6 ms·

It annoys me when they compare countries and don't consider income tax - you don't pay with pre tax income... If you earn 150k in High Tax Euro Country you're

It annoys me when they compare countries and don't consider income tax - you don't pay with pre tax income... If you earn 150k in High Tax Euro Country you're losing 50% of that. In low tax US state you're closer to 33%. Thats the difference between 75k and 100k.

creakingstairs 4y ago
IIRC we pay 33% after 70k NZD ish. Usually people opt into KiwiSaver (3~6%) and fair bit also goes out into paying their student loan.
- dx034 4y ago
  In many European countries university is either free or nearly free, so you'd have to add that to the tax burden to make it comparable to Europe.
msh 4y ago
But then you also have to consider what services are included in the tax that the lower tax rate might have to pay out of pocket.
- netjiro 4y ago
  > you also have to consider what services are included in the tax Yes! And a lot more as well. Many are under the impression that income tax is the majority of their major tax burden. Total taxation from billing to salary net + vat of normal spending. This must include all forms of employment, social fees, and other government imposed costs for the employer. This is higher than income tax for many regions and income brackets. On top of this should be added other taxes for a given lifestyle. E.g. fuel and vehicle taxes, property taxes, etc. Then the services provided: health care, schooling, child care, child support, pensions, etc. Things look a lot different when making a complete cost comparison between countries, and varies a lot depending on what is included as a "normal" lifestyle. E.g: couple with 2.2 children at median income looking at retirement at 70 vs a single high income earner looking to retire at 50... and ... so ... on ... On top of that we can also include other living costs ... but we started somewhere at average house price vs annual family income?
- refurb 4y ago
  Such as? At that income level you have great health insurance, can still qualify for state schools, maybe childcare? I agree at lower taxes the difference is more stark.
  - solenoidalslide 4y ago
    The United States is the fourth largest country in the world and has no kind of high speed rail of any kind
    - refurb 4y ago
      True, but we have this thing called "high speed planes". Gets you there even faster than rail. If you want to take a train and you've got time to kill, take Amtrak.
    - missedthecue 4y ago
      high speed rail is overrated. Tickets cost as much or more than an airline ticket, but even going at 300km/h, it takes 2 or 3 times the amount of time to travel. Even more if you have to make frequent stops to embark and disembark passengers.
  - msh 4y ago
    A few things off the top of my head: - Free university education, with a stipend payed to study (so no student loans, no need to save for the kids college fund). - Social security net so you have to save less for that kind of thing. - unemployment benefits, so less need to save for that - No co pay on medical expenses. - cheap and good childcare - good public schools, cheapish private schools
    - refurb 4y ago
      US has state schools that have subsidized education and grants for low income. And we're talking internationally ranked schools like Berkeley, UCLA, U of Michigan, U of Virginia. And cheap loans to pay for it (plus high salaries to pay it back). US Social Security is actually very generous with the max pension pay out ($3,300USD per month per person). Lots of American retire with nothing more than their SS pension. SSI is disability insurance if you can't work. You can also qualify for free Medicaid or Medicare if you're poor or can't work due to illness. Once you hit 65 you get very generous healthcare coverage. Unemployment benefits are very generous. During