[seanmcdirmid]

Could we stop talking about top marginal income tax rates as if graduated income taxation wasn't a thing? You will pay less taxes in California than Mississippi or Alabama if you are poor.

Even if you are a single person in California making $400k/year (which I would call pretty rich!), you are only paying 8.38% of your income in state tax (you don't even hit the 13.3% bracket until a million dollars or so?). In total, you are paying 39.22% of your income in taxes (including federal and payroll). As a baseline, if you are in Texas which doesn't have state income tax, you are paying around 31% for the same income.

[bpt3]

The OP of this thread wants to keep spending the same and says that taxing the rich is the solution to our budget woes, so that's why the top marginal rates are relevant, and most state income taxes aren't as progressive as the ones in CA.

Your example of a CA resident who is making $400k is paying a marginal rate of 35% at the federal level and 10.30% at the state level (not 8.38%), which is above the EU average.

[seanmcdirmid]

> and most state income taxes aren't as progressive as the ones in CA.

That's why poor wind up paying more in flat tax states, it is simply WAI.

Marginal rates don't matter as much as how much you actually pay. On paper, CA has a top rate of 12.3%...on income over 720k dollars. It exists, but it doesn't seem like a thing we should ponder too much.

States only have so much power in setting tax rates, given that people are somewhat mobile. California being overpopulated for so long gave them some latitude here, but honestly income inequality isn't going to be handled at any level below federal.

But the point about Europe is right, but only in the sense that Europeans don't pay nearly as much in income taxes as most Americans think they do.

[bpt3]

> But the point about Europe is right, but only in the sense that Europeans don't pay nearly as much in income taxes as most Americans think they do.

Why do you say this? Middle class Europeans pay significantly higher taxes than middle class Americans.

[seanmcdirmid]

If we go by total tax burden (including VAT, sales tax, property tax, income tax):

https://taxpolicycenter.org/briefing-book/how-do-us-taxes-co...

Denmark is the highest at 45%, compared to America's 27%. Switzerland, the only European country I've lived in, is just a hair above the USA at 28/29%. UK is only a few points above that, while France is just below Denmark. So I guess it really depends?

[bpt3]

Yes, it depends on the country. but the European average is well above the US.

Also, the US has a more progressive federal income tax code than Europe (or every other developed country), so the tax burden in the US is carried more by the upper class than it is in those other countries, resulting in the average middle class American paying significantly lower taxes than a peer in Europe.

[acdha]

Most of that difference disappears when you consider insurance premiums and retirement, however. I compared a few countries when a Danish mentioned that they weren’t really seeing a huge difference and you have to be in the top few percentiles for high American healthcare costs not to cancel out the tax savings, and by their account it was a far less stressful process to get care as well.

[seanmcdirmid]

You've got to compute the entire package. One reason Switzerland comes in around the USA is that they require health insurance and retirement to be funded by the user (mandatory, this system is what Obama/RomneyCare was actually based off of). Denmark uses taxes instead, so their rate looks higher. You can't just make broad assumptions that taxation is for the same thing.