If I was to be reincarnated as a random person in a given country, I wouldn't pick the US though. Even as a skilled worker who can decide where to work, I prefer some European countries for healthcare, vacations and culture. That being said, I feel Europe is declining and it feels the US could become a better choice in the near future.
Healthcare and vacations in the US are often reasonable for the developed world if you are, e.g., a highly-paid tech worker or other elite worker or, in some jurisdictions, a public sector worker (especially one with many years in, for vacations)
For the other, oh, 80% of the US working population, though, that's not true.
To put it into perspective, in Germany you might make 4k/month as a highly educated, highly skilled worker with years of experience. Even if you work remote (most don't) you won't be able to find a decent small house even in the middle of nowhere below 500k.
I recently visited the US and haven't been happier to be a EU citizen in a long time, tbh.
Going by levels FYI, this would put you in the 95th percentile, the equivalent in NYC would be $400,000. Which is nuts combined with your 20k/yr living expenses. When did you get your apartment, 2009?
He said he made 80k Euros ($84.5k) and save 60k euros from that. Where do you get 140k+?
I budget for ⅓ off the top, living in NYC (this is an overestimate, but common practice) for a post-tax income of $100k. High income geographies are correlated with high tax rates in the U.S., too.
Anyways, all this to say that U.S. post-tax-post-benefits income is not wildly different from the E.U. Maybe the main difference is that you can work as a freelancer, expense everything, and effectively opt-out of health insurance, and take home more salary.
But if you're salaried and in tech in the top quartile of the labor market, post-tax savings is pretty much the same in western EU vs U.S. There's no 10x difference in wages, (excluding equity performance, which is not a tax/benefits policy issue).
In general, E.U. citizens I know who have come to the U.S. do it because the businesses here are more interesting and have more upside (i.e. the aforementioned equity upside component). If they're making bigger heaps of money, it's because of startup equity comp, not because of tax or benefits policies.
> But if you're salaried and in tech in the top quartile of the labor market, post-tax savings is pretty much the same in western EU vs U.S. There's no 10x difference in wages, (excluding equity performance, which is not a tax/benefits policy issue).
As someone who's worked in top companies in Germany and the US, I feel confident enough to weigh in on this. Top earners might make 200k TC in Berlin, but engineers at this caliber will earn 500k+ in NYC. And no, rent and tipping in restaurants does not take up that 300k difference.
> If they're making bigger heaps of money, it's because of startup equity comp, not because of tax or benefits policies.
They're making more money because American companies pay more money, because they make more money, they have access to more capital, they hire in a more competitive market.
- 350k is like 200k net in CA
- 200k is ~110k net in Germany
- ~90k post-tax difference
- Germany: 25 days PTO min
- Meta: 25-30 days PTO min
- Google: 20 days PTO min
Considering COL differences, you'd probably save 40-50k more in the US than Germany with these numbers. Maybe it's not significant enough to lose the EU lifestyle bonuses but it's also not nothing.
That's insanely high post-tax salary for Germany. Most aren't making that before-tax. You're an exceptionably rare circumstance that's far from the norm.
As a freelancer, you make around 800-1000$ a day working for bigger German companies, and the bar to become one is not very high from my experience on both sides of the table. For internal employees the ceiling is at around 120k for senior engineers, above that you need to go into middle management territory or be an EM equivalent.
On top of that, tech emerging as a big industry which forms a big part of the whole economic output of a country, has led to Europe losing out to US. Although only China through thier protectionism has been safe from that.
You can see this in the commentary about UK politics, where they don't have money to fund NHS and NHS wages haven't grown which has bogged down their healthcare system. Most of the manufacturing ecosystem is completely degraded. Productivity is at a complete toss as well, as they are not even able to build high speed rail well now, which for a social net country like UK should be of paramount importance.
To combat this, they have increased taxation, either through freezing slabs or moving down tax slabs. This penalises people in high wage professions and it leads to loss of competitiveness.
We can't build high speed rail either -- we can't even keep our low-speed rail running well -- and our answer to expensive healthcare is typically just "let them die, we can replace them" (immigration too, except we don't have to give our immigrants anything, just wink and pretend we hate them).
At the end of the day no society has it all figured out yet, but I'd love to live in a place with social services and a less hostile democracy so that all the citizens can work together to figure out next steps, instead of being dragged kicking and screaming by the rich. It's just a more collectivist mindset, not necessarily better or more right in any way.
My whole point was how these issues are less of an issue for US, again comparing with UK
US has better age demographic distribution than UK
The net tax burden on an average UK person is way higher compared to US while having worse average wages. Quick googling shows per capita income tax collected in US is $15K, while in UK it is $21K
GDP per capita of UK is $46K compared to US's 70K
If even after having high taxes, a country is having problem funding social services, then that's a big issue as the high taxes are meant to take care of that. US doesn't have this issue as taxes being lower, people can use the money not spent on tax on funding the social care things for themselves.
Also, overall US is still an attractive place for high earners so it will keep on attracting people from those segments which will boost its tax revenues and lead to decline of Europe. As while western Europe might be still a good place for people on median wages or below, USA might be much better for people on the other end
I can believe that. Japan's even worse off, wonder what they're gonna do...
