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A lot of people working in tech in California pay above 40% effective income tax rate with a top marginal tax rate of like 48%. So Europe income tax rates are n

by cactus2093 4y ago

A lot of people working in tech in California pay above 40% effective income tax rate with a top marginal tax rate of like 48%. So Europe income tax rates are not as much higher as you might think. The tax brackets in the US tend to be much progressive though, so for people earning lower salaries their taxes in the US are much lower.

samjmck 4y ago
To put this into perspective a little, Belgian income tax is 40% after 23000 euros (which is now 23k dollar) and 50% after 43000 euros. So the issue here is the middle and even lower class being hit with incredibly high taxes.
mercutio2 4y ago
A California family of two (no kids) making $400k, with no deductions, not even contributions to their retirement, will pay an effective 32% tax rate on all income. At $600k, it's 37% effective tax rate (again, with zero deductions). You have to make $817k, with zero deductions, before you'll pay 40% effective tax rate in California. None of this includes sales tax, which is 10-11% depending on municipality in California. Europe's lowest VAT is 17% in Luxembourg. It is not my impression that "a lot of people" in tech are making that much, even by the extreme standards of the Bay Area these days.
- cactus2093 4y ago
  If you count social security and medicaid taxes the $400k couple is paying 36% and the 600k couple is paying 40%. So yeah it's not the majority of people in the Bay Area paying 40% but if both spouses are working at big tech companies and they're more than a few years into their career then they will likely be somewhere in this range and paying close to 40%
  - mercutio2 4y ago
    I don't know how I managed to use a calculator that didn't include FICA, but for a single earner that barely changes the analysis. A single earner (again, with the unusual state of no deductions) has to make $690k to reach 40%. For a dual-high-income earner households I concede 40% effective isn't going to be uncommon.

samjmck 4y ago

To put this into perspective a little, Belgian income tax is 40% after 23000 euros (which is now 23k dollar) and 50% after 43000 euros. So the issue here is the middle and even lower class being hit with incredibly high taxes.

mercutio2 4y ago

A California family of two (no kids) making $400k, with no deductions, not even contributions to their retirement, will pay an effective 32% tax rate on all income. At $600k, it's 37% effective tax rate (again, with zero deductions). You have to make $817k, with zero deductions, before you'll pay 40% effective tax rate in California. None of this includes sales tax, which is 10-11% depending on municipality in California. Europe's lowest VAT is 17% in Luxembourg. It is not my impression that "a lot of people" in tech are making that much, even by the extreme standards of the Bay Area these days.

cactus2093 4y ago
If you count social security and medicaid taxes the $400k couple is paying 36% and the 600k couple is paying 40%. So yeah it's not the majority of people in the Bay Area paying 40% but if both spouses are working at big tech companies and they're more than a few years into their career then they will likely be somewhere in this range and paying close to 40%
- mercutio2 4y ago
  I don't know how I managed to use a calculator that didn't include FICA, but for a single earner that barely changes the analysis. A single earner (again, with the unusual state of no deductions) has to make $690k to reach 40%. For a dual-high-income earner households I concede 40% effective isn't going to be uncommon.