Quote:
Originally Posted by RainMaker
A single person making $60k a year, the tax wedge on just income is 32%.
Now throw in property tax (average $2,300 a year)
Now throw in sales tax.
Then we have to factor in things we don't actually get in this country compared to those others.
Throw in health insurance. Premium for an average person is $400/month or $4800 a year. That doesn't include your co-insurance or co-pays.
Now if you went to college, on average you will have close to $40,000 in loans when you leave (not to mention what you spent to go). Average student loan payment is $400/month so another $4,800 a year.
So for the best case scenario where you have absolutely no need for a doctor and live in a state with no sales taxes of any kind while somehow avoiding all government fees, you'd be at 45%. Realistically over 50% since you'll need medical care and pay government taxes/fees.
We actually pay a lot in taxes when you factor in that we have to pay exorbitant amounts for education and health care that are mostly free in those other countries. We just do a better job of making it seem like we don't.
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No one pays 32% in Federal income tax. If you are single, you pay this:
10% on the first 10K, 12% on 10-39K, 22% on 39-82.5K and 24% on 82-150K
If you are married and file together, you pay:
10% on the first 20K, 12% on 20-77K, 22% on 77-165K and 24% on 165-315K
Then, you take out deductions. Even if you do a standard deduction only, that's 12K off for individuals and 24K off for married. So, let's say you are single and make $75K a year. You can deduct your 410K investments and heath care, but let's keep it simple and just take off the standard deduction (63K taxable). Your fed taxes are $8,500 and your social security/medicare tax is $5,738 (7.65% of 75K). Your state taxes are a % of federal, around $1,800 in this case. So your total fed+SS/Med+state = $16,038 (21%). But that's saying you don't deduct any for health care, 401K or any itemized deductions. For most individuals, it would be closer to 18% after deductions.
Now, let's say you are married and make $140K combined. After the standard, you are at 116K. Your fed taxes are $17,237 and your social security is $8,240 (max) and your medicare is $2,030 (1.45% of gross). Your state taxes are a % of federal and about $3,600. So your total fed+SS/Med+state = $31,107 (22%). But that's saying you don't deduct any for health care, 401K or any itemized deductions. Again, most families would be closer to 18-20% at that range.
I didn't count sales tax because I wasn't counting the VAT tax in Europe. You can also deduct property tax off your return as well. Most families with a 401K, employer provided health care, that pay for day care (deductible) and use the standard (or own a home and itemize) probably pay in the 17-19% rate for fed+state+SS+medicare+property tax. That's a far cry from what Europe pays.