[symbolepro]

And to the "outsiders" from outside US, it should be written that 40-45 percent is taken away as taxes. So, if someone is making a total comp of 200k, it is basically 120k. This should be written in bold on this website.

Actually i would say, instead of having these charts which compare total comp, its better to have a survey on how much people save after rent, taxes, and basic living expenses (not including loans etc.)

[jldugger]

> it should be written that 40-45 percent is taken away as taxes. So, if someone is making a total comp of 200k, it is basically 120k.

Are you confident about this? My experience as a single guy in that total comp range is closer to 25 percent taxation. The marginal rate is that high, but only a small chunk of a 200k income is taxed at that rate. In fact, Social Security caps out before there. And if you're married, it's even lower.

But my impression was that Europeans are taxed at an even higher rate; is there some reason listing pretax salaries would be deceptively high?

[kajecounterhack]

> Are you confident about this? My experience as a single guy in that total comp range is closer to 25 percent taxation. The marginal rate is that high, but only a small chunk of a 200k income is taxed at that rate. In fact, Social Security caps out before there. And if you're married, it's even lower.

What state are you in? My experience is more similar to the parent post; bonuses which are part of your total comp get taxed slightly higher than base pay. After CA income tax, etc etc effective tax rate is easily 40%+.

[jldugger]

> What state are you in?

California.

> After CA income tax, etc etc effective tax rate is easily 40%+.

The marginal rate is that high yes. Pretty easy breakdown at 200k:

CA Disability: 0.00% (phased out at $114k) Social Security: 0.00% (phased out at $128k) Medicare/Medicaid: 2.35% California Tax: 9.30% Federal Tax: 32.00%

So that's around 40 percent of every _extra_ dollar, emphasis on "extra". The average rate rate is far lower, around 18% federal, 9% cali.

> My experience is more similar to the parent post; bonuses which are part of your total comp get taxed slightly higher than base pay.

Your experience with bonuses is misleading. They're taxed as normal income, but the withholding formulas for paychecks are calculated independently per paycheck, as if you earned that much every paycheck. So if you have one biweekly paycheck with a 15 percent of salary bonus, that's taxed as if you made 5x as much. End result: you are withheld as though in the top tax bracket for the bonus paycheck, and your refund will be larger than expected.

tl;dr: don't look at your pay stubs, look at the actual tax returns you file instead for effective tax rates.

[pedrosorio]

> bonuses which are part of your total comp get taxed slightly higher than base pay

This is incorrect. The taxes withheld when the bonus is paid may be different, but for annual tax calculation all that matters is the total income (bonus or not).

https://blog.turbotax.intuit.com/income-and-investments/bonu...

"Remember, taxes may be withheld from your bonus at a higher tax rate at payout, but when you file your taxes at tax time your actual tax rate is based on your total taxable income and overall actual tax rate (...) you may get some of the money withheld back in the form of a tax refund."

> After CA income tax, etc etc effective tax rate is easily 40%+.

For a sufficiently high income, sure. In 2018, a single person living in California with no deductions, no contribution to retirement accounts (401k, IRA) or HSA and earning $364k would pay $145,602 in federal+state+FICA taxes, which is 40% effective rate up to 4 significant digits:

https://smartasset.com/taxes/income-taxes#XFuV4Aoe9F

This is the worst case (high state income tax, no deductions, no pre-tax retirement contributions, single) - change any of those factors and you're paying less than 40% effective rate.

If I had to guess, very few people around the world will be shocked to learn that someone earning $364k in California will net only $220k after paying taxes. In most of Western Europe they'd be surprised your effective tax rate is so low while earning 20x the minimum wage.

[rco8786]

Where do you live that doesn’t have taxes? Also 40-45% is extremely high for the US. Perhaps you’re misunderstanding how marginal tax rates work?

[sl8r]

Some of these reported salaries would come close to that, if you include social security and medicare:

For a $500k income in CA

    29.59% Federal Income Tax
  + 10.48% CA Income Tax
  +  1.59% Social Security
  +  1.99% Medicate
  ----------------------------
  = 43.65% total tax rate.

(Source: https://smartasset.com/taxes/california-paycheck-calculator)

[Bahamut]

The California tax rate is off - you get taxed certain percentages up to a certain amount (progressive tax). The effective tax rate for $500k in California should be about 9.44% pre-deductions (should be effectively lower than this).

Should be roughly 42% pre-deductions/writeoffs.

...But in truth, if you're making around the $500k ballpark, you're doing pretty well financially.

[Cthulhu_]

People not understanding marginal tax need to get educated and not spread misinformation like claiming you pay nearly 45% taxes. You pay that on the top half of your income.

Also yes; just pay the tax, and then some. It helps everyone. If the country is sane in terms of politics of course, and doesn't have the military as its biggest expense. That makes it clear they're more concerned with international affairs than their own people.

[sl8r]

I mean... the parent post is right, the site I linked seems to be calculating CA state tax incorrectly.

But: 42% is the effective tax rate (not marginal, average). And this is pretty close to 45%. For a hypothetical person making $500k or more as regular income in CA (as many of the posted salaries above would be), they would indeed pay about $210k in taxes plus Medicare plus Social Security.

[pzh]

You forgot sales taxes, additional health insurance fees, and 401k contributions.

[bzbarsky]

40-45% is not extremely high for California for someone unmarried with a mid-6-figures income.

For lower income levels than that, or if you're married, or live in a state with lower state taxes, the numbers look much better.

[askafriend]

You forget that many of these compensation numbers include a large portion of equity that many people hold for 1yr to get long term capital gains tax of just 15%.

Many of these equity packages include components that can top 6 figures a year. $100k in equity every year for 4 years is not an unreasonable equity package for a mid-senior engineers (5+yrs exp).

[kajecounterhack]

> You forget that many of these compensation numbers include a large portion of equity that many people hold for 1yr to get long term capital gains tax of just 15%.

Actually for RSUs you are taxed at vest, so it's your pay tax rate (probably in the realm of 35%+). What's taxed at 15% after a year is any additional gain from vest time. So if you get 4 google stock at $1000 a piece, they sell 2 to cover your tax liability, refund you the difference between $2000 and .35*4000, and you get 2 stocks you've just paid full taxes on. If in a year they're worth $1200 a piece, you can pay additional taxes of only 15% on the $400 you just made by holding onto them.

[C1sc0cat]

That's brutal is the not any CGT allowance? Looks like we are getting an EMI option scheme her in the Uk and the EU.

This is the one where employees do not have to pay the income tax that would normally be charged on the market value of any shares or options granted to them.

If employees are given options under an approved EMI, they are only charged capital gains tax at 10% on the increase in value over what they pay for the shares (the option's 'exercise price'), so long as that price is at or above the market valuation of the shares on the date of granting the options.

[joshuamorton]

Options and rsus are different. I don't buy my rsus, the company just gives them to me, so I pay tax on any shares they give me, because they're income.

If I purchased them as options, different things would apply. But I'm happy paying tax on income of it means I get the shares for free.

The change in price if the shares is taxed as capital gains though.

[askafriend]

You’re right, thanks for jumping in and clarifying my hastily written comment!

Stock gain does account for a significant portion of comp the past couple of years though so it’s not a small thing.

Options (vs RSUs) also have slightly different mechanics.

[thedufer]

But the stock gain that accounts for a significant portion of comp is between grant and vest, and thus is still taxed at normal income tax rates.

Gains after vest can't really be counted as comp, since anyone else could have bought those same shares and made those same gains. That's just investment income; attributing it to your employer/employee relationship is silly.