4 ms·
100k euros would be ~$124k. At that salary if you are single your marginal tax rate would be 28% federal + 6.2% employee social security + 6.2% employer social
by Buge 9y ago
100k euros would be ~$124k. At that salary if you are single your marginal tax rate would be 28% federal + 6.2% employee social security + 6.2% employer social security + 1.45% employee medicare + 1.45% employer medicare + 9.3% California income + 0.9% California disability insurance = 53.5%. This doesn't include unemployment taxes (California or federal) which might be another 0.3-0.5%. Though for real math, the employer paid taxes should increase the denominator when calculating rate. This number includes employer-paid taxes, but you were doing the same.
Of course effective tax rate is much lower than marginal tax rate. Effective federal income tax would be 17.1%, effective California income tax would be 6.9%. This would make effective total tax 40.2% (it was 42.6% in 2017, before Trump's tax cuts).
- kgwgk 9y agoNote that you’re basing your calculations on a EUR 100k salary. His 100k are the sum of salary and employer-paid charges. It’s true that California taxes are high. But it’s also true that France taxes are higher. And, to be fair, bring with them higher entitlements.
- zapita 9y agoThey're higher in France but not meaningfully higher, hence my comment "not that different". In fact if you take into account the cost of typical private employer-paid healthcare, the cost might actually be higher in California. And I maintain that taxes are just not high enough to be a major obstacle to entrepreneurship in France - and yes I am aware of the dreaded "charges sociales". The reason we hear so much about them is because complaining about high taxes is easy and not controversial. Unlike the topic of employee protection, which is deeply polarizing.
- nicolas_t 9y agoLooking at the numbers, you do indeed have a point. It would be interesting to look at the taxes and charge sociales for different ranges of income but, for software startups who hire highly qualified people, taxes wouldn't be an obstacle compared to Malaysia. And I very much doubt that availability of qualified hires is the obstacle either since the level of engineering Grandes Ecoles is quite good (I might be biased there) So, I guess factors for why France is not doing that well re startups would be Employee Protection, Kafkaesque bureaucracy when dealing with creating the company and paying the said Charges Sociales and lack of capital.
- kgwgk 9y agoI guess it depends on what do you consider meaningfully higher. And we didn't mention VAT: from your "post-tax" income, 20% of it will be paid as tax anyway when you buy products of services. A reduced rate is applied for some products/services but it should be kept in mind that France collects more money from VAT than from all the other taxes combined.