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Many Europeans don’t know how much taxes Americans actually pay. It’s not that little, but often paid differently with high property taxes and sales taxes inste

by Ma8ee 4y ago

Many Europeans don’t know how much taxes Americans actually pay. It’s not that little, but often paid differently with high property taxes and sales taxes instead of VAT. And most of us (Europeans) don’t have to pay €1000 or so in health insurance for ourself and our family. We might make a bit less money, but most of us have at least 5 weeks of paid vacation (I’ve got almost 7).

thehappypm 4y ago
Yep, health care costs for a family can run $10k/year for Americans (out of pocket maximum) and so basically any kind of major illness or baby delivery will cost that much.
- jakear 4y ago
  How often do you expect most families encounter major illnesses and/or babies? I’ve literally never used my health insurance. I expect the vast majority of people are in the same boat.
  - mercutio2 4y ago
    This sounds like the fallacy of youth. I never used medical care in my 20s. In my 30s, my wife and I needed a bit. In my 40s, slightly more. On average Americans use a lot of health care.
    - jakear 4y ago
      Average of “never”, “a bit”, and “slightly more” is “a bit”, where do you get “a lot” from?
- spiderice 4y ago
  That varies widely by your insurance. And given that tech companies use insurance as a way to attract more employees, software employees often pay way less than that. I'm about to have a child and I will pay $0 for it. My wife's company pays everything. Even if we were using my companies insurance instead of hers, we wouldn't pay anywhere near $10k.
  - thehappypm 4y ago
    It is not the norm for birthing to be 100% covered even at a place like Microsoft or Salesforce, it is the norm for it to apply towards your deductible and then coinsurance ultimately going up to your out-of-pocket maximum. If yours is covered 100% that’s great but definitely not the norm
nemo44x 4y ago
It’s way more than “a bit less”. As someone that has had global teams in multiple countries, the country in Europe that approaches USA salaries is Switzerland. The rest in my experience are paid significantly less that their counterparts in the USA. Especially their counterparts in high cost of living areas. For example, people I was paying $190k in the USA were making around $110 in Europe and this was well before parity - $1.25 per euro, etc. It’s probably around 50% of an Americans salary today or there about.
rootsudo 4y ago
While you wish to make it sound "not so bad" the fact is that you do pay more in taxes, and drastically much less money then for USA. 7 weeks of Vacation sounds nice, but depending on your org/work in USA, it can rival that, most FAANG, tech companies and such offer minimum 4 weeks of vacation, 20 days, which is 28 days including weekends "total." Then many states do not have income taxes, Washington, Nevada, Florida and Texas for example. Sales tax is also not that high, topping around 10% for the most expensive of cities, but as low as 5%. Then on income tax, we have very favorable tax brackets that allow us to reduce our tax liabilities. Someone making 250K w/ an LLC can easily drop their bracket to as low as 13%. As an American, we have pros. You being an European, you have pros - but if you're experienced in the game and have time - there is a reason why USA can have very favorable tax, income Now if you talk about your public transit, rails and trains - yes I'll concede and say that is much much ahead of USA. :)
- _njyk 4y ago
  [flagged]
- cr1895 4y ago
  > 20 days, which is 28 days including weekends "total." Bit of an unusual thing to include weekends to make 20 actual vacation days sound 40% better than it is. Edit: to be clear, in my experience, when someone in Europe says “4 weeks holiday” they mean 28 actual vacation days, not including weekend days.
Gare 4y ago
Yeah, I only pay 500€ mandatory health insurance per month out of 40000€ per year gross salary. I'd rather earn $100000 and pay $1000 per month.
- akmarinov 4y ago
  And have gas be super cheap
  - marvin 4y ago
    Norwegian gas prices are currently ~$11.5 per gallon. Anyone in continental Europe got a more impressive number?
    - digianarchist 4y ago
      The Netherlands had the highest gas taxes in the world last time I looked.
nwiswell 4y ago
Honestly, it really is true that upper middle class and wealthy Americans pay less tax than their European counterparts. VAT is broadly much higher than sales tax, property taxes are not exactly unknown in Europe, and if you are an employed professional, your health insurance burden is typically pretty close to zero. If you live in a no-income-tax state like Washington or Texas, and you are single making $200,000 a year, your effective (not marginal) tax rate, including FICA, is around 26%. I doubt that anywhere in Europe comes close. The flip side is that poor people in America absolutely get shafted.
