4 ms·

Just a nitpick, but I think you are using the marginal tax numbers instead of the actual tax rate, and not applying all the complicated deductions available to

Just a nitpick, but I think you are using the marginal tax numbers instead of the actual tax rate, and not applying all the complicated deductions available to US people. Texas: $95k pre-tax falls into the marginal 28% bracket, but after subtracting 401k + IRA deferral ($18k + $5.5k), $95k falls to AGI of $71.5k. Then after subtracting standard deduction ($6.35k for single 30y, no children), personal exemption ($4.05k), taxable income falls to $61.1k. For this, the tax calculation is: 0-9325: 10%x9325 = 932.5 9325-37950: 15%x28624 = 4293.6 37950-61100: 25%x23150 = 5787.5 Total tax: 11013.6 Post-tax income: 84k Income Tax rate: 11.6% since no income tax in Texas. Social security+Medicare: 7.65% Post-tax and post-SS: $76.7k Berlin: Pre-tax: $60k USD x 1 Euro/$1.19 USD = 50240 Euro I entered this number into a German tax estimator [1], which gave me the following output for the tax bracket calculations: Total tax: 9.908,56 Euro Post-tax income: 40331 Euro Income Tax rate: 19.7% Obligatory Pension: 9.35% UI+Health Insurance+Disability: 8.4%+1.5%+1.425% = 11.325% Post-tax and everything: $35.8k USD The difference becomes $40.9k. If you amortize the 4y engineering bachelor degree over 4 years, I think the difference in income is quite significant. [1] http://www.parmentier.de/steuer/steuer.htm?wagetax.htm http://www.parmentier.de/steuer/steuer.htm?wagetax.htm

marvin 9y ago
Hm, this is interesting to me -- if your example is representative, US income tax rates are often quoted at the marginal rate, whereas European taxes (higher on a percentage basis) are quoted at the net rate, skewing the perception in the direction of European taxes sounding lower than they really are. Of course, there's both deductions and non-income taxes also, which complicate the issue. In Norway, the total tax pressure is significantly greater than 50% for most people. (VAT at 25% always deducted from already-taxed income, long-term capital gains at 30%, pre-salary employer tax at 14%, company profits taxed at 24%, salary taxed at ~33% on average, fuel tax ~30%, wealth tax 0.85% of net assets after deductions +++).
- walshemj 9y ago
  is there not a CGT allowance in Norway I thought the Nordics had a strong individual share holder lobby groups
  - marvin 9y ago
    I guess in effect we have a "CGT allowance" of ~$6000 USD/year, but if you make more than 6000 USD in taxable income from _any_ source, you cannot use it. It's a deduction that is used for all income sources. If we do have shareholder lobby groups, they certainly do not have any impact on policy. Capital gains tax increases one percentage point to 31% next year, up from 27% five years ago. In addition, there is the 0.85% wealth tax on net assets above ~180,000 USD. There is no deduction for long term capital gains.
- ido 9y ago
  Germany is also disproportionately generous with tax deductions and benefits for getting married and having children (not to mention childcare is free from 1 year of age in Berlin). It isn’t easy to compare apples to apples but generally I’d guess in Europe highly paid professions are subsidizing the poor relative to the US.

marvin 9y ago

Hm, this is interesting to me -- if your example is representative, US income tax rates are often quoted at the marginal rate, whereas European taxes (higher on a percentage basis) are quoted at the net rate, skewing the perception in the direction of European taxes sounding lower than they really are. Of course, there's both deductions and non-income taxes also, which complicate the issue. In Norway, the total tax pressure is significantly greater than 50% for most people. (VAT at 25% always deducted from already-taxed income, long-term capital gains at 30%, pre-salary employer tax at 14%, company profits taxed at 24%, salary taxed at ~33% on average, fuel tax ~30%, wealth tax 0.85% of net assets after deductions +++).

walshemj 9y ago
is there not a CGT allowance in Norway I thought the Nordics had a strong individual share holder lobby groups
- marvin 9y ago
  I guess in effect we have a "CGT allowance" of ~$6000 USD/year, but if you make more than 6000 USD in taxable income from _any_ source, you cannot use it. It's a deduction that is used for all income sources. If we do have shareholder lobby groups, they certainly do not have any impact on policy. Capital gains tax increases one percentage point to 31% next year, up from 27% five years ago. In addition, there is the 0.85% wealth tax on net assets above ~180,000 USD. There is no deduction for long term capital gains.
ido 9y ago
Germany is also disproportionately generous with tax deductions and benefits for getting married and having children (not to mention childcare is free from 1 year of age in Berlin). It isn’t easy to compare apples to apples but generally I’d guess in Europe highly paid professions are subsidizing the poor relative to the US.