4 ms·

Is it net pay? If not then the gap is even higher as workers pay more tax than CEOs (if your salary is beyond certain threshold, you can use various "tricks" to

Is it net pay? If not then the gap is even higher as workers pay more tax than CEOs (if your salary is beyond certain threshold, you can use various "tricks" to make your tax bill go away, whereas workers have to typically pay something in the area of 40% or more). It's a scandal. Each party tells us that they will tax the rich, but what they really mean is taxing your specialists, developers, doctors, lawyers. People who worked hard all their life to get a great job and some to also lift themselves and their family out of poverty.

t-writescode 6y ago
40% in taxes? Where are you getting this from? I know that California has very high sales tax and very high state-level income tax and those can add to federal income tax; but, federal income taxes aren't anywhere near 40% for people that make an average income.
- varispeed 6y ago
  I am paying in the area of 40-45% in the UK. I talked with someone from the US about this and they said they pay similar in the US. I checked for New York and got 37% which is quite in the ballpark. Is it much different in other states?
  - t-writescode 6y ago
    I think they need to look at their own taxes a bit more closely, if I'm honest. https://www.bankrate.com/finance/taxes/tax-brackets.aspx https://www.bankrate.com/finance/taxes/tax-brackets.aspx And each tax bracket is a tax on the money made above that (edit: tier), meaning $1 is taxed at 37% if they made $518,402. New York's tax rates are here: http://www.tax-rates.org/new_york/income-tax http://www.tax-rates.org/new_york/income-tax New York City's sales tax is 4.5% https://www1.nyc.gov/site/finance/taxes/business-nys-sales-tax.page https://www1.nyc.gov/site/finance/taxes/business-nys-sales-t... edit: wow. I'm being downvoted quite a bit here. What am I saying wrong? Where am I wrong? Clearly I must have some misunderstanding of how taxes work, can someone clarify it for me?
    - deleted 6y ago
      [deleted]
    - varispeed 6y ago
      I used this website: https://smartasset.com/taxes/new-york-paycheck-calculator https://smartasset.com/taxes/new-york-paycheck-calculator For $160,000 salary it gives 63.28% take home.
      - t-writescode 6y ago
        When I enter the same, I see 67.17% 25.97% from taxes: 19.73 federal, 6.24 state. Social Security: 5.34% Medicare: 1.45% edit: scratch that, NYC is 63.28. Americans tend to treat taxes and social security as separate, though. The tax percentage is 29.87% in NYC
        varispeed 6y ago
        > Americans tend to treat taxes and social security as separate, though. Here is similar, but for some time now the government can transfer money between pots (e.g. spend social security money on something else), so essentially this is just cosmetic.
martinald 6y ago
Out of interest, what tricks are these (genuine question)? Stock grants are often taxed less (but not 0). In the UK at least I don't know any real 'tricks' to get rid of £10m salary for a CEO. You will be paying around 47% marginal tax on that.
- efficax 6y ago
  Incorporate yourself and have your salary be paid as management fees to the corporation. Declare those fees as a capital gain and pay 15% tax. Or, have the corporation housed in a tax haven, pay almost nothing in taxes. Setup a foundation, use that foundation to employ friends or relatives (like say, your wife). Pay out very little in charity but take your donations to the foundation as a tax write off. Etc.
  - gruez 6y ago
    >Incorporate yourself and have your salary be paid as management fees to the corporation This is harder than you think: https://en.wikipedia.org/wiki/Piercing_the_corporate_veil https://en.wikipedia.org/wiki/Piercing_the_corporate_veil >Declare those fees as a capital gain and pay 15% tax. That's tricky. You can't just take money out of the corporation's coffers and say it was capital gains. You'd need to sell off your shares or something. Otherwise it's a dividend and is taxed as income. >Or, have the corporation housed in a tax haven, pay almost nothing in taxes. You still need to repatriate it back to your personal account somehow. >Setup a foundation, use that foundation to employ friends or relatives (like say, your wife). ...which they're promptly taxed on. Actually you don't even need a foundation, you can just employ them at the corporation from earlier.
    - efficax 6y ago
      Yes a lot of it is difficult, which is why rich people hire people to figure this out for them. Mitt Romney is the inspiration for the management fees as capital gains trick. https://www.businessinsider.com/law-professor-says-one-of-romneys-tax-avoidance-schemes-was-illegal-2012-8 https://www.businessinsider.com/law-professor-says-one-of-ro... The point of the foundation is you evade taxes with the writeoff. Using it to pay your friends/family is just a bonus. It also helps to win you goodwill, you get to have galas etc. and convince people you're one of the good ones.