- cpursley 4y ago
  Bulgaria has a 10% flat tax. Hungary 15% flat tax. There are others.
  - nwiswell 4y ago
    Do they have payroll taxes? I struggle to see how you could run a pension system at those tax rates. The 26% figure above does include the FICA payroll tax.
  - nemo44x 4y ago
    And a software engineer makes $50k there.
    - cpursley 4y ago
      Only if they work for a local company. If you work for a richer EU country or the US, you can do very well financially.
      - bogomipz 4y ago
        >" If you work for a richer EU country or the US, you can do very well financially." Will richer EU country and US companies pay you better than your local wage bracket in the EU? How do you find that? This sounds like the best of both worlds. I'm guessing its tricky?
mgraczyk 4y ago
News to me, I spent less than 50% of my income last year on everything. Not just taxes, everything. And I'm in roughly the highest tax bracket in the US and have roughly the highest state and local taxes. I would guess my effective tax rate including sales and local and healthcare and everything else is ~40%
- PenguinCoder 4y ago
  You single and don't have a personal vehicle? I'm Married, and have kids, in a lower COL area. I paid ~9% federal income tax, ~7% state income tax, ~1% of that in property tax, without attributing for healthcare insurance every paycheck, and uncounted more in sales tax, gas tax, etc etc. I have spent ~90% of my take home income trying to barely survive in the last year. Being able to save 50% of your income is a level of privilege many don't have regardless of effective tax rates.
  - mgraczyk 4y ago
    totally agree, but it sounds like you're paying way less in taxes than you would be paying in Europe.
    - PenguinCoder 4y ago
      Took the time to add it all up. Between federal,state,city income tax, sales tax, property tax, excise taxes, healthcare (which European taxes pay for already) premiums; I pay 53% of my income in some form of taxes. I'm not sure if that's less taxes than in Europe, but I'm pretty sure they don't pay 50%+ of their pay towards tax.
      - mgraczyk 4y ago
        Incredible. I wonder what you're doing differently. My rate is around 30% and I live in San Francisco and pay ~9% to the state. Like most of my 150,000 coworkers, I pay ~0% out of pocket for healthcare. Maybe that's the main difference?
aidenn0 4y ago
The breakdown is: - Working professionals making low 6 figures (espicially in states with income taxes) pay much closer to EU taxes than most people think. - Non professional jobs (service industry and blue-collar) are taxed very lightly, but have worse benefits, less job protection, and an extremely limited social safety net. - Government jobs have better benefits than other non-professional jobs, but often the pay is not great (I suspect no better than EU, but honestly have no clue what e.g. a postal worker in the EU makes). - The very wealthy are taxed very lightly compared to the EU.
- cactus2093 4y ago
  Agree with most of this. Although to be fair the social safety net is not as weak in the US as most people think, either. The majority of the Federal government's budget goes to Medicare and Social Security, the main gap is just that for working-aged people there is no universal healthcare in the US. Not sure what you mean by the last point, though, it kind of conflicts with your first point. And in e.g. France the capital gains rate is 19% I believe vs 20% in the US. Various countries in Europe have experimented with a wealth tax, but they've now all gotten rid of it. In what ways are the very wealthy taxed heavier in the EU?
  - benatkin 4y ago
    I disagree. > the main gap is just that for working-aged people there is no universal healthcare in the US What about those who have health insurance but have huge medical bills?
    - debug-desperado 4y ago
      You hit the out-of-pocket maximum for the year and then no longer pay anything on the bills. Most upper middle class jobs offer different plans with different maximums and monthly payments.
  - guerrilla 4y ago
    > Agree with most of this. Although to be fair the social safety net is not as weak in the US as most people think, either. No way. It's almost impossible to become homeless in Sweden while you have the entire homeless villages everywhere. People with disability get paid a living income and are allowed to save money, which they aren't in the US. Then we have tons of other services like child care, health care and universally just way better everything regarding infrastructure and social service. I've lived half my life in each place and honestly the difference is Grand Canyon sized. Even Portugal, one of the poorest still has great free healthcare and all kinds of social safety net sand services.
