as it does in eg Britain or Germany, so if your employer in the US covers the cost of that, as is typically the case with an engineer, that's worth another $10,000 to $30,000 per year depending.

GuiA 9y ago
Interesting, thanks for the write up. My post came from the fact that as an engineer in Silicon Valley about 45% of my salary goes in taxes, which is more than if I were an engineer in my native European country (where obviously the pay would be much less).
- adventured 9y ago
  As a percentage comparison to your salary, what are you getting in benefits (including healthcare coverage)? If you're making $200,000 and getting $60,000 per year in total non-base-salary benefits, that makes a meaningful difference in the taxation percentage picture. In my experience, Europeans properly always talk about what they get for their taxes (eg healthcare), while Americans rarely discuss that they get an entire other compensation set to go with their salary and it's excluded from income comparisons (which is extremely relevant, because of how very expensive US healthcare is, ie that it's not cost comparable to other developed nations).
woolvalley 9y ago
Your not including the flat ~%15 social security / medicare taxes that you get, the ~%3-%9.5 state taxes. New york has city taxes if you live there making your high income. Also not including the ~%1 or more property tax rate, which doesn't really exist at the same level vs. places like the UK. That can add $2000-$10000 per year to your tax bill.
- adventured 9y ago
  At $47k, Federal income tax + FICA + average state + local + deducations, you're looking at about 18%-20% all-in. The VAT tax also doesn't exist in the US, you're not accounting for that, and it's dramatically higher in most of Europe than the US sales tax. In the US we think a 6% or 7% sales tax is high; in Europe 15% to 20% VAT rates are common. We don't need to go over all of that however, we have the disposable income figures to reference. The US median disposable income figure is among the highest: http://www.pewresearch.org/fact-tank/2017/06/05/through-an-american-lens-western-europes-middle-classes-appear-smaller/ http://www.pewresearch.org/fact-tank/2017/06/05/through-an-a... The US is better of in terms of median income than all of Europe except for a few nations (that gets even more exaggerated if you select for full-time employment): https://mises.org/blog/if-sweden-and-germany-became-us-states-they-would-be-among-poorest-states https://mises.org/blog/if-sweden-and-germany-became-us-state... And per the OECD, when it comes to taxation progressiveness, the US is the leader among developed nations: https://taxfoundation.org/news-obama-oecd-says-united-states-has-most-progressive-tax-system/ https://taxfoundation.org/news-obama-oecd-says-united-states...