Since moving to the UK I've wanted to do a breakdown of taxes I paid in Colorado vs UK. Even though taxes are higher here and VAT is 20% I'm still convinced I have more income at the end of the year then I would in CO.
Some things I've noticed -
I surrendered a good chunk of my paycheck to health insurance in the states that's already folded into income tax in UK
Car insurance in UK is much cheaper because it only needs to cover damage to the car instead of hospital bills
Council tax (property tax) is significantly cheaper here. For instance, a £1,000,000 home in manchester might pay £2200-£2700 per year in council tax, while a $1,000,000 home in my old neighborhood in Denver is paying $6000 per year
Gasoline is more expensive here, but driving distances are not as high so I think that washes out even
Fruit, vegetables and meat is definitely cheaper here then anywhere in CO
Internet, cable, and phone plans are significantly cheaper here
> Car insurance in UK is much cheaper because it only needs to cover damage to the car instead of hospital bills
UK car insurance includes medical cover! It's just not usually called on quite so much and it's cheaper if it is. At one point there was a lot of fraudulent whiplash claims. Maybe the US has a medical expenses insurance fraud problem?
> Council tax (property tax) is significantly cheaper here.
Council tax is a really bizarre system that is only loosely linked to property, and the UK would benefit from introducing proper US style property taxation.
> Fruit, vegetables and meat is definitely cheaper here then anywhere in CO
One of those things that we UKans don't appreciate - food is both cheap and pretty good compared to lots of Europe and especially the much praised Scandinavia. Whereas the US is the land of cheap and plentiful processed food.
> Internet, cable, and phone plans are significantly cheaper here
The UK has a working if slightly artificial market here, where the US basically doesn't have competition.
“ Maybe the US has a medical expenses insurance fraud problem?”
It has a medical expenses problem! ER visits are thousands of dollars even if nothing is wrong! There is a reason coverage is expensive — if it’s ever used, the costs are catastrophic
This is a bit cheating, as CO is significantly more expensive than other roughly equal areas. Something about the altitude magically makes everything more expensive. My mother's car insurance tripled moving to CO, despite the car being paid off and no accidents on record.
California may be high tax for high income people, but for most middle and low income folks, it is actually pretty cheap. CA's top marginal income tax rate is actually a temporary provision which may or may not be extended when it expires, depending on who the voters elect.
> driving away the 1% of households that pay 50% of the taxes in California, worsening the situation for everyone.
One big problem is that over the decades the economy has shifted more to services and less to sales of physical goods, so sales tax revenue has declined disproportionately. We should have a sales tax on services to offset reductions in income tax, which would be much better for creating steady revenue.
>this is the only place we’ve lived where it would add an additional $2,000+/month expense to keep our family’s healthcare while unemployed.
That's inaccurate. If your income is low, you can get subsidized coverage through Affordable Care Act (aka Obamacare), up to 100%.
>government retirement plans like 401(k)s
401k is not a "government plan", it is an employer-sponsored plan. There is no "retirement age" associated with a 401k or an IRA, for that matter. You are making a pretty big mistake here by not maxing out your available opportunities to defer taxes. The tax you pay when you retire on such contributions is based on where you live at the time, not where you lived when you earned the money.
>Lastly, we won’t allow ourselves to be audited without our knowledge by the IRS by using a cloud-based personal finance app that could be subpoenaed behind our backs if they continue pushing for new powers.
Paranoid maybe? Audits are a necessary component of our voluntary reporting system, and you have nothing to fear if you pay what you legitimately owe. You will absolutely be notified if you are being audited, and get a chance to provide accurate information. Far more people cheat on their taxes than are unfairly dunned by the IRS.
Thanks for the comment. I wasn't aware of that point on the high top marginal tax rate, I can only comment that it's been in place for a long time (since I moved here) and I don't get any sense personally that it will be expired when California is constantly looking for ways to increase taxes.
Re. healthcare, from past people I've hired and let go and friends who've been unemployed, perhaps as they're all in tech with higher incomes, it seems pretty accurate. I remember one employee had to setup Cobra to continue keeping their healthcare plan, and it was actually more expensive than what the company was paying for some reason! Terrible system in general...
