3 ms·

The reason EU companies don't pay US tech salaries is that there aren't enough super profitable companies, and also, related, that the most profitable companies

by marvin 6y ago

The reason EU companies don't pay US tech salaries is that there aren't enough super profitable companies, and also, related, that the most profitable companies don't properly have to compete for the best engineers. I think we would move in the direction of US tech companies if we managed to create five world-class tech behemoths, but I don't see that happening. Taxation will necessarily affect things; some places have an employer tax that approaches 100%. (Half the salary to the employee and half to the state, then tax the employee's share again afterwards).

pyrale 6y ago
> (Half the salary to the employee and half to the state, then tax the employee's share again afterwards) Can't think of a single country having that. This money which you count as tax goes into retirement, healthcare and stuff like that. Would you consider US packages including healthcare to be taxed ?
- marvin 6y ago
  I could be mistaken and/or have an incomplete picture based on my relatives' experiences of running a small business in France. My impression was that an amount corresponding to the total salary of their employees was required in tax payment from the employer, with the employee's taxes coming on top of this. This tax could of course consist of social security or retirement benefit contribution, if so I got an incomplete picture. Are you by chance familiar with this system? I am familiar with Norway's system. Employer pays 14% of employee's gross salary as tax and required to pay at least 2% as retirement contributions. Employee normally pays in somewhere between 30-40% tax on what's left, 8 percentage points of these being the state retirement contribution. Socialized healthcare. Company taxed 22% on all profits and owners taxed 31% on all dividends and capital gains. Most of the particularly rough parts of the tax system are in form of VAT, taxation of capital and special-purpose taxes on various sectors and activities, mostly transportation. With the 70%-ish oil producer tax being a welcome special case of this. In this case, our modest salaries for globally in-demand skills are mostly due to a lack of very profitable companies, plus probably a degree of cultural bias against high performers. Marginal tax rate tops out at ~46% after $110,000/year, so one isn't incentivized to work hard for salary increases.
  - pyrale 6y ago
    > [...] France. My impression was that an amount corresponding to the total salary of their employees was required in tax payment from the employer, with the employee's taxes coming on top of this. The lion's share of what the employer pays is not taxes. It is, indeed, mandatoty, but it is not a tax collected by the state, as it opens individual rights to jobless claims, health insurance and retirement schemes. Revenue tax is also directly taken from salary since a couple years ago, but that means most people don't pay any tax besides what's on their salary.
    - barry-cotter 6y ago
      > The lion's share of what the employer pays is not taxes. It is, indeed, mandatoty, but it is not a tax collected by the state, as it opens individual rights to jobless claims, health insurance and retirement schemes. If it’s a state mandated by the state that you can go to prison for not paying economically it’s a tax. It functions exactly like a tax in every way. That it’s legally something else is irrelevant to economic impact.
      - pyrale 6y ago
        The mandatory aspect is only half the definition of what a tax is. A tax is something collected to fund govt. These payments are made to a mechanism that, in return, opens rights for workers, such as pensions to retire, full health insurance, or work insurance. These are very much individual benefits, not some kind of tax scheme that goes to fund roads or the army. If you want a comparison, car insurance is mandatory in the US, but it is not considered a tax.

by marvin 6y ago

pyrale 6y ago

> (Half the salary to the employee and half to the state, then tax the employee's share again afterwards) Can't think of a single country having that. This money which you count as tax goes into retirement, healthcare and stuff like that. Would you consider US packages including healthcare to be taxed ?

marvin 6y ago
I could be mistaken and/or have an incomplete picture based on my relatives' experiences of running a small business in France. My impression was that an amount corresponding to the total salary of their employees was required in tax payment from the employer, with the employee's taxes coming on top of this. This tax could of course consist of social security or retirement benefit contribution, if so I got an incomplete picture. Are you by chance familiar with this system? I am familiar with Norway's system. Employer pays 14% of employee's gross salary as tax and required to pay at least 2% as retirement contributions. Employee normally pays in somewhere between 30-40% tax on what's left, 8 percentage points of these being the state retirement contribution. Socialized healthcare. Company taxed 22% on all profits and owners taxed 31% on all dividends and capital gains. Most of the particularly rough parts of the tax system are in form of VAT, taxation of capital and special-purpose taxes on various sectors and activities, mostly transportation. With the 70%-ish oil producer tax being a welcome special case of this. In this case, our modest salaries for globally in-demand skills are mostly due to a lack of very profitable companies, plus probably a degree of cultural bias against high performers. Marginal tax rate tops out at ~46% after $110,000/year, so one isn't incentivized to work hard for salary increases.
- pyrale 6y ago
  > [...] France. My impression was that an amount corresponding to the total salary of their employees was required in tax payment from the employer, with the employee's taxes coming on top of this. The lion's share of what the employer pays is not taxes. It is, indeed, mandatoty, but it is not a tax collected by the state, as it opens individual rights to jobless claims, health insurance and retirement schemes. Revenue tax is also directly taken from salary since a couple years ago, but that means most people don't pay any tax besides what's on their salary.
  - barry-cotter 6y ago
    > The lion's share of what the employer pays is not taxes. It is, indeed, mandatoty, but it is not a tax collected by the state, as it opens individual rights to jobless claims, health insurance and retirement schemes. If it’s a state mandated by the state that you can go to prison for not paying economically it’s a tax. It functions exactly like a tax in every way. That it’s legally something else is irrelevant to economic impact.
    - pyrale 6y ago
      The mandatory aspect is only half the definition of what a tax is. A tax is something collected to fund govt. These payments are made to a mechanism that, in return, opens rights for workers, such as pensions to retire, full health insurance, or work insurance. These are very much individual benefits, not some kind of tax scheme that goes to fund roads or the army. If you want a comparison, car insurance is mandatory in the US, but it is not considered a tax.