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Comment by onlyrealcuzzo | Hacker News Reader

There's some truth to this, but the bigger issue is that we've been paying A LOT in taxes for A LONG time and because larger and larger portions of that are going to pensions, people are starting to second guess every expense.

The good news - form my perspective - is that the GROWTH in the percentage of the workforce living off pensions is slowing dramatically and is now under REAL growth, which means working folks might feel like life is getting better again.

The reason people have complained that life hasn't gotten better for workers over the last 20 years is because nearly all growth has gone to more people being retired and the 0.1%.

If you keep the same growth, but the number of people retiring slows, there's a little more wiggle room with the pie.

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I moved from Australia to the USA (be careful who you swipe on dating apps) and went from paying 50% tax to 15% tax for basically the same job with basically the same quality of life. Tax in America is outrageously low which is no doubt why it cant balance its budget (though I approve of cutting government spending aswell).

Counterpoint: I’m in the US and my effective income tax rate is in the mid-40s, with my marginal rate over 50%. And I’m not in one of the few states with the highest state income taxes.

Admittedly I live in Texas (no state income tax) but where do you pay 40%? California?

25(federal)+8(social security)+5(state) is a common combination. That's 38%.

God forbid you live in NYC and it can gonna to 42%

Social security is 6.2% and is capped (you only pay social security taxes on a max income of $168,600). So if your income is 168,600 you pay $10,453 in social security taxes.

And if your income is $1,000,000 you still only pay $10,453 in social security tax.

$176,100 this year, and you should also include Medicare which is 1.45% and has the same cap. That does mean a base 7.65% federal tax rate for most W-2 earners. But when you work out the math on the effective tax rates for income tax (not payroll) it takes a lot to hit 25% as your effective federal income tax rate.

Around $350,000 gets you to a 24.8% effective federal income tax rate if you're single and only take the standard deductible, $700k if married. That puts you in the top 3% and 1%, respectively, of incomes in the US these days.

But that gets reduced when you include things like tax advantaged retirement accounts, various tax credits, dependents, paying for health insurance, possibly being able to itemize (more likely at those incomes than the US median income). So really you have to be making something like $400k-500 as a single person to hit 25%, and $800k+ for a married person.

A single W-2 earner making $1 million has a 33.49% effective federal tax rate (OASDI, Medicare, Income) taking only the standard deductible and doing nothing else to lower their taxable income (no tax advantaged accounts, not spending enough in categories that allow itemization, etc.). A single non-W-2 earner (has to pay the employer part of payroll taxes) has an effective rate of 34.84%.

If they're married the rates are 29.62% (W-2) and 30.97% (non-W-2), under the same assumption that they do not do anything to qualify for either reduced taxable income or any kind of rebate or credit.

Most people don't make $1 million, and those that do have ways to reduce their tax burden quite a bit without much trouble.

EDIT: Small modifications to the numbers above, they were off by about 0.4% to 0.5%.

The highest federal bracket is 37%, the highest state bracket in the US is California at 13.3%, Medicare at 2.9% if you're self employed, NIIT caps out at 3.8% - so even earning well into seven plus figures, with punitive NIIT, only puts you at a max of 47% marginal. Social security taxes stop long before the brackets kick in.

NYC has combined local and state top marginal rates of 14.776%, to go up to 48.476%.

I call BS on marginal rates exceeding 50%

Edit: even the new 2024 California payroll tax cap lift and mental health tax on seven figure incomes put it at 49.1%. Marginal rates that high don't exist in the US. Even then that requires paying payroll taxes and NIIT on the same income, which I'm pretty sure is impossible.

Thanks for the correction- I did some math and my marginal rate is something like 46%, which, while it’s indeed not over 50%, still is pretty discouraging when weighing whether it’s worth putting in enough effort to get another raise.

A quick back of the envelope calculation shows that an income of $1 million gets you an effective tax rate in the mid 40s in California.

AGI: $1000k Federal Income Tax: $322k California State Income Tax: $102k FICA Taxes: $32k Total tax: $456k

Compared to say Germany, where for the same income you would be paying over 50% in taxes. So I think you're doing very well.

"Tax in America is outrageously low which is no doubt why it cant balance its budget"

Neither can France, which redistributes over 50 per cent of its GDP.

The hunger for public monies will eventually outrun any feasible taxation system.

In US, employer pays their share of social security + medicare taxes, which is about 7.6%. If you are self-employed, you need to pay both the employee and the employer side (about 15.2% taxes, mandatory).

When we briefly had a balanced budget (kinda, if you squint just the right way) we had 1990s tax levels and a major economic boom.

We’ve since had two major rounds of tax cuts by republicans, so a balanced budget isn’t feasible even in booms and when we’re not deficit spending on two stupid wars. And now we’ve got all the interest on the debt from those tax cuts and wars to worry about.

If only anyone could have predicted this. Oh wait, everyone who knew anything about taxation policy did.

> same quality of life

What is your bill when an ambulance brings you in? When you have a legal problem at your workplace? What will be your pension? How is the mass transit system? What do you pay for child care, how is your school, how safe is your neighborhood, how do the number of murders in your area compare?

Taxes aren't the problem.

How do I know? Because my parents earning ~1000 USD per month each living in Poland have higher standard of living than most Americans. Despite paying ~30% taxes.

You have to add up what the taxes pay for in the calculation. Free healthcare, free university education, good public transport, low inequality (= low crime). All of that adds up to higher standard of living achievable with pretty shitty earnings.

Oh and before you blame it on military spending - we spend higher% of GDP on military than USA. Russia is a shitty neighbor, we have to.

American problems are exactly the opposite of what Americans think they are. You are in dire need of some social democracy.

Lack of civic pride and a lack of belief in even the possibility of effective government means that the US -- and many countries like it have a) ineffective civil service and b) ineffective government.

Going at it with a chainsaw isn't going to help.

> Free healthcare, free university education, good public transport, low inequality

And I think these are all difficult things to do well and make money, as in doing a good job in healthcare, education, etc. is not really profitable. So, they are areas for government involvement.

That's an interesting perspective, that could be used as an argument by both camps. You say more social democracy, someone else might say, more social cohesion due to shared cultural background and low immigration.

Social democracy is orthogonal to immigration policy.

You can have welfare state with close or open borders and anything in between, and you can have libertarian state with close or open borders.

For the last few years most EU countries have been going towards pretty strict immigration policy but not towards libertarianism.

Also Poland is not a good example (it's been accepting A LOT of immigration since ~2014 - more than average in EU). But that argument gets pretty detailed very quickly so unless you want to go into it - I'll leave that alone).

Comparing a mostly homogenous 312km^2 country to an extremely diverse 9 million km^2 USA doesn't seem like a strong point to me. Regarding healthcare though, I would love to see it subsidized for the working person who neither qualifies for Medicaid or their employer's health insurance.

Is Canada or Sweden a better comparison then? Poland was just the easiest example for me (cause I live here). It's not unique nor the best at these things.

The idea that USA's got it right when most of the world does it differently (and with better results adjusting for cost/effect) always amazes me.

The country has been growing and people getting rich taxes are not the issue that’s just Republican propaganda

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