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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 inc
by 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 agoIf 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 agoI 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.