Re. 401(k), I understand these are privately managed accounts, but the rules around them are dictated by the government, and can be changed as many countries are doing in general. And there are penalties for withdrawing before 59.5years, which I would call the "retirement age" on these plans. I completely get the math of deferring taxes on your investments, and employer contributions, but I prefer to find other tax strategies that lock in tax savings today and also have more freedom around what we do with our money, these plans are pretty restrictive and I suspect will only get more restrictive in future as I mention in the blog.
I could be wrong, but this is one of many examples I've heard about since moving here, the general theme being they want more powers to get our data and audit us. Since moving here, our experience is the IRS is way more aggressive and invasive with tax filings and penalties than we ever experienced in the UK too. And don't even get me started on the exit tax, which for some reason kicks in after 8 years if you're on a green card, requires you to list every asset you have worldwide, and then pay capital gains on it, if you ever decide to leave the USA one day!
> And there are penalties for withdrawing before 59.5years, which I would call the "retirement age" on these plans.
Sort of, but in practice not really if you're smart about it and plan a bit in advance.
If you want to retire early and access 401(k) or traditional IRA funds, you can do so without incurring additional taxes or penalties. The strategy is called a "Roth conversion ladder". It takes advantage of the fact that you can always withdraw Roth principal (not investment returns) before any retirement age penalty-free (as long as those funds have been in the Roth for at least five years).
The general outline is that you roll over some of your 401(k) or IRA funds into a Roth IRA every year. This causes those funds to be taxed as regular income tax, but your income is almost certainly going to be dramatically lower than during your earning years, putting you in a much lower tax bracket. This entire amount that was rolled over is now considered principal, and in five years you can use it penalty-free per the Roth rules. Every year you roll over what you expect to need in five years. Once you bridge that first five years (perhaps with preexisting Roth funds), you now have a recurring source of income through your Roth.
Yes, this is some additional complication and requires some planning. But it's not particularly onerous. GP is right that you're likely making a pretty big mistake, paying 40%–50% tax rates (on the marginal top end of your income) in order to avoid some restrictions that are—in most cases—pretty easily bypassed. That's not to say there aren't some very legitimate reasons for keeping money in accounts that don't come with restrictions, but paying 40%—50% in taxes for that privilege makes those situations comparatively rare.
I will absolutely agree that the fact that you need to know these sorts of "tricks" is one of many indefensible parts of our retirement system. And of course, there's always the risk of the rules changing out from under you. But cases where that actually happens in a way that causes significant impact are uncommon in practice.
Thanks for the info - funnily enough after I posted this I spoke to a tax strategist this morning who also laid out a bunch of things we could do to reduce our tax bill. The problem as you say, is this type of person isn't accessible to most people, and expensive!
/r/personalfinance is a phenomenal resource where this kind of info is freely available, and the advice therein more or less obviates the need for tax strategists and financial advisors for what I'd estimate is something like 80% of people.
There's even crazier options like the Mega Backdoor which require working at a company with an excellent benefits package. When combined with a normal Roth backdoor and an HSA, they allow a high earner to set aside $22,500 in a traditional 401(k) and $50,000 in Roth accounts, for $72,500 in tax-advantaged savings every year. With the information from my previous comment, this means that every year you do this equates to $50,000/yr you can spend in early retirement completely tax- and penalty-free
It's absolutely insane to me and also completely indefensible that simple access to this level of tax-avoidance is available to people based on their employer. Someone who earns the same level of income but at a different employer without a 401(k) only has the opportunity to set aside $6,500 (solely in a Roth IRA). And even doing that requires knowing about the backdoor "trick".
The title of the piece is California versus UK, but lots of the complaints seem to be US versus UK.
Cobra is federal and was always a hack. We Americans need a complete healthcare rewrite, but there isn’t enough political will to get it done and we couldn’t even agree on what/how to change.
Cobra shifts all of the cost to the newly-unemployed employee, whereas previously the employer and employee shared the insurance premium cost and the employer side was tax deductible. It’s only more expensive than while employed because the person can’t deduct it from taxes, while the company could.