_njyk 4y ago
You pay health insurance in Europe, it's just that it's baked-in in the salary and you have no choice than to pay for the public system (as there is very little competition). For example, in Estonia the minimum you have to pay per month just to health insurance is 201.20 EUR and this barely covers anything except extreme injuries, so on top you add a private insurance :|
- 19h 4y ago
  > you have no choice than to pay for the public system You can very much opt out from the "public system" in Germany. I'm privately insured.
  - rvnx 4y ago
    Interesting, thank you for sharing. I didn't know. (I assumed it was like France, where it's also mandatory at 7.30%+1.30% (in some regions))
    - int_19h 4y ago
      German healthcare system is really interesting, and I wonder if it should be a model for US more so than Canada. Not even because there are some inherent advantages, but because it would be an easier sell politically. Even the "public" part isn't really state-run, but rather a bunch of heavily regulated but still independent non-profits - some territorial, some industrial, some specific to (particularly large) employees.
  - OtomotO 4y ago
    You can't in Austria - you can additionally get a private insurance, but it's by no means mandatory. Although I pay most of my urgent stuff in cash, and get it back later (not everything), because otherwise I have to wait 3 months + for a simple scan :/
    - Akronymus 4y ago
      As much as I love it here, such mandatory things is something I HATE. Like Public health insurance being mandated, or the GIS.
tlss 4y ago
Discussion about US taxation often omit: - the state & local taxes (can be as high as 12-15%) - social security (6.2%, tapers off after 150k) - medicare (2% generally) - net investment income tax (3.8%) - different tax treatments of short and long term capital gains Sure, if you just look at the federal rate, the US tax rate does seem a lot lower... VAT are generally higher in Europe though. Even in the "high sales tax" areas in the US, you'd typically get ~10% compared with 22% in Europe.
cactus2093 4y ago
The tech salaries you see discussed in the US are in jobs that also cover healthcare, so we don't pay out of pocket each month for health insurance. And these jobs include "unlimited vacation", however most people don't take more than about 4 weeks a year.
- OtomotO 4y ago
  central Europe here: You have to take the vacation! You can take a few weeks in the new year, but not everything and you have to consume them. Why "have to"? Because it's by law forbidden to bully employees into taking money instead of going on vacation. To never have to deal with this, most employers are very strict wrt vacation days :)
- grepLeigh 4y ago
  When I worked for US companies that paid employee health insurance premiums, my family's premiums appeared on my W2 as taxable income. Only my own premium was "covered" in a way that did not increase my tax burden.
  - mercutio2 4y ago
    My guess is you may have misread your W2. Health insurance (for dumb, path dependent, historical reasons) for individuals and their families are not taxable, haven't been since WW2. What you may have seen is the AMA line item that just tells you how much your employer spent on your healthcare. This is a weird attempt to get people to realize how much their employers are paying (much more than the premiums people generally think of as covering their health insurance). If your employer happened to pay you more than the maximum allowable cost per employee, then your employer had to pay a 40% excise tax on the amount above the limit, but even then, it wouldn't be taxable to you. The roll out of this tax was delayed several times, it may have been repealed, I wasn't paying attention during the pandemic.
- Thorrez 4y ago
  FAMGA don't offer unlimited vacation: https://www.levels.fyi/benefits/ https://www.levels.fyi/benefits/
deleted 4y ago
[deleted]
irrational 4y ago
Even the vacation thing depends. As an American, I just finished a six week paid sabbatical. I also get 10 paid holidays. And I get another paid day that I can use as a floating holiday. And I get 8 hours of vacation each paycheck, up to 400 hours of which can rollover from year to year. And we get a paid week off in the summer. And we get every Friday as a paid vacation day in the summer (between labor day and Memorial Day). And every five years a six week sabbatical, as I already mentioned.
- Ma8ee 4y ago
  And you would say that is typical for American employees?
  - irrational 4y ago
    Well, it's typical for the tens of thousands of employees at the company I work for. I have zero idea how other large companies structure their vacation time.

