[cm2012]

At $500k per year salary, in NYC and SF, your overall tax burden is about 50% (including federal, state, city, sales and property tax).

So really if you save half your money, you are only saving $125k per year.

[dmoy]

35% effective, 50% marginal.

You take home more like $325k+. Assuming we're talking MFJ with a family

[cm2012]

Once you add in payroll tax, sales tax (10% of most purchases) and property tax (you pay indirectly even if you rent) and you get right around 50% in NYC. I have lived this and calced this many times lol.

[bgnn]

Interesting to include the sales tax. Makes sense I guess. Where I live in Europe it's like 45% income tax + 21% sales tax (more like 75% on fuel) + 5% wealth tax.

[lotsofpulp]

It is not 10% on most purchases. All the largest purchases one makes are almost always not subject to sales tax. Land, money (debt), equities, healthcare, education, insurance, medicine, and groceries (unprepared foods) in almost all states.

And 10% is a high sales tax rate, most jurisdictions are ~7%.

[dmoy]

Also, even if you did hypothetically spend 100% of your money, and all of it was taxed at 10%, with a 50% effective income tax rate you'd be having a 55% overall effective tax rate - the money taxed for income isn't also taxed for sales.

So you can't add tax rates like that.