The parent of your comment mentioned Obamacare plans. Those plans (and Medicaid) require that you change your insurance policy, so depending on availability you may be able to keep your primary healthcare provider. The out-of-pocket costs vary depending on what you qualify for, but the change in employment allows you to move to a higher deductible plan (cheaper if you conserve your healthcare visits).
All US safety net programs assume the end user is a liar and/or thief so it is your responsibility to prove your need. The UK (and Germany and Japan) got to redesign their social contract in the rubble of WW2; the US didn’t. And WW2 was the reason we ended up with so much employer-sponsored healthcare —- which means being unemployed comes with losing healthcare. We would have far better job creation if employees were more willing to leave companies quickly rather than searching for the next job first or calculating how much Cobra runway they can afford.
re: CA marginal tax rates, IIUC they're "temporary" but in place through 2030 at least, and have already been extended once.
I am a bleeding heart liberal which doesn't come through in the below, but think this is one example of 'nothing as permanent as a temporary government measure'
Before 2012 the top CA tax bracket was the 9.3% one. CA was still one of the most progressive states (tax burden for mid-income folks and retirees is not bad, though cost of living is high), which means the state revenue is sensitive to the income of high-income Californians. Some of those incomes weren't doing so well in 2009-2011 with the GFC impact on tech, finance, maybe entertainment, execs living in the state, everyone's stock portfolios, etc.
Oh no, the schools are going to lose funding and the children won't be able to learn! Proposition 30 was proposed and raised sales tax for 4 years, and income tax for 7, via the creation of the 10.3-12.3 brackets; a 1M 1% surtax already existed. This was retroactive, raising taxes for the whole calendar year where it was on the November ballot.
Jerry Brown campaigned for it and stressed this was a temporary measure to get through these times, and it passed.
Four years later, in 2016... Did you know that if you don't act NOW then in a couple years there is going to be a big TAX CUT exclusively for rich Californians? Don't let this grave injustice happen, we need to fund schools so the children can learn! (and this time some other stuff like Medi-Cal and pay down the debt a bit).
Next year, CA will lift the cap on the 1.1% CA employee payroll tax. I haven't followed this too close but think that means that californians making over $1M will be paying a 14.4% state marginal tax rate. Not that there's much sympathy for that group.
In 2025, the individual Tax Cuts and Jobs Act brackets will expire, with the top bracket going back up to 39.6%. Though I think Californians will be able to deduct their state taxes on the federal side once again (would not be surprised for that cap to return though).
I'm not necessarily opposed to these tax rates. I just wish having marginal rates over 50% would get us some form of universal healthcare.
Thanks for all the info - I would add Prop C to the list and almost added it as an example to the blog, which was meant to solve the homeless problem in San Francisco by essentially doubling the amount of money spent per homeless person from $40k/yr to $80k/yr by adding another tax for companies inside the city.
Not only has the homeless problem gotten worse since they introduced it, its also driven a few companies out of the city like Stripe, and in my opinion its the policies, not the funding which is the issue.
These are all examples of the government raising taxes, expanding, and not being accountable for any results that the increased spend was meant to bring
> One big problem is that over the decades the economy has shifted more to services and less to sales of physical goods, so sales tax revenue has declined disproportionately.
This is also the reason why the rich won't leave places with unusually good services even if they're taxed hard for the privilege of living there. See London, NYC, etc. Taxes in those places could and should be higher. A little tangential perhaps, but we don't adequately measure the value amenities and services have for people, so we disadvantage ourselves in conversations about tax.
"One big problem is that over the decades the economy has shifted more to services and less to sales of physical goods, so sales tax revenue has declined disproportionately."
What? Do they really not tax services? I thought that was part of sales tax everywhere.
As a Brit this article is laughable. People are literally dying in the UK because so called wonderful 'free' public healthcare doesn't have the ambulances to send to them. Tons of potholes everywhere too. Outside London and major cities, public transport is non-existent to very poor.
I know us Brits like to complain, but when I drove there last year the roads were all brand new and fantastic compared to what we have over here in California!
I did think to add some caveats about the NHS, my sister works there so I'm aware of all the issues there. However, I would rather choose that system, over the one here, which is extremely expensive, and doesn't even look after you if you lose your insurance for whatever reason.