by Ma8ee 4y ago

thehappypm 4y ago

Yep, health care costs for a family can run $10k/year for Americans (out of pocket maximum) and so basically any kind of major illness or baby delivery will cost that much.

jakear 4y ago
How often do you expect most families encounter major illnesses and/or babies? I’ve literally never used my health insurance. I expect the vast majority of people are in the same boat.
- mercutio2 4y ago
  This sounds like the fallacy of youth. I never used medical care in my 20s. In my 30s, my wife and I needed a bit. In my 40s, slightly more. On average Americans use a lot of health care.
  - jakear 4y ago
    Average of “never”, “a bit”, and “slightly more” is “a bit”, where do you get “a lot” from?
spiderice 4y ago
That varies widely by your insurance. And given that tech companies use insurance as a way to attract more employees, software employees often pay way less than that. I'm about to have a child and I will pay $0 for it. My wife's company pays everything. Even if we were using my companies insurance instead of hers, we wouldn't pay anywhere near $10k.
- thehappypm 4y ago
  It is not the norm for birthing to be 100% covered even at a place like Microsoft or Salesforce, it is the norm for it to apply towards your deductible and then coinsurance ultimately going up to your out-of-pocket maximum. If yours is covered 100% that’s great but definitely not the norm

nemo44x 4y ago

It’s way more than “a bit less”. As someone that has had global teams in multiple countries, the country in Europe that approaches USA salaries is Switzerland. The rest in my experience are paid significantly less that their counterparts in the USA. Especially their counterparts in high cost of living areas. For example, people I was paying $190k in the USA were making around $110 in Europe and this was well before parity - $1.25 per euro, etc. It’s probably around 50% of an Americans salary today or there about.

rootsudo 4y ago

While you wish to make it sound "not so bad" the fact is that you do pay more in taxes, and drastically much less money then for USA. 7 weeks of Vacation sounds nice, but depending on your org/work in USA, it can rival that, most FAANG, tech companies and such offer minimum 4 weeks of vacation, 20 days, which is 28 days including weekends "total." Then many states do not have income taxes, Washington, Nevada, Florida and Texas for example. Sales tax is also not that high, topping around 10% for the most expensive of cities, but as low as 5%. Then on income tax, we have very favorable tax brackets that allow us to reduce our tax liabilities. Someone making 250K w/ an LLC can easily drop their bracket to as low as 13%. As an American, we have pros. You being an European, you have pros - but if you're experienced in the game and have time - there is a reason why USA can have very favorable tax, income Now if you talk about your public transit, rails and trains - yes I'll concede and say that is much much ahead of USA. :)

_njyk 4y ago
[flagged]
cr1895 4y ago
> 20 days, which is 28 days including weekends "total." Bit of an unusual thing to include weekends to make 20 actual vacation days sound 40% better than it is. Edit: to be clear, in my experience, when someone in Europe says “4 weeks holiday” they mean 28 actual vacation days, not including weekend days.

Gare 4y ago

Yeah, I only pay 500€ mandatory health insurance per month out of 40000€ per year gross salary. I'd rather earn $100000 and pay $1000 per month.

akmarinov 4y ago
And have gas be super cheap
- marvin 4y ago
  Norwegian gas prices are currently ~$11.5 per gallon. Anyone in continental Europe got a more impressive number?
  - digianarchist 4y ago
    The Netherlands had the highest gas taxes in the world last time I looked.

nwiswell 4y ago

Honestly, it really is true that upper middle class and wealthy Americans pay less tax than their European counterparts. VAT is broadly much higher than sales tax, property taxes are not exactly unknown in Europe, and if you are an employed professional, your health insurance burden is typically pretty close to zero. If you live in a no-income-tax state like Washington or Texas, and you are single making $200,000 a year, your effective (not marginal) tax rate, including FICA, is around 26%. I doubt that anywhere in Europe comes close. The flip side is that poor people in America absolutely get shafted.

