8% of income is significant for almost everyone. It could be easy for someone living on a lot less to assume that a marginal 20k doesn't matter to "rich people", but lifestyle inflation and regional cost of living differences should be considered.
So, yeah, i can't really imagine being angry that you're being asked to contribute back to the society. Especially when you make 250k.
Marginal rate for high earners includes: 37% federal. 13.3% state, plus FICA, social security, local taxes, etc. not to mention employer payroll tax and insurance premiums that are essentially passed on to employees but baked into tax in Europe).
Taxes are significantly higher in California than Europe for high earners (like the people leaving SF). There seems to be a major misconception about this even among Americans. Take France for example. Uses a simliar marginal rate system but caps out at 48%. https://taxsummaries.pwc.com/france/individual/taxes-on-pers...
- 37% federal requires $510k income (after $12k personal exemption and probably $20k retirement savings)
- 13.3% state in California requires $1M income
- Social security is included in FICA and does not count towards the marginal rate for high earners (you pay no social security tax on income above $137k)
- Local taxes?
- 37% federal requires $510k income (after $12k personal exemption and probably $20k retirement savings). YES BUT ITS 35% ABOVE $207k
- 13.3% state in California requires $1M income. YES BUT IT'S 9.3% ABOVE $57k, and 10.3% ABOVE $295k
- Social security is included in FICA and does not count towards the marginal rate for high earners (you pay no social security tax on income above $137k). THERE IS NO CAP ON THE EMPLOYEE PORTION MEDICARE TAX. PLUS NOT ALL OF THEM ARE IN FICA. THERE ARE BOTH FEDERAL (IN FICA) AND STATE INSURANCE TAXES IN CALIFORNIA FOR EXAMPLE.
- Local taxes? SF HAS A PAYROLL TAX OF 1.5% FOR EXAMPLE.
California effective tax rate: 36% France effective tax rate: 48%
Using a different calculator with $19000 into 401k and the California effective tax drops to 32%
https://us.icalculator.info/salary-calculator/california.htm... https://www.icalculator.info/france.html
401k is not tax free, it's tax deferred. You still pay tax, just when you cash out.
Personally, by far my largest tax is income tax (which is far lower in CA than France for my level of income). Everything else is basically meaningless in comparison.
"Healthcare" also isn't a particularly strong case for the scenario you're proposing. If you're making $250k, you've probably got pretty good employer sponsored health insurance. Personally I pay nothing for a fairly good plan with low deductibles and copays. Health insurance in the US sucks for the unemployed and for low-income workers, but it's not at all bad for high earners.
401k taxation is also much more nuanced than you're making it out to be: it's taxed on withdrawal, at the rate you're withdrawing it. If you're retired — which is when you'd withdraw — your other income is probably zero, so your 401k is taxed in a very low bracket since it's your only income, and you're only withdrawing as much as you need to spend — as opposed to income earlier in life, where you're trying to make much more than you spend in order to build up savings. So while it's not exactly tax-free, it's extremely low tax generally. Presumably any other money you're relying on at that point you'd structure as long-term capital gains, which are also taxed at a low rate.
The average home price in The Bay is $1.3M. Because of prop 13, most owners aren't paying tax on that much, but most renters are paying pretty close (most units are relatively new stock). This comes out to $23,400 a year in taxes per house/condo. SF median salary is $96k.
Obviously the average person making $96k ($67k after income taxes) isn't paying $23k in property tax, but I think it helps give an idea at how big of an expense this is to most renters...
The other difference is that as individual you almost get nothing for your taxes. Childcare, college education, health care, pensions, everything is private and something you or your employer has to pay.
In Europe paying taxes feels better since in many countries you actually lot of this stuff for free in an exchange from the taxes you pay.
"asked to contribute back to the society" is a generalization. how much should people be asked to give back? Similarly, even if a rate was fair, isn't it understandable that someone might prefer to pay less in taxes? We aren't talking about tax evasion, rather considering regional differences in taxation as part of the cost benefit analysis of moving. I imagine many in california share your beliefs and feel they are giving back a fair share of their labor. but it feels you are advocating for avoiding the conversation, or perhaps too quick to dismiss them as selfish, which seems to be less productive than understanding why others behave differently.