I think overall, I would say the UK has a lot of challenges, and if I was still living there, I would actually feel ok to pay more taxes to support those services, because I'd be using them.
As opposed to here, where I pay almost the same rate of taxes, and feel like I get nothing in return!
They moved strokes to a 'Category 2' condition that requires an ambulance to arrive in 45 minutes. Having a father who had a stroke early in his life, this sickens me. My trust in the NHS is minimal and seeing how good the healthcare is in California I will be going private when I return. It is night and day, and my private insurance is less than my NI contributions were in the UK. If I message my doctor on my healthcares mobile application I could get an appointment within 2 hours. If I want a blood test I can go to the local office at Stanford and get one within 30 minutes, with my results sent to the healthcare app by the time I get home. It's just so so much better, the NHS really has failed when I look at it from here.
The NHS needed a chunk of money put into it during COVID and afterwards, but so much was taken by "track and trace" and overt fraud (Michelle Mone etc) that it's struggling with budget and staff. The "£350m a week for the NHS" promised at Brexit never really arrived.
The NHS is the sixth largest organisation by employee-count in the world. At some point I think we have to address the elephant in the room that throwing money at it won't fix it, and we should look to other European countries that have a hybrid public/private system to help push efficiency and cost savings. There's so much inefficiency in the NHS it is mind-boggling and I firmly believe it would be addressed if they started to have to compete. The issue with private healthcare in the UK is they don't have the specialists they need to operate real hospitals - if you have complications in a private hospital they take you to an NHS hospital.
The NHS is chronically under-funded compared with other western European countries on a per-capita basis. It is one of the most efficient systems in the world in terms of £ in and outcomes out.
The underfunding is the cause of the inefficiencies that you have probably seen. It literally does not have enough staff, buildings, beds, mri machines etc to operate and is constantly fire-fighting.
Yes, it's a big employer, and? It provides health care to 70 million people, of course it is. Why do you think competition would improve things? the US spends more than 2x as much per capita.
Britain gets worse the longer a Tory government is in control, but should recover gig when that ends.
I notice there are now more potholes, more "please don't abuse our staff" signs, more strikes, more working-to-rule, more dirt, more delays, more homeless.
I think the article is correct if you consider it an average of the last 10 years or so.
Do you live in UK or US? I used to live in the country too - and was able to take regular trains in less than an hour from my house to London.
Compare here, we have a Caltrain that only runs once an hour during the day, is slow, and to get to city requires switching to the Bart, which is also slow, and so filthy too, its much easier just to drive into the city, avoiding the potholes, and hoping your car doesn't get broken into when you park late downtown...
UK has it way better without any cherry picking :)
You seem to be comparing UK to California. The parent seems to be comparing the UK to the best systems in the world.
Also worth pointing out that BART was originally planned to be a large loop around the entire South Bay, but the affluent suburbs in the lower peninsula rejected the plan to expand it to their neighborhoods.
UK public transport in general may be lacking, especially in towns and rural areas, but London public transport (which the author was referring to) is definitely world class.
Great idea to compare "what you pay" vs "what you get" between countries. I'd love to see further analysis downstream: How much revenue per capita each country collects, and how it's allocated. (IIRC, the conventional wisdom is that wealthy Americans are good at legally avoiding taxes, and a disproportionate amount of America's tax money goes to an outsized military and a cost-ineffective healthcare system.)
Thanks, I did actually start work on getting that data but as the blog was already very long, and it would take hours to find and analyse the data, I decided against it. Maybe a future blog!
CA taxes get you the privilege to say you're progressive, and that you're not like that other guy. For everything else, use your Mastercard.
We've been spending some time in Turkey since the pandemic and despite all the corruption, we experienced clean streets (swept daily, hardly rocket science), rebuilt roads, rebuilt sidewalks, new bike lanes, maintained gardens/parks, improved broadband, virtually no homelessness. They even tried cleaning the temporary sea snot problem, which seemed a bit like trying to boil the ocean. But A for effort, I thought.