the 2008 crash they were extended for 2 years at 80% of your normal up to a cap (like $4,000 per month in CA I believe). Even during normal times you can get 26 weeks. Welfare after that. Medical maybe but in Europe, private insurance isn't uncommon along with premium payments and co-pays. So I wouldn't act like Europe is entirely "free" unless it's like the UK and you stick entirely with the public system. In the US your employer pays much of it, you can get HSA (tax free) money to help with out of pocket. It's a massive paperwork hassle and annoy bureaucracy I'll agree. Childcare if it's subsidized sure. The US has plenty of great public schools. Don't let the movies fool you. I lived in a small town in Michigan and the public schools were outstanding and entirely free. I always chuckle when people say "the US has no safety net" when 50% of our taxes go to "safety net" programs.
hef19898 4y ago
In high tax Euro country those 50% also include stuff like public health care, retirement and social security.
jusssi 4y ago
Most Euro countries have capital gains tax rate that's mostly flat and significantly under 50%. By the time the progressive income tax rate starts to exceed the near-flat capital gains tax rate, people start finding ways of converting their income to capital gains.
- zer0tonin 4y ago
  Not many people can actually do that no
  - syrgian 4y ago
    GP must think the maximum tax rate is reached at 5 million euro a year. In most Euro countries you're at 45% (combining both social security and income tax) at around 50k/year. Or actually close to 60% taxed if you count the 33% paid by the company in social security tax that is somewhat hidden to the employee.
    - jusssi 4y ago
      In the well known tax haven where I live, Finland (sum of taxes and employee part of pension and other social security, 2020. YMMV due to municipalities setting different rates, deductions etc): 30% at 50k 40% at 100k 49.5% at 250k 52% at 500k 53.5% at 1000k I have these handy in a spreadsheet I use to calculate.. things. (Nope, not making enough yet for special arrangements to make sense. edit: aside from the commonly used tricks my current employer already provides) Capital gains is 30%-34%.
    - yywwbbn 4y ago
      https://en.m.wikipedia.org/wiki/Tax_rates_in_Europe#/media/File%3APayroll_and_income_tax_by_country.png https://en.m.wikipedia.org/wiki/Tax_rates_in_Europe#/media/F... The average in Belgium is around 45k, in Germany 47k, France is ~40k. So aside from Belgium if by close to 60% you actually mean close to 50% then yeah you’re right…
MisterBastahrd 4y ago
It annoys me when people don't realize that just because Euro States are taxing at 50%, it doesn't mean that the US is cheaper. We're paying for the services that Europeans take for granted while someone else makes a profit off of these services. The US is more expensive and US citizens are getting less for their money.
- yywwbbn 4y ago
  It depends, if you’re earning 200k (or even 100+) private health insurance is probably quite a bit cheaper than ~10%. Obviously for an average person you’re probably right.
- refurb 4y ago
  For some. But at $200k, another 15% in tax is $30k. That covers healthcare (the extra not covered by employer insurance), childcare for 1 with a little left over. And it's not just $30k. That same role is likely paid less in the EU. So it's more like $50-70k extra.
Manheim 4y ago
If you want to do a comparable structure on this subject you need to set many parameters. There are some resources you can use for this, i.e. https://world-statistics.org/ https://world-statistics.org/. Anyways, tax level is not the only indicator for the purchasing power in a population since it is often related to public services and common support programs.
jen20 4y ago
It annoys me when people comment on tax rates like this without taking property tax into account.

