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Why higher-income workers in California may get surprised by tax hike in 2024

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Re: Why higher-income workers in California may get surprised by tax hike in 2024

#11

Post by s1artibartfast »

personomas wrote: post #9
grecy wrote: post #4

Earlier quoted context omitted.

A decade or so ago I read an article titled something like "If Americans knew what Europeans get for their tax dollars, they (Americans) would riot in the streets". My tin foil hat theory as to why I can't find it is because it was removed in hopes of preventing those riots. It's really insane to see Americans pay the same tax as Europeans (and Canadians, and Australians) but get so, so much less for that money.

Taxes are far higher in Europe than in America. The additional "Social" benefits in my opinion are trivial in comparison with the differences in taxes. Progressive income taxes increase at a far higher rate in Europe. Plus Europe has other forms of taxes: far higher sales taxes (VAT), corporate taxes, and other forms of taxes like buying-property tax (Grunderwerbsteuer).

It is actually a lot closer than you think if you add up all the different taxes for each country.

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#12

Post by gamblor956 »

pfannkuchen wrote: post #8
gamblor956 wrote: post #6

Earlier quoted context omitted.

It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). This isn't even remotely true. In France, the highest marginal rate kicks in at EUR 160k (approximately $170k). To get the same marginal tax rate in California, you would need to be making approximately $350k (approximately EUR 330k), or more than twice as much. (Note tha…

They do qualify if they suddenly become poor, which is the point of the safety net. > $350k… extremely wealthy In many parts of California this is someone who can buy a just okay house with a long mortgage. Have we redefined the word wealthy?

350k is 99th percentile in terms of income, so I'm not the one redfining "wealthy".

If you can't afford a nice house with 350k/year, move a mile or two away from your upper class enclave to the middle class neighborhood and live like a king. (Per Nerdwallet, 350k/year is enough to qualify for a mortgage for a $1.35 million property with 20% down. I live in a nice part of LA and places here cost significantly less than 1.35 million.)

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#13

Post by ffgjgf1 »

pfannkuchen wrote: post #8
gamblor956 wrote: post #6

Earlier quoted context omitted.

It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). This isn't even remotely true. In France, the highest marginal rate kicks in at EUR 160k (approximately $170k). To get the same marginal tax rate in California, you would need to be making approximately $350k (approximately EUR 330k), or more than twice as much. (Note tha…

They do qualify if they suddenly become poor, which is the point of the safety net. > $350k… extremely wealthy In many parts of California this is someone who can buy a just okay house with a long mortgage. Have we redefined the word wealthy?

> someone who can buy a just okay house with a long mortgage.

Look up housing prices in some major European cities (generally way less affordable that in most of the US if adjusted by income).

In London, Paris or Munich prices are about as bad as in SF or NY yet median income is considerably lower (also good luck getting a fixed 30 year mortgage, so there is also considerably more risk even if you can afford it)

> suddenly become poor

If you earn over €350k per year you really have to make some very poor financial decisions for that to happen. Besides from changing illnesses/accidents etc. but you would still most likely end up in a much better position financially if you saved that extra 10% you pay in taxes or went with a private insurance option.

Of course healthcare is probably a different matter.

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#14

Post by anonzzzies »

gamblor956 wrote: post #6
Reubend wrote: post #3

Earlier quoted context omitted.

That makes California the state with the highest marginal tax rate. It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). My opinion: High tax rates in Europe are the "price" of free (or very cheap) healthcare, cheap university education, and a strong social welfare net. But Californians at the high end are paying almost the…

It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). This isn't even remotely true. In France, the highest marginal rate kicks in at EUR 160k (approximately $170k). To get the same marginal tax rate in California, you would need to be making approximately $350k (approximately EUR 330k), or more than twice as much. (Note tha…

> and for the most part have chosen to have the bulk of their medical treatment in the U.S.

Citation? Because that is very rare, even for the very rich.

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#15

Post by dukeyukey »

personomas wrote: post #9
grecy wrote: post #4

Earlier quoted context omitted.

A decade or so ago I read an article titled something like "If Americans knew what Europeans get for their tax dollars, they (Americans) would riot in the streets". My tin foil hat theory as to why I can't find it is because it was removed in hopes of preventing those riots. It's really insane to see Americans pay the same tax as Europeans (and Canadians, and Australians) but get so, so much less for that money.

Taxes are far higher in Europe than in America. The additional "Social" benefits in my opinion are trivial in comparison with the differences in taxes. Progressive income taxes increase at a far higher rate in Europe. Plus Europe has other forms of taxes: far higher sales taxes (VAT), corporate taxes, and other forms of taxes like buying-property tax (Grunderwerbsteuer).

Worth pointing out that lots of Europe doesn't really have property taxes, something that is common in the US.