I love CA but also quite heart broken that in over a decade, I've watched San Francisco get more and more expensive, with taxes also going up, and homelessness get more and more prevalent, only to find out that in 2019 they were not letting homeless people with drug issues or dogs in shelters, and complaining about how homeless people "don't wanna go to the shelters." Well, have the operators not seen a single homeless person? I bet having a dog and drug issues is the greatest predictor of homelessness. So the homeless shelter is basically a shelter that doesn't allow any homeless in.
The tax table only focuses on income tax, but the UK derives a substantial portion of its national budget from VAT, which the US lacks (yes, I know about sales tax — not the same in rates or effect).
This does not consider costs. Example: US spends more per person on Medicare and Medicaid than the UK spends per person on NHS. Medicare and Medicaid are not exactly known for lavish spending.
Many expensive services are labor intensive and labor costs more. Other costs are driven by political factors — which are not caused by corporate interest but are instead wildly popular with voters (example: NIMBY-ism, Prop 13).
Even the dreaded tax filing business exists because there is a substantial political base that hates taxes — and having an awful and infuriating UI/UX to the tax system makes people hate taxes more. The fact that you have to fill out all those forms is a feature, not a bug.
The author makes several really good points about how so much of our taxes that are levied and paid in good faith go towards enriching already-rich entities (healthcare, universities, the defense industry).
It's disappointing that the take-away is "join me in having a better way to avoid paying your taxes."
I agreed with the overwhelming majority of this article.
However one serious ommision is the fact that NO ONE who makes $650,000/yr pays $295,000 in income taxes in the US.
That byzantine tax structure is basically in place to insure this.
Personally, I'm a lefty, and I will be the first in line to say that the government of California is massively corrupt. Government is a monopoly, and as such it needs major public review and restrictions in place to prevent corruption. We don't have those review processes, and we don't have those restrictions.
A message to the author: If you think you're getting a bad deal for your taxes in California, try out a red state for size, where you get basically nothing for your tax dollars.
I'm not sure I agree with that statement just looking at our own tax bills...
Also, my point was I feel that I get nothing for my taxes in California already!
I will give California public libraries which I rediscovered recently after Covid, that's probably the only service I appreciate with my tax dollars currently!
Also there is no law preventing publicly funded ambulances. The reason they do not exist in some places is because voters (and this is local voters, as police/fire funding is very local) have chosen not to raise taxes to pay for it.
This is an understandable decision because running an ambulance service is expensive and cities/counties would rather have someone else pay for at least a part of it. Here is a nice explanation from the City of Long Beach:
https://www.longbeach.gov/finance/services-and-permits/ambul...
Even if I take you at face value and say you paid an effective tax rate of 43.92% on an income of USD 650k+ (or USD 279.5k+ which I still contend nobody does, unless you do some kind of shady math including all your property taxes and sales taxes and all kinds of nonsense), can you really say with a straight face that people making USD 650k+ a year, year after year are part of the middle class?
Who is in the upper class? Just the thousand or so billionaires?
I'm confused what you're getting at. First you say 40% income tax isn't a thing for the wealthy then you refute that this person who pays 40% income tax isn't wealthy? Their response was to say that they aren't part of the upper class, who we're saying are those who have enough wealth to protect most of their income from taxation
You might as well make yourself clearer & instead of saying the wealthy don't pay 40% taxes, just straight up say "dgildeh, you're a liar, you don't pay that much in taxes, post your tax records to prove yourself"
That's Fussellian upper-middle. Enough to send three kids to $70k/yr private boarding school and from there to an elite university, enough to have a sailing hobby, enough to take annual family ski trips in the Alps. But you're still working for a living, and can't retain a fancy lifestyle if you stop.
> But you're still working for a living, and can't retain a fancy lifestyle if you stop.
Personally, I’d say if you are a wage slave like me regardless of how much you earn, we can’t afford to have any children.
I can’t say you have not been warned. The signs have been there all along. Remember how much trouble HRC go in for just the title of the book, it takes a village. It is not your responsibility alone to make sure you have happy, healthy children who will become productive members of society later.