creakingstairs 4y ago

IIRC we pay 33% after 70k NZD ish. Usually people opt into KiwiSaver (3~6%) and fair bit also goes out into paying their student loan.

dx034 4y ago
In many European countries university is either free or nearly free, so you'd have to add that to the tax burden to make it comparable to Europe.

msh 4y ago

But then you also have to consider what services are included in the tax that the lower tax rate might have to pay out of pocket.

netjiro 4y ago
> you also have to consider what services are included in the tax Yes! And a lot more as well. Many are under the impression that income tax is the majority of their major tax burden. Total taxation from billing to salary net + vat of normal spending. This must include all forms of employment, social fees, and other government imposed costs for the employer. This is higher than income tax for many regions and income brackets. On top of this should be added other taxes for a given lifestyle. E.g. fuel and vehicle taxes, property taxes, etc. Then the services provided: health care, schooling, child care, child support, pensions, etc. Things look a lot different when making a complete cost comparison between countries, and varies a lot depending on what is included as a "normal" lifestyle. E.g: couple with 2.2 children at median income looking at retirement at 70 vs a single high income earner looking to retire at 50... and ... so ... on ... On top of that we can also include other living costs ... but we started somewhere at average house price vs annual family income?
refurb 4y ago
Such as? At that income level you have great health insurance, can still qualify for state schools, maybe childcare? I agree at lower taxes the difference is more stark.
- solenoidalslide 4y ago
  The United States is the fourth largest country in the world and has no kind of high speed rail of any kind
  - refurb 4y ago
    True, but we have this thing called "high speed planes". Gets you there even faster than rail. If you want to take a train and you've got time to kill, take Amtrak.
  - missedthecue 4y ago
    high speed rail is overrated. Tickets cost as much or more than an airline ticket, but even going at 300km/h, it takes 2 or 3 times the amount of time to travel. Even more if you have to make frequent stops to embark and disembark passengers.
- msh 4y ago
  A few things off the top of my head: - Free university education, with a stipend payed to study (so no student loans, no need to save for the kids college fund). - Social security net so you have to save less for that kind of thing. - unemployment benefits, so less need to save for that - No co pay on medical expenses. - cheap and good childcare - good public schools, cheapish private schools
  - refurb 4y ago
    US has state schools that have subsidized education and grants for low income. And we're talking internationally ranked schools like Berkeley, UCLA, U of Michigan, U of Virginia. And cheap loans to pay for it (plus high salaries to pay it back). US Social Security is actually very generous with the max pension pay out ($3,300USD per month per person). Lots of American retire with nothing more than their SS pension. SSI is disability insurance if you can't work. You can also qualify for free Medicaid or Medicare if you're poor or can't work due to illness. Once you hit 65 you get very generous healthcare coverage. Unemployment benefits are very generous. During the 2008 crash they were extended for 2 years at 80% of your normal up to a cap (like $4,000 per month in CA I believe). Even during normal times you can get 26 weeks. Welfare after that. Medical maybe but in Europe, private insurance isn't uncommon along with premium payments and co-pays. So I wouldn't act like Europe is entirely "free" unless it's like the UK and you stick entirely with the public system. In the US your employer pays much of it, you can get HSA (tax free) money to help with out of pocket. It's a massive paperwork hassle and annoy bureaucracy I'll agree. Childcare if it's subsidized sure. The US has plenty of great public schools. Don't let the movies fool you. I lived in a small town in Michigan and the public schools were outstanding and entirely free. I always chuckle when people say "the US has no safety net" when 50% of our taxes go to "safety net" programs.

hef19898 4y ago

In high tax Euro country those 50% also include stuff like public health care, retirement and social security.

jusssi 4y ago

Most Euro countries have capital gains tax rate that's mostly flat and significantly under 50%. By the time the progressive income tax rate starts to exceed the near-flat capital gains tax rate, people start finding ways of converting their income to capital gains.

zer0tonin 4y ago
Not many people can actually do that no
- syrgian 4y ago
  GP must think the maximum tax rate is reached at 5 million euro a year. In most Euro countries you're at 45% (combining both social security and income tax) at around 50k/year. Or actually close to 60% taxed if you count the 33% paid by the company in social security tax that is somewhat hidden to the employee.
  - jusssi 4y ago
    In the well known tax haven where I live, Finland (sum of taxes and employee part of pension and other social security, 2020. YMMV due to municipalities setting different rates, deductions etc): 30% at 50k 40% at 100k 49.5% at 250k 52% at 500k 53.5% at 1000k I have these handy in a spreadsheet I use to calculate.. things. (Nope, not making enough yet for special arrangements to make sense. edit: aside from the commonly used tricks my current employer already provides) Capital gains is 30%-34%.
  - yywwbbn 4y ago
    https://en.m.wikipedia.org/wiki/Tax_rates_in_Europe#/media/File%3APayroll_and_income_tax_by_country.png https://en.m.wikipedia.org/wiki/Tax_rates_in_Europe#/media/F... The average in Belgium is around 45k, in Germany 47k, France is ~40k. So aside from Belgium if by close to 60% you actually mean close to 50% then yeah you’re right…

MisterBastahrd 4y ago

It annoys me when people don't realize that just because Euro States are taxing at 50%, it doesn't mean that the US is cheaper. We're paying for the services that Europeans take for granted while someone else makes a profit off of these services. The US is more expensive and US citizens are getting less for their money.

yywwbbn 4y ago
It depends, if you’re earning 200k (or even 100+) private health insurance is probably quite a bit cheaper than ~10%. Obviously for an average person you’re probably right.
refurb 4y ago
For some. But at $200k, another 15% in tax is $30k. That covers healthcare (the extra not covered by employer insurance), childcare for 1 with a little left over. And it's not just $30k. That same role is likely paid less in the EU. So it's more like $50-70k extra.

Manheim 4y ago

If you want to do a comparable structure on this subject you need to set many parameters. There are some resources you can use for this, i.e. https://world-statistics.org/ https://world-statistics.org/. Anyways, tax level is not the only indicator for the purchasing power in a population since it is often related to public services and common support programs.

jen20 4y ago

It annoys me when people comment on tax rates like this without taking property tax into account.