> The net tax burden on an average UK person is way higher compared to US while having worse average wages. Quick googling shows per capita income tax collected in US is $15K, while in UK it is $21K
It's a bit trickier than that, because some of the same services (like healthcare) are still paid by the typical consumer in the US, it just doesn't show up in their taxes. $6k/year might actually just cover the premiums for a small family (what you pay the insurer before you use any services). Using that healthcare would be way more expensive.
I think a fairer comparison would be discretionary income (disposable income minus cost of living expenses like housing, healthcare, food, education), etc. Unfortunately that data isn't easy to find, and definitions differ, but without considering all of those, it's not really apples-to-apples just to look at taxation rates.
The average person is more affected by "how much money do I have left to spend after the essentials" than "am I paying the government or a private company for these essentials".
This is not true anywhere in the US. The lowest premiums are ~$400 per person per month for bronze level insurance.
Lowest premiums for a family of four would be ~$2k per month plus annual deductible of $5k to $10k plus annual out of pocket maximum of ~$10k to $17k (legal limit).
At least until the end of 2024, insurance premiums are capped via subsidies (either paid directly, or as tax credits). The computation of the cap is extremely complex, but basically: you do not pay more than 8.3% of your household AGI for your state's 2nd most expensive silver-level insurance plan.
This is not widely talked about. It was a part of the ACA, but there was a salary cap somewhere near 100k/yr. The cap was removed during the COVID19 pandemic, and this currently runs to the end of 2024.
I used to pay $1300/month for my wife and I (in our late 50s); I currently pay $440/month (annual income approx $120k).
I see the full $30k+ in annual premiums that my employer plus I am paying in my W-2 (box 12 code DD), which is money that could have been cash compensation.
Europe faces three big issues: demographic crisis, energy/resources dependency, and security vulnerability. US on the other hand will have good demographic outlook for most of this century, it is energy (including renewables) and resources rich, and separated by oceans from anyone who can threaten it.
High speed rail? Non-factor in a bigger picture.
Tax and wealth distribution needs a fundamental rethink going into the next few decades - I really don't have high hopes that the current approaches will work. As you say, they are predicated on high growth scenarios which western nations are no longer experiencing at a macro level.
It is not because of welfare that there are less startups in Europe and it is not because of welfare that the big companies in Europe prefer to be more conservative with their spending on R&D. It's cultural. It's people being more financially conservative and risk averse.
I'm a relatively well paid software engineer in the UK, and I don't recognise this at all. I would be very happy to be taxed more to have a better health system. I wouldn't see this as being penalised, but something I'd vote for.
I have plenty of disposable income; if I had a bit less I'd probably spend less on buying expensive tech gadgets from American companies, investing in international shares or taking foreign holidays. It would be better for the country if that cash was diverted towards the NHS. I think overall it would make the country more prosperous. A sick workforce is an inefficient workforce.
Having a bit less cash would not make me less keen to start a company or change employer for more cash. In fact it would probably do the opposite.
We do have the money to fund the NHS. Successive Conservative governments have made the choice to defund the NHS, along with public health, and social care. And they did all of this on top of Brexit.
That only leaves you with immigrants from beyond the EU. Most of those who have any skills are going to try to get into the US. The ones that can't are probably going to try and get residency / citizenship in canada and get in via a TN visa.
Europe is left with the remainder, and unskilled migrants from cultures which frankly have a much harder time integrating into a western one. Over the long term it's a pretty dire situation.
The birth rate in the US is 1.64, the EU average is 1.53. So this is almost equally true for the US, a country historically built on the backs of immigrants.
Neither can the US with social security, pensions and 401ks. All ponzi schemes created on infinite growth with the future generation paying off the last. The rate of pension bailouts by the Feds has been increasing even now.
- heatlhcare isn't what it used to be. Sure, it's free but it can take months to see some doctors, or even a dentist.
- retirement: the pension system isn't good. Most people will get less than 1.5K a month, and not before 64. The effects of the various pension reforms aren't visible yet but they will increase old people poverty.
- safety: this is political and people hold strong opinions on this, but my feeling is that poverty is on the rise, there are more and more unemployed young refugees...
More speculatively, I think Europe lacks natural resources and this is going to bite us more than the US.
> The eurozone economy grew about 6% over the past 15 years, measured in dollars, compared with 82% for the U.S., according to International Monetary Fund data. That has left the average EU country poorer per head than every U.S. state except Idaho and Mississippi, according to a report this month by the European Centre for International Political Economy, a Brussels-based independent think tank. If the current trend continues, by 2035 the gap between economic output per capita in the U.S. and EU will be as large as that between Japan and Ecuador today, the report said.
> The European Union now accounts for about 18% of all global consumption spending, compared with 28% for America. Fifteen years ago, the EU and the U.S. each represented about a quarter of that total.
> Adjusted for inflation and purchasing power, wages have declined by about 3% since 2019 in Germany, by 3.5% in Italy and Spain and by 6% in Greece. Real wages in the U.S. have increased by about 6% over the same period, according to OECD data.
Keep in mind a lot of this is exchange rates. If you look at GDP PPP, while falling slightly behind, the EU has mostly kept up with the US: https://data.worldbank.org/indicator/NY.GDP.MKTP.PP.KD?locat...
Now nominal value is more important on a global influence scale so the usual figures still mean a lot, but it's way more nuanced than most peopl think.