t-writescode 6y ago

40% in taxes? Where are you getting this from? I know that California has very high sales tax and very high state-level income tax and those can add to federal income tax; but, federal income taxes aren't anywhere near 40% for people that make an average income.

varispeed 6y ago
I am paying in the area of 40-45% in the UK. I talked with someone from the US about this and they said they pay similar in the US. I checked for New York and got 37% which is quite in the ballpark. Is it much different in other states?
- t-writescode 6y ago
  I think they need to look at their own taxes a bit more closely, if I'm honest. https://www.bankrate.com/finance/taxes/tax-brackets.aspx https://www.bankrate.com/finance/taxes/tax-brackets.aspx And each tax bracket is a tax on the money made above that (edit: tier), meaning $1 is taxed at 37% if they made $518,402. New York's tax rates are here: http://www.tax-rates.org/new_york/income-tax http://www.tax-rates.org/new_york/income-tax New York City's sales tax is 4.5% https://www1.nyc.gov/site/finance/taxes/business-nys-sales-tax.page https://www1.nyc.gov/site/finance/taxes/business-nys-sales-t... edit: wow. I'm being downvoted quite a bit here. What am I saying wrong? Where am I wrong? Clearly I must have some misunderstanding of how taxes work, can someone clarify it for me?
  - deleted 6y ago
    [deleted]
  - varispeed 6y ago
    I used this website: https://smartasset.com/taxes/new-york-paycheck-calculator https://smartasset.com/taxes/new-york-paycheck-calculator For $160,000 salary it gives 63.28% take home.
    - t-writescode 6y ago
      When I enter the same, I see 67.17% 25.97% from taxes: 19.73 federal, 6.24 state. Social Security: 5.34% Medicare: 1.45% edit: scratch that, NYC is 63.28. Americans tend to treat taxes and social security as separate, though. The tax percentage is 29.87% in NYC
      - varispeed 6y ago
        > Americans tend to treat taxes and social security as separate, though. Here is similar, but for some time now the government can transfer money between pots (e.g. spend social security money on something else), so essentially this is just cosmetic.

martinald 6y ago

Out of interest, what tricks are these (genuine question)? Stock grants are often taxed less (but not 0). In the UK at least I don't know any real 'tricks' to get rid of £10m salary for a CEO. You will be paying around 47% marginal tax on that.

efficax 6y ago
Incorporate yourself and have your salary be paid as management fees to the corporation. Declare those fees as a capital gain and pay 15% tax. Or, have the corporation housed in a tax haven, pay almost nothing in taxes. Setup a foundation, use that foundation to employ friends or relatives (like say, your wife). Pay out very little in charity but take your donations to the foundation as a tax write off. Etc.
- gruez 6y ago
  >Incorporate yourself and have your salary be paid as management fees to the corporation This is harder than you think: https://en.wikipedia.org/wiki/Piercing_the_corporate_veil https://en.wikipedia.org/wiki/Piercing_the_corporate_veil >Declare those fees as a capital gain and pay 15% tax. That's tricky. You can't just take money out of the corporation's coffers and say it was capital gains. You'd need to sell off your shares or something. Otherwise it's a dividend and is taxed as income. >Or, have the corporation housed in a tax haven, pay almost nothing in taxes. You still need to repatriate it back to your personal account somehow. >Setup a foundation, use that foundation to employ friends or relatives (like say, your wife). ...which they're promptly taxed on. Actually you don't even need a foundation, you can just employ them at the corporation from earlier.
  - efficax 6y ago
    Yes a lot of it is difficult, which is why rich people hire people to figure this out for them. Mitt Romney is the inspiration for the management fees as capital gains trick. https://www.businessinsider.com/law-professor-says-one-of-romneys-tax-avoidance-schemes-was-illegal-2012-8 https://www.businessinsider.com/law-professor-says-one-of-ro... The point of the foundation is you evade taxes with the writeoff. Using it to pay your friends/family is just a bonus. It also helps to win you goodwill, you get to have galas etc. and convince people you're one of the good ones.