cpursley 4y ago
Bulgaria has a 10% flat tax. Hungary 15% flat tax. There are others.
- nwiswell 4y ago
  Do they have payroll taxes? I struggle to see how you could run a pension system at those tax rates. The 26% figure above does include the FICA payroll tax.
- nemo44x 4y ago
  And a software engineer makes $50k there.
  - cpursley 4y ago
    Only if they work for a local company. If you work for a richer EU country or the US, you can do very well financially.
    - bogomipz 4y ago
      >" If you work for a richer EU country or the US, you can do very well financially." Will richer EU country and US companies pay you better than your local wage bracket in the EU? How do you find that? This sounds like the best of both worlds. I'm guessing its tricky?

mgraczyk 4y ago

News to me, I spent less than 50% of my income last year on everything. Not just taxes, everything. And I'm in roughly the highest tax bracket in the US and have roughly the highest state and local taxes. I would guess my effective tax rate including sales and local and healthcare and everything else is ~40%

PenguinCoder 4y ago
You single and don't have a personal vehicle? I'm Married, and have kids, in a lower COL area. I paid ~9% federal income tax, ~7% state income tax, ~1% of that in property tax, without attributing for healthcare insurance every paycheck, and uncounted more in sales tax, gas tax, etc etc. I have spent ~90% of my take home income trying to barely survive in the last year. Being able to save 50% of your income is a level of privilege many don't have regardless of effective tax rates.
- mgraczyk 4y ago
  totally agree, but it sounds like you're paying way less in taxes than you would be paying in Europe.
  - PenguinCoder 4y ago
    Took the time to add it all up. Between federal,state,city income tax, sales tax, property tax, excise taxes, healthcare (which European taxes pay for already) premiums; I pay 53% of my income in some form of taxes. I'm not sure if that's less taxes than in Europe, but I'm pretty sure they don't pay 50%+ of their pay towards tax.
    - mgraczyk 4y ago
      Incredible. I wonder what you're doing differently. My rate is around 30% and I live in San Francisco and pay ~9% to the state. Like most of my 150,000 coworkers, I pay ~0% out of pocket for healthcare. Maybe that's the main difference?

aidenn0 4y ago

The breakdown is: - Working professionals making low 6 figures (espicially in states with income taxes) pay much closer to EU taxes than most people think. - Non professional jobs (service industry and blue-collar) are taxed very lightly, but have worse benefits, less job protection, and an extremely limited social safety net. - Government jobs have better benefits than other non-professional jobs, but often the pay is not great (I suspect no better than EU, but honestly have no clue what e.g. a postal worker in the EU makes). - The very wealthy are taxed very lightly compared to the EU.

cactus2093 4y ago
Agree with most of this. Although to be fair the social safety net is not as weak in the US as most people think, either. The majority of the Federal government's budget goes to Medicare and Social Security, the main gap is just that for working-aged people there is no universal healthcare in the US. Not sure what you mean by the last point, though, it kind of conflicts with your first point. And in e.g. France the capital gains rate is 19% I believe vs 20% in the US. Various countries in Europe have experimented with a wealth tax, but they've now all gotten rid of it. In what ways are the very wealthy taxed heavier in the EU?
- benatkin 4y ago
  I disagree. > the main gap is just that for working-aged people there is no universal healthcare in the US What about those who have health insurance but have huge medical bills?
  - debug-desperado 4y ago
    You hit the out-of-pocket maximum for the year and then no longer pay anything on the bills. Most upper middle class jobs offer different plans with different maximums and monthly payments.
- guerrilla 4y ago
  > Agree with most of this. Although to be fair the social safety net is not as weak in the US as most people think, either. No way. It's almost impossible to become homeless in Sweden while you have the entire homeless villages everywhere. People with disability get paid a living income and are allowed to save money, which they aren't in the US. Then we have tons of other services like child care, health care and universally just way better everything regarding infrastructure and social service. I've lived half my life in each place and honestly the difference is Grand Canyon sized. Even Portugal, one of the poorest still has great free healthcare and all kinds of social safety net sand services.

