Colleagues of mine in the US work a lot more hours as well. I think our effective spending power in Europe is much better just on that point as well.

> I used to think this (as a euro), then I met an American and he explained that he ended up better off in Europe on a "lower" salary because he hadn't considered the hidden costs of living in the USA.

This is going to be very situation dependent, but usually the math works out in favor of the US. The EU will generally, but not always, have higher taxes, lower salaries, and a lower total cost of living. However, the difference depends a lot on which region you're looking at. Of course, there are also going to be varying quality of life differences that can't be easily quantified, which is where many parts of the EU come out better.

> He claimed (though I'm certainly no expert) that you have to do your own taxes and set aside money for that; he also claimed that "sales tax" had local, state and federal taxes applied, so while it varies from state to state and city to city; it generally ends up being about 18-20%, which is in-line with VAT in most Euro countries.

He was likely self-employed. Income taxes in the US are almost always withheld by the employer. Sales tax does vary depending on the state and local government, but it looks like the maximum sales tax at the moment is a little over 10%.

> Though he said he couldn't imagine living without a car in the US, as it turns you "back into a child".

This is true in most areas. It's possible to live without a car in some of the larger cities, such as NYC and DC. However even then it's preferable to have one (which is also true from experience in Europe as well).

The big ones are healthcare, public transportation, and perhaps childcare (my understanding is that this varies a lot from country to country in the EU). Needing health insurance and a motor vehicle for transportation effectively functions as an additional tax on many people.

Consumption taxes in the US generally top out at around 10% (San Francisco's is currently 8.625%) which is noticeably below European VATs. Sales taxes also generally do not apply to services at all, and most places exempt certain basic necessities such as groceries.

Yeah, none of that is true. There is no federal sales tax, and sales tax in most places didn't ever come close to 10%, let alone 20%. In many states it's 0.

Filing your taxes is free. Maybe you can spend $30 if you want to use turbo tax to do it for you.

Any job with these salary differences provides great health care and benefits.

Cars exist in Europe, I know many software developers there that have them. Why people pretend nobody has them if beyond me. And just like in the US, the closer and more convenient to the city center you are the more expensive it is to live there. Cars are also not as costly of a burden as they are in Europe. Also, most European tech jobs are in cities (London, Amsterdam, Dublin) that have similar cost of living to US cities which you don't need a car in (SF, NYC, Seattle). So it's mostly a moot point anyway.

Finally, we get to a point where there is a REAL cost difference: taxes. The overall burden of taxes will be 10-20% lower in the US, which is a substantial difference as it's a percentage on gross, not an additional fixed fee like many of the above expenses.

If you want to pretend all of that justifies a 6 figure salary difference, more power to you. I've looked into making the move many many times with actual figures and it never even comes close to being close.

>He claimed (though I'm certainly no expert) that you have to do your own taxes and set aside money for that;

Unless you're a contractor, small-business owner, or some other sort of self-employed, no. Taxes are deducted automatically from your paycheck by your employer from every paycheck. At the end of the year you need to file a tax return, and you can do this yourself for free. But even most paid tax return services usually only cost ~$50-$150 for the average worker.

>he also claimed that "sales tax" had local, state and federal taxes applied, so while it varies from state to state and city to city; it generally ends up being about 18-20%, which is in-line with VAT in most Euro countries. And, as a general rule, a state with higher sales tax will usually have lower (or no) state income tax, and vice versa.

There is no federal sales tax in the US. It does vary from state to state, but it ranges from 0% to ~10%, nowhere near 20%.

>He made a lot of comments about certain mandatory insurances

The only mandatory insurances are car insurance (and even then it's only mandatory if you want to drive a car) and health insurance (and even that has only been mandatory since the ACA passed, and all the enforcement provisions of that have been gutted). The cost to an employee for decent health insurance is usually going to range from $0 a month to a several thousand a month, but the average is something like ~$700 a month for an individual to get coverage and ~$1,400 for family coverage.

Public transport outside of major cities does suck, but I don't think that's easily fixable. Something a lot of Europeans don't realize is that the US is way, way, way, way less dense than Europe. The US has 33.7 people per square km, the entire EU is 116.2 people per square km. public transit isn't really feasible because the costs to provide it go up almost exponentially with lower population density.

>I'm not sure, I don't know everything, but after talking with him I didn't feel bad for being a "poor euro" anymore, because while the absolute "amount" of money he earned was much greater, the amount that he could actually use was lower.

Even after accounting for things in Europe like free healthcare, the actual amount of spending power the typical American has is actually still far, far greater than that enjoyed by the typical European. The metric you can look at to see this is consumption: ~$38,000 per capita for the US in 2017, vs $28,000 for Switzerland, $23,000 for the UK, etc.: https://en.wikipedia.org/wiki/List_of_countries_by_household...