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#16

Post by lesuorac »

gamblor956 wrote: post #12
pfannkuchen wrote: post #8

Earlier quoted context omitted.

They do qualify if they suddenly become poor, which is the point of the safety net. > $350k… extremely wealthy In many parts of California this is someone who can buy a just okay house with a long mortgage. Have we redefined the word wealthy?

350k is 99th percentile in terms of income, so I'm not the one redfining "wealthy". If you can't afford a nice house with 350k/year, move a mile or two away from your upper class enclave to the middle class neighborhood and live like a king. (Per Nerdwallet, 350k/year is enough to qualify for a mortgage for a $1.35 million property with 20% down. I live in a nice part of LA and places here cost significantly less tha…

It's not. 350k is 3% for the entire USA [1]. For somewhere like California if your _household_ isn't making $1M you're not 1% [2]. Even in the poorest state (West Virginia) if you lived alone then you're not even a 1%-er.

People really do think of themselves as at the top when they're not. You're very good but not the top.

[1]: https://en.wikipedia.org/wiki/Income_in_the_United_States

[2]: https://www.visualcapitalist.com/mapped-the-top-1-percent-in...

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#17

Post by refurb »

Reubend wrote: post #3
hnburnsy wrote: post #2

From Bogleheads... >This also effectively increases the maximum marginal tax rate for CA high earners. The maximum marginal rate is now: 37% Federal + 2.35% Medicare + 13.3% CA Income + 1.1% CA SDI = 53.75%

That makes California the state with the highest marginal tax rate. It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). My opinion: High tax rates in Europe are the "price" of free (or very cheap) healthcare, cheap university education, and a strong social welfare net. But Californians at the high end are paying almost the…

European marginal tax rates that high kick in at a way lower income, resulting in a far higher tax burden on the middle class.

France is 41% at 78k EUR. UK is 40% at 37k GBP, Netherlands is 50% at 73k EUR.

Then add on top the VAT which is high teens.

You’d need to earn over $200,000 to get to a >40% marginal rate in CA, with the standard deduction and SALT it’s probably closer to $300,000.

Europe taxes the middle class at those higher rates to raise enough income for all those social programs. You couldn’t fund those sort of social programs in CA relying solely on taxes the top 5%

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#18

Post by nly »

Reubend wrote: post #3
hnburnsy wrote: post #2

From Bogleheads... >This also effectively increases the maximum marginal tax rate for CA high earners. The maximum marginal rate is now: 37% Federal + 2.35% Medicare + 13.3% CA Income + 1.1% CA SDI = 53.75%

That makes California the state with the highest marginal tax rate. It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). My opinion: High tax rates in Europe are the "price" of free (or very cheap) healthcare, cheap university education, and a strong social welfare net. But Californians at the high end are paying almost the…

Highest marginal in the UK is technically 47%, but for certain bands and life situations it can be as high as 80% (loss of certain benefits phased in at certain income thresholds)

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#19

Post by meetingthrower »

personomas wrote: post #9
grecy wrote: post #4

Earlier quoted context omitted.

A decade or so ago I read an article titled something like "If Americans knew what Europeans get for their tax dollars, they (Americans) would riot in the streets". My tin foil hat theory as to why I can't find it is because it was removed in hopes of preventing those riots. It's really insane to see Americans pay the same tax as Europeans (and Canadians, and Australians) but get so, so much less for that money.

Taxes are far higher in Europe than in America. The additional "Social" benefits in my opinion are trivial in comparison with the differences in taxes. Progressive income taxes increase at a far higher rate in Europe. Plus Europe has other forms of taxes: far higher sales taxes (VAT), corporate taxes, and other forms of taxes like buying-property tax (Grunderwerbsteuer).

Your perspective depends on your income, obviously. If you are a truly middle class income (say $70K which is median household income in US), the benefits you get are HUGE relative to the taxes you pay. Not to include the insecurity of being one health event away from bankruptcy...

Re: Why higher-income workers in California may get surprised by tax hike in 2024

#20

Post by refurb »

grecy wrote: post #4
Reubend wrote: post #3

Earlier quoted context omitted.

That makes California the state with the highest marginal tax rate. It also puts California very close to the European countries with the highest margin tax rates (for instance, Spain and France have similar rates). My opinion: High tax rates in Europe are the "price" of free (or very cheap) healthcare, cheap university education, and a strong social welfare net. But Californians at the high end are paying almost the…

A decade or so ago I read an article titled something like "If Americans knew what Europeans get for their tax dollars, they (Americans) would riot in the streets". My tin foil hat theory as to why I can't find it is because it was removed in hopes of preventing those riots. It's really insane to see Americans pay the same tax as Europeans (and Canadians, and Australians) but get so, so much less for that money.

Americans don’t pay the same tax as most Europeans. It’s far lower.
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