_njyk 4y ago

You pay health insurance in Europe, it's just that it's baked-in in the salary and you have no choice than to pay for the public system (as there is very little competition). For example, in Estonia the minimum you have to pay per month just to health insurance is 201.20 EUR and this barely covers anything except extreme injuries, so on top you add a private insurance :|

19h 4y ago
> you have no choice than to pay for the public system You can very much opt out from the "public system" in Germany. I'm privately insured.
- rvnx 4y ago
  Interesting, thank you for sharing. I didn't know. (I assumed it was like France, where it's also mandatory at 7.30%+1.30% (in some regions))
  - int_19h 4y ago
    German healthcare system is really interesting, and I wonder if it should be a model for US more so than Canada. Not even because there are some inherent advantages, but because it would be an easier sell politically. Even the "public" part isn't really state-run, but rather a bunch of heavily regulated but still independent non-profits - some territorial, some industrial, some specific to (particularly large) employees.
- OtomotO 4y ago
  You can't in Austria - you can additionally get a private insurance, but it's by no means mandatory. Although I pay most of my urgent stuff in cash, and get it back later (not everything), because otherwise I have to wait 3 months + for a simple scan :/
  - Akronymus 4y ago
    As much as I love it here, such mandatory things is something I HATE. Like Public health insurance being mandated, or the GIS.

tlss 4y ago

Discussion about US taxation often omit: - the state & local taxes (can be as high as 12-15%) - social security (6.2%, tapers off after 150k) - medicare (2% generally) - net investment income tax (3.8%) - different tax treatments of short and long term capital gains Sure, if you just look at the federal rate, the US tax rate does seem a lot lower... VAT are generally higher in Europe though. Even in the "high sales tax" areas in the US, you'd typically get ~10% compared with 22% in Europe.

cactus2093 4y ago

The tech salaries you see discussed in the US are in jobs that also cover healthcare, so we don't pay out of pocket each month for health insurance. And these jobs include "unlimited vacation", however most people don't take more than about 4 weeks a year.

OtomotO 4y ago
central Europe here: You have to take the vacation! You can take a few weeks in the new year, but not everything and you have to consume them. Why "have to"? Because it's by law forbidden to bully employees into taking money instead of going on vacation. To never have to deal with this, most employers are very strict wrt vacation days :)
grepLeigh 4y ago
When I worked for US companies that paid employee health insurance premiums, my family's premiums appeared on my W2 as taxable income. Only my own premium was "covered" in a way that did not increase my tax burden.
- mercutio2 4y ago
  My guess is you may have misread your W2. Health insurance (for dumb, path dependent, historical reasons) for individuals and their families are not taxable, haven't been since WW2. What you may have seen is the AMA line item that just tells you how much your employer spent on your healthcare. This is a weird attempt to get people to realize how much their employers are paying (much more than the premiums people generally think of as covering their health insurance). If your employer happened to pay you more than the maximum allowable cost per employee, then your employer had to pay a 40% excise tax on the amount above the limit, but even then, it wouldn't be taxable to you. The roll out of this tax was delayed several times, it may have been repealed, I wasn't paying attention during the pandemic.
Thorrez 4y ago
FAMGA don't offer unlimited vacation: https://www.levels.fyi/benefits/ https://www.levels.fyi/benefits/

deleted 4y ago

[deleted]

irrational 4y ago

Even the vacation thing depends. As an American, I just finished a six week paid sabbatical. I also get 10 paid holidays. And I get another paid day that I can use as a floating holiday. And I get 8 hours of vacation each paycheck, up to 400 hours of which can rollover from year to year. And we get a paid week off in the summer. And we get every Friday as a paid vacation day in the summer (between labor day and Memorial Day). And every five years a six week sabbatical, as I already mentioned.

Ma8ee 4y ago
And you would say that is typical for American employees?
- irrational 4y ago
  Well, it's typical for the tens of thousands of employees at the company I work for. I have zero idea how other large companies structure their vacation time.