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40%?! Where do you live? The effective federal income tax at 100k is 22.75%. I don't think any state has a 17.25% effective income tax, certainly not if you onl
by strombofulous 6y ago
40%?! Where do you live? The effective federal income tax at 100k is 22.75%. I don't think any state has a 17.25% effective income tax, certainly not if you only earn 100k.
- arcticbull 6y agoIf you're making 100K in California, your marginal tax rate is: - Federal: 24% - State: 9.3% - FICA: 7.65% (6.2% social security, 1.45% medicare) - SDI: 1% This gets you to 42%. Your employer matches the FICA payments too, so that's closer to 50% of your take-home pay. Once you make enough to pay off the regressive FICA taxes ($142K) you get bumped back down to "just" the mid-high 30% range briefly, until you hit $163K, then its back up to 40% again.
- strombofulous 6y agoWow, I had no idea
- ilikeerp 6y agoIt's not insane - it's pretty common in most developed countries. The US is a major outlier.
- titanomachy 6y agoIn many developed countries, 42% tax would cover healthcare, a pension you can actually live off of, and fully-paid education for all of your children. Californians get none of those things, and I don't really understand what it is that they get over (e.g.) Washingtonians for the extra ~30% in taxes.
- pm90 6y agoThey get protection by the US military and promotion of Californian business interests throughout the world through Federal institutions. Not to mention: friction free access to a large labor pool and US domestic market etc. I get your point that the US doesn’t provide as much social services as other developed nations. Almost all these nations depend on US hegemony to not have to spend as much on their military. This is a choice that the US made. There are good arguments for scaling back military spending and increasing social spending without compromising US hegemony though, however those choices may not be politically expedient so here we are.
- newswasboring 6y agoI don't want to address the hegemony point beyond I disagree on the need or even effectiveness of US military. But I would want to point out the curious phrasing and of your first paragraph and what that says about USA way of thinking. All these points are business targeted while all european points are individual targeted.
- pm90 6y ago> But I would want to point out the curious phrasing and of your first paragraph and what that says about USA way of thinking. All these points are business targeted while all european points are individual targeted. I don't think there is anything curious about this way of thinking. And US hegemony plays directly into this! Pre-World Wars, European nations had their colonies and their militaries and the priority of thinking was along similar lines: access to expansive markets, large pools of labor, protection of business interests etc, chiefly through colonies. WW2 changed all of that, reducing European nations to client states (no disrespect) of the US, that funded their reconstruction. Colonialism was no longer allowed, and European nations could not freely pursue foreign markets without competing with US companies, which would always get precedence. With no real way to compete with the US militarily, and with NATO aligning with their immediate geo-political needs anyways, European nations invested heavily on Social Services, rather than blow up their military budgets. This geopolitical equation hasn't changed post WW2 and you have generations of people that consider social services as the primary function of their Government. However, its a fundamental mistake to assume that a Government can provide effective social services without having a strong economy. Strong economies require successful businesses.
- newswasboring 6y ago> However, its a fundamental mistake to assume that a Government can provide effective social services without having a strong economy. Strong economies require successful businesses. Umm... I would say the social services in european countries are pretty successful.
- didibus 6y agoAre you sure Washington doesn't just take the money from some other tax? Like property tax and business tax? I'm actually curious, is there somewhere you can see the total revenue for a state from the union of all collected taxes and fees?
- dr_dshiv 6y agoIn the states, tax is obscure but painful -- you feel it when you pay it, like a sales tax not included in the price or a complicated tax form. In Europe, tax is hidden but smooth -- like a VAT built into the cost of everything or a 3-box tax form (in NL)
- jspash 6y agoThey get to work 50-60 hour weeks. But that's not exclusive to California. Every state has that advantage. /s
- dmode 6y ago30% ? The difference is 9% and is probably made up through other taxes. I know Washington has the highest alcohol and cigarette taxes for example
- robertlagrant 6y agoIt's not a major outlier if it's common. 100k USD in GBP is 73347.60. In the UK you'd be taxed 30% on that, including national insurance. https://listentotaxman.com/73347.60 https://listentotaxman.com/73347.60
- BorisTheBrave 6y agoNo, in the UK, your marginal rate at that income would be 42% (40% income + 2% National Insurance).
- benzoate 6y ago+9% if you’re still repaying student loans, which is common until 40s. Student loans operate like a tax in the U.K., taking 9% of your pre-tax income above 15 or 25k directly from your payslip.
- sokoloff 6y agoI don’t view paying my own individual debt as a tax. I have a percentage of my pay deducted and diverted to my retirement account. That’s not a tax either, even though it’s percentage-based on my pre-tax amount and directly deducted.
- benzoate 6y agoYou can opt out of your pension contributions. You can’t opt-out of paying student loans, which is an available option with other debts. Student loan deductions reduce a balance that doesn’t impact your credit score, can’t chase you for repayment (unless you do something stupid like move country and fail to inform them) and doesn’t impact lender decisions. Most people have no hope of repaying their ‘loan’ in their lifetimes and instead expect the loan to be written off after 25 years. U.K. student loans being debt is a technicality, it’s a tax with a countdown timer that might be shorter if you’re baller.
- ilikeerp 6y agoIf you hit 100k by the time your 30 you won't be paying it off into your 40's... Tech / consulting etc, not too hard to hit that number.
- benjaminl 6y agoDon’t forget the 10.25% sales tax. This puts the combined marginal tax rate at 59.85%. (24 + 9.3 + 7.65 + 7.65 + 1 + 10.25)
- sdenton4 6y agoOnly if you buy stuff, though. Which was hard this year in particular, and not terribly useful once basic needs are met.
- knuthsat 6y agoIn Croatia the total would be about 63%. If you go through capital gains (no paycheck just profit after corporate tax, capital income tax and VAT) it's 53%. It could go down if some company expenses can be used for your life expenses. In Austria the total is 75%. In Austria going through capital gains would still be 70%. I'm very disappointed at how much money Europe sucks out of my work.
- passerby1 6y ago> I'm very disappointed at how much money Europe sucks out of my work Are you owner of property like apartment or house there? Just wandering, if that makes a significant personal economic difference for owning it in EU.
- 6y ago
- georgeplusplus 6y agoThis is slightly misleading. The federal tax rate is a tiered system, meaning a portion of your income is taxed at a certain rate and income that exceeds that tier is taxed at a different rate after that and so on. The federal tax rate is much lower if you account for that.
- beagle3 6y agoOp did say “marginal rate”
- nicoburns 6y agoYes, but you'd be amazed at how many people don't understand what that means. No doubt it's not true on HN, but a lot of people among the general public seem to be under the impression that the effective rate jumps at thresholds.
- learnstats2 6y agoI personally know someone who turned down a payrise for this reason.
- taffer 6y agoShouldn't that be 37%? 1-(1-0,24)*(1-0,093)*(1-0,0765)*(1-0,01) = 0,37
- sokoloff 6y agoNo. Those taxes are levied on the gross income, not on the net income after the previous tax has been applied.
- EVa5I7bHFq9mnYK 6y agoParent message talks about effective tax rate, you talk about marginal tax rate. You are talking about 2 different things.
- imtringued 6y agoSo California is basically on par with Germany? Yet all I hear from Americans is how our tax rates are high. A lot of those "taxes" are also not going into the government's budget. They are used to fund specific services exclusively.