[pedrosorio]

"high earners" - this thread starts with someone asking why people earning $250k would care about $20k in taxes and the person you are replying to is talking about tax/income in Europe, not marginal tax rate

- 37% federal requires $510k income (after $12k personal exemption and probably $20k retirement savings)

- 13.3% state in California requires $1M income

- Social security is included in FICA and does not count towards the marginal rate for high earners (you pay no social security tax on income above $137k)

- Local taxes?

[justchilly]

The rate is exceptionally high for earners making a fraction of that. Responses in caps.

- 37% federal requires $510k income (after $12k personal exemption and probably $20k retirement savings). YES BUT ITS 35% ABOVE $207k

- 13.3% state in California requires $1M income. YES BUT IT'S 9.3% ABOVE $57k, and 10.3% ABOVE $295k

- Social security is included in FICA and does not count towards the marginal rate for high earners (you pay no social security tax on income above $137k). THERE IS NO CAP ON THE EMPLOYEE PORTION MEDICARE TAX. PLUS NOT ALL OF THEM ARE IN FICA. THERE ARE BOTH FEDERAL (IN FICA) AND STATE INSURANCE TAXES IN CALIFORNIA FOR EXAMPLE.

- Local taxes? SF HAS A PAYROLL TAX OF 1.5% FOR EXAMPLE.

[muti]

Why compare marginal rates? plugging 250k USD and 211k Euro into California/France tax calculators.

California effective tax rate: 36% France effective tax rate: 48%

Using a different calculator with $19000 into 401k and the California effective tax drops to 32%

https://us.icalculator.info/salary-calculator/california.htm... https://www.icalculator.info/france.html

[justchilly]

The 36% US rate doesn't include Payroll Tax, Social Security, or healthcare (premiums paid by both employer and employee, additional out of pocket by employee). The 48% France rate doesn't include Employer Social Security Contribution - which is significant but includes a pension etc. In essence a person making 211k Euro is getting paid a lot more than someone making $250k USD because of that pension alone (i.e. its more like someone making ~$280k USD, which would be a US combined rate of more like 40%, before payroll tax, etc etc)

401k is not tax free, it's tax deferred. You still pay tax, just when you cash out.

[reissbaker]

"Payroll Tax" isn't a tax, it's a mechanism for paying taxes by witholding tax from a paycheck. Which payroll taxes are you referring to when you claim that the CA effective tax rate for someone making 250k USD is higher than the equivalent in France?

Personally, by far my largest tax is income tax (which is far lower in CA than France for my level of income). Everything else is basically meaningless in comparison.

"Healthcare" also isn't a particularly strong case for the scenario you're proposing. If you're making $250k, you've probably got pretty good employer sponsored health insurance. Personally I pay nothing for a fairly good plan with low deductibles and copays. Health insurance in the US sucks for the unemployed and for low-income workers, but it's not at all bad for high earners.

401k taxation is also much more nuanced than you're making it out to be: it's taxed on withdrawal, at the rate you're withdrawing it. If you're retired — which is when you'd withdraw — your other income is probably zero, so your 401k is taxed in a very low bracket since it's your only income, and you're only withdrawing as much as you need to spend — as opposed to income earlier in life, where you're trying to make much more than you spend in order to build up savings. So while it's not exactly tax-free, it's extremely low tax generally. Presumably any other money you're relying on at that point you'd structure as long-term capital gains, which are also taxed at a low rate.

[pedrosorio]

SF tax is paid by the employer. If we want to compare total employer costs for a given net salary, most of Europe is going to look much more expensive than California (see sibling comment).