If you have zero income as soon as you stop working and waste your money on private school for your kids, I say it is in the same category as buying a yacht and a jet ski. Just incredibly dumb things you can’t afford. Can you imagine how much pain you will cause if you need to withdraw your kids from school if you have a stroke? Ffs stop sending kids to private schools!
We and our parents are getting older every day. How will we pay for our and our parents’ health care cost? I don’t have the courage to say just pull the plug if something happens to me and my end of life care costs more than USD 200k.
Don’t worry about the bigger picture of who will take care of society when we are older. Screw this society. In any case, can you really trust your kids to take care of you when you are old if you don’t have any savings of your own?
Instead of worrying about middle vs upper etc consider these things:
- that is all income and it really is taxed at the rates described, it is crushing the amount of tax I/we pay as wage earners
- CA (where those salaries exist) is really expensive, like $4500/mo for daycare, so despite having a high income it feels no higher than somebody making half as much elsewhere
- the truely wealthy derive their cash flow from investments which are taxed at half as much, or own businesses and deduct expenses to effecting 0%
So the effect is if you have high income you are inescapably taxed very high (and are ineligible for almost all govt inventories) resulting in an effectively much lower cash flow, meanwhile the wealthy have a lower effective tax burden for the same or higher standard of living.
Ideally, I’d like to see an end to all silly credits, deductions, and exemptions and things like that.
It is absurd to me that you would want to not pay taxes on your daycare expenses. I think the proper solution is for the state to offer free of cost (actually free of cost, no hidden charges) daycare for all children. This is just the tip of the iceberg though. We are just overly against supporting all parents. All children, regardless of income or assets, should have access to WIC and ideally we should increase WIC age to eighteen. We should remove income, assets, means testing from all entitlement programs.
> the truely wealthy derive their cash flow from investments which are taxed at half as much, or own businesses and deduct expenses to effecting 0%
The upper class doesn't work - it owns. Maybe some top executives of global corporations can be considered upper class, but usually most of their wealth comes from ownership of stock.
The problem isn’t that you are paying too much in taxes. Your taxes are fine. The problem is the super wealthy aren’t paying their share of taxes. Don’t get mad at me. Get mad at the top 0.01% and their cronies. Look at how carried interest died again in Congress.
Also, we can and should fix the tax system so any state income tax you pay reduces your federal income tax bill. So for example, in your case, the ten percent or so that you pay to California (or the flat four percent in case of Colorado) gets effectively paid back to you by the federal government (even if you choose standard deduction). This would immediately give you a little breathing room. This would also encourage states from artificially keeping their income tax low.
Ideally I’d like to see an end to all credits, deductions, and exemptions but I don’t see it happening so this is pretty much the best I can think of…
That and either California needs to repeal the idiotic prop 13 from 1978 that from what I understand keeps property taxes artificially low or we need to enact a federal property tax of about 7% (and effectively exempt the equivalent of a national median two bedroom unit per owner/co-owner). That’s a conversation for another day. For now let’s focus on federal income tax.
I don’t know how to solve this wealth tax problem.
Since you shared your withholding, let me share a metric that everyone in the US can agree on:
Divide line 24 by line 1a (not line 9!!!) and multiply it by 100. Forget about all the other things you pay. We paid under 16 percent in 2022 and under 22 percent in 2021. Do not include Medicare. Do not include state taxes. Just do plain simple math with the FIT. (You don’t need to share the final number here. It is just for you.)
> Lastly, we won’t allow ourselves to be audited without our knowledge by the IRS by using a cloud-based personal finance app that could be subpoenaed behind our backs if they continue pushing for new powers.
Driven to a great extent by the US (they made Switzerland, the last bastion of secret Nazi gold, hand over information on bank accounts of US nationals). But no government is going to tolerate large amounts of money disappearing beyond the visibility of taxation. And if you like public services, they have to be paid for like this.
>We need the basics that deliver true equality, as I experienced growing up in the UK: free healthcare, good public schools, and good public transport. Maybe even ban the private options like they banned
To be fair.
You picked California.
Chicago , NYC, DC and I'm sure one or two other American cities have functioning public transportation.
The other two issues will never ever be fixed. Tbh if your quality of life was so much better in the UK why'd give that up ?