PPP and other factors make a one-to-one comparison difficult, but Americans have far more spending money left after taxes, and that combined with them making more money in general makes Americans far more wealthy. Especially in the software dev industry.

I've worked several years in in London, Paris and now the Northeastern USA, so I think I am in a position to draw some high-level conclusions. In a word, your friend is not wrong about there being hidden costs in the US. However, for many high-education jobs, American employers pay significantly more. In pure monetary terms, a software developer will be much better off in the US.

I think it's really hard to have this discussion without some hard numbers. Note that this is a simplified analysis. I am not accounting for the various deductibles (social security, etc.), state taxes etc. I have restricted the analysis to roughly-comparable cities, but it seems to hold at the national level as well.

Currency conversions are left as an exercise to the reader :)

====================================

Median salary for a senior developer

- Paris: 65k € (Paris) (n.b.: some sources say 45k €, but this does not match my experience)

- London: 90k £

- New York City: $160k

======================

Tax Brackets in France

Up to 10,225 € 0 %

From 10,226 € to 26,070 € 11 %

From 26,071 € to 74,545 € 30 %

From 74 546 € to 160,336 € 41 %

Above 160,336 € 45 %

==================================

Tax Brackets in the United Kingdom

Up to £12,570 0%

From £12,571 to £50,270 20%

From £50,271 to £150,000 40%

Above £150,000 45%

=================================

Tax Brackets in the United States

From $0 to $9,950 10%

From $9,951 to $40,525 $995 plus 12% of the amount over $9,950

From $40,526 to $86,375 $4,664 plus 22% of the amount over $40,525

From $86,376 to $164,925 $14,751 plus 24% of the amount over $86,375

From $164,926 to $209,425 $33,603 plus 32% of the amount over $164,925

From $209,426 to $523,600 $47,843 plus 35% of the amount over $209,425

Above $523,600.99 $157,804.25 plus 37% of the amount over $523,600

There are many reasons to pick one place to live over another, but it's very difficult to argue against the enormous economic advantage to working in the US, even with the "hidden costs".

With regards to health insurance in particular, it's important to point out that the quality of care on the upper end of the spectrum is far better than anything I've ever had access to in Europe. I pay $1.2k/month in health insurance and pay nothing out of pocket for: dental, vision, emergency care, ambulance transportation, extended stay in hospital, mental health services, etc. I have a $10 copay for all medications. Waiting times for appointments are on the order of single-digit days. If you make the median income for a senior software dev in NYC, that leaves you with about $145k.

Concerning cars, they are far more affordable here than in Europe, especially if you buy a reliable used car. I drive a 2000 Subaru Legacy with about 125k miles on it. It costs me about $850/year to insure. I pay about $100/month in gas, so let's round that up to $1,500 per annum. Last year, I spent $1,236.57 in maintenance & repairs. Total cost of ownership: approximately $3,600 per annum. If you make the median income for a senior software dev in NYC, that now leaves you with $141,400.

College education? It's wildly variable, but let's take the pessimistic case of sending your two children to an Ivy League school that costs $75k per year. Let's be even more conservative and factor in an additional $25k in non-tuition costs (room & board, meals, books, pocket money, etc.). That's a total of $800k for two BAs. Assuming you have twins who go to college at the same time, that leaves you with 18 years to accrue those savings, or about $45k/year. Taking the leftover salary, that leaves you with about $96k. For comparison, my education in an American "public Ivy" school cost about 36% of this figure, which would leave you with about $125 in gross annual income. There are tax deductions for tuition fees, and many scholarships available for good students.

It bears repeating that there are many good reasons to prefer living in Europe over the US. Economic analysis is not the only relevant analysis. But, it is very difficult to argue that the cost-of-living breaks even for the overwhelming majority of STEM jobs, or jobs requiring post-secondary education. If you have a college degree, you will almost certainly have more money in the United States than in the European Union, by a significant margin. There is a reason the Brain Drain exists.

Also I bet his healthcare costs were a lot higher in USA.

to simplify this statement: until you take into account that your taxes are used to provide important government services.

> … until you take into account everything covered by welfare states.

You mean the services that barely work half the time?

The salaries are lower before taxes though.

There ain't no welfare state on heaven or earth that makes enough of a difference for new grads to earn 14-18k yearly (before tax). Good afternoon from Spain.

Yes,

though you also have to look into details.

Like as far as I can tell the "actual" cost of living in the US diverges quite a bit from the "surface level" cost you might find when googling ad-hoc.

As far as I can tell this is because (but not limited to) factors like the health system being prone to having high hidden costs, or also small things like you being required to have a care in many metro areas or thinks you are "socially expected" to strive for like owning a house or a more expensive car.

I'm pretty sure similar things apply for other countries, too.