[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.