Having lived in SF, London, Berlin, and now DC, I can tell you that DC's is totally subpar in comparison to any I encountered in Europe. Not only in the year that I've been there have there been multiple shootings on the subway in that time but I can't remember a single instance where I didn't see someone hopping the turnstile and the trains are quite slow (in terms of number of trains per hour).
Are you saying that DC was worse than SF? I find that hard to believe. SF has worse coverage, fewer trains and felt much more dangerous.
I was able to live in DC for 4 years without a car but with a bike and my walking shoes and found it a mostly happy experience. The trains could have been more frequent and some areas of the city had sparse coverage, but it was not so bad. Europe and NYC is a leap better of course.
Sounds like I missed a crime wave though. That’s a shame, I remember the metro system being safe and clean during the 2010’s.
It's functional, compared to most of the US where public transportation effectively doesn't exist.
I agree Europe is a step above, but to be fair European cities tend to be much more compact. Public transportation can't work well when things are spread out
works for other states too but the tax rates won’t be high enough for you to bother looking
If your plan is just earning a salary and saving then you’ll get taxed the highest, the government is literally telling you to do anything else. Risk is rewarded, transactional velocity within the economy is healthier for the economy than tax revenues and the government promotes this via the tax code.
One way to improve government services is to measure quality somehow like private corporations do. Then there is at least a number that can be optimized instead of just more or less spending. Subjectively as an expat Brit living in California I would say Medicare as provided by Kaiser Permanente is superior to my memories of the 1970s UK NHS.
One big difference, though, is in the US I believe you can file jointly if you are married and get roughly double the usual range for each tax bracket? That option isn't available in the UK and must surely make a huge difference with high income households.
Single Income Married families have some benefits, or if one party makes a lot less than the other. However there are other disadvantages in some cases; after my first wife got married to me, her financial aid went into the toilet. Even though I was making less than 50k a year myself (and paying enough in student loans/etc that we were barely making ends meet,) that income counted against her. [0]
[0] - Filing separately (as we did once we were separated before our divorce) had it's own disadvanatges; namely that I could no longer declare my student loan interest on my taxes.
Thanks both - I actually did put a paragraph about this in the blog then took it out as the blog was too long, there are definitely differences between married vs. single in US/UK, but I wanted to look more at the worst case scenario.
Most of my friends/colleagues are not aware that for at least single tax filers, the difference between UK/California is less than 5%, I think its assumed Europe is significantly higher, and that's not the case anymore as the US bureaucracy has grown!
If you take a look at the instructions for your 1040 there is a pie chart at the very end which shows where your taxes go. Take a look at page 108: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf
The UK's tax authority actually does send out individualized letters to taxpayers with a pie chart showing how much you paid in and where it was allocated. It was a pleasant surprise after immigrating from America.
And now we are at the point when one strong and courageous nation defending free world from neoHitler with sweat, tears and blood, while countries without adequate armies are trying to find weapons needed.
The key thing here is that Americans see all the stuff in the left hand column as “socialism”.
The author sees the relationship between the government providing all those services and a healthy functioning society. Americans do not… again, they see provision of community/common good social services as socialism.
Americans don’t see a direct line relationship between “socialism” and tent cities of homeless (though it’s true there is also a drug problem there).
In short, all the stuff that many other social democracies see as core to functioning society, the Americans…. speaking generally…. don’t want.
It’s worth looking at why the UK (and Germany and Japan) were able to provide these services at a reasonable cost while the US can’t.
All of those countries rebuilt their social contracts after WW2 ended. The US built the New Deal (which has mostly been dismantled and/or sabotaged since), but we haven’t really changed the social contract or updated most of our welfare / safety net systems for the modern age.
People who want those things simply don’t see how they fit into the current US social contract.
Americans are so dominated psychologically by elite propaganda that they fail to realize that America has this unique tax return torture system designed to extort fees from the people that go to the tax return industrial complex and a portion of that money gets paid back is kickbacks and bribes and fees or whatever to the Congress people that Ensure that the Byzantine tax system never goes away and only gets more complicated every year.. no other Nation on Earth has this tax return torture system and extortion device systematically applied across society
Some things I've noticed -