You are mistaken. Currently, the higher income you have here, the higher tax rate you have, where the highest tax rate on income sits at 47%, which you get hit by when your income is above 300K/year. People between 60K and 300K sits at 45%.
And then there are regional differences, someone in Andalucía don't pay the same amount of taxes as someone who lives in Catalunya for example, where the top tax rate is 50%.
Even taking into account other taxes we have, you still end up paying more in taxes the more you earn, unless you start engaging in schemes to lessen your tax burden, obviously. Although the social security is capped, so it does increase slower once you go beyond the cap, but it doesn't start regressing which your comment hinted at.
Edit: important to note that the tax rates are all marginal tax rates, maybe that was a bit unclear.
If/once you reach that point (+60K/year), you already live a above-average life, why not share some of that with others who aren't as good/lucky as yourself? Seems like a no-brainer to me, but I might be too European to really grasp the problem.
I wonder, have there been any studies/considerations for making rent tax-deductible for individuals? That would address this problem for example. There probably is a good reason for not doing it, but I wonder what it is.
Barcelona (and Madrid) are extreme examples though, not "average" by most measures. Take a look at houses/apartments just 30 minutes outside of Barcelona (not too familiar with Madrid) and it's way easier to find affordable places, and it's easy enough to get into the city with trains and buses.
Frankly, I don't even know what my gross earnings would be, simply because the number is irrelevant and only makes a bad mood. All I consider is net income. This way, I dont have to be sour about taxes....
It's not hard for tech workers to start hitting top rates similar or higher than that in the US if you're in a high tax state, but at 60k you're more likely to top out at 39%, but because the curve is so steep the average (actual percentage of income) tax is only something like 22%. That includes extras like social security and Medicare.
Living in a state without any income tax will further lower those numbers.
Sure, but how well are those without income supported in those states? Can they live a comfortable life even if they're unable to work? Can they go to the hospital and do life-saving surgeries without being in debt for the rest of their lives? Are there enough libraries and beyond-school activities everyone could use for free, regardless of income?
Once you hit those rates, I feel like you should stop thinking about how you can pay less in taxes, and figure out how you can support everyone else around you, otherwise what's the point of earning all that money in the first place?
In California someone on the median personal income of about $50k pays 18% income tax. In Spain (Madrid) someone on the median income of about €23k pays 19% income tax.
Double the median income and it's 27% in California and 27% in Spain
Four times median income and 33% California, 34% Spain
Taxes are the fees you pay for living in a nice society
Ignoring smaller tax brackets, income in the bracket of USD 48,500 to 102,900 is taxed at 41% with any higher earnings taxed at 45% [0].
On top of that we have 15% VAT on essentially everything we buy. Also, any "luxury" imported item, including all electronics, also has an additional substantial import tax on top of that, e.g. an iPhone is something like 9%.
It gets even worse though, if I want decent quality health care, education and security I have to pay for all of those privately. Between my wife and 2 small kids, we pay at least USD 10,200 extra each year, and that's not including occupational, speech and physio therapy my now 5-year old, but prematurely born, is needing at the moment.
An "advantage" for someone like me though is that a very large portion of our population is very poorly educated and thus cannot demand much of a salary, meaning that the domestic cleaner/child minder I employ is very affordable.
Just the other day someone pointed out that the middle class here might not get much for their taxes (as we're essentially subsidizing the majority who are poor such that they tend to pay nothing except VAT) but on the flip side we wouldn't have domestic workers and gardeners be as affordable.
[0]: https://www.sars.gov.za/tax-rates/income-tax/rates-of-tax-fo...
This is basically inviting your best and brightest to move to the US and other low tax countries.
Fun fact, Ireland has one of the most unequal distributions of income in the EU pre transfers/taxation, and one of the most equal distributions of income after taxes and transfers.
So this stuff sortof works.
More generally, taxation of wealth is generally a good idea, but it needs to be over as many countries as possible to avoid people just moving.
You can accomplish most of the same goals by taxing property, as that's most of global wealth and it's harder to move.
You also need to handle the extreme top of the distribution through some kind of taxation on stocks/investments but property tax gets you most of the way there.
If you're in tech, you'll want to move to California, where you'll end up paying around 50% marginal, which is much the same as lots of Western Europe. So yeah, you'll make more money but you won't get significantly lower tax rates.
Assuming your money comes via income and you are not doing anything exceptional to optimize taxes, you are around that 50% or so rate on incremental income nearly anywhere you’d be able to make such incomes in the western world. Normalize for things like health insurance and it’s really not worth even considering a move for tax purposes in most cases.
The US is known as low taxes, low services - but it’s really within about 5% for high earning professional workers compared to even most social democracies. It’s a decidedly high tax low services place to live.
The largest difference in taxes in the US vs rest of the developed world seems to be the high tax brackets start much earlier on the income scale. It’s much better (for taxes at least) to be in the US as a median wage earner and it’s usually not remotely close.
Where things decouple is how capital and other forms of investment income are treated. That gets too complicated for me to understand, but it’s clear to me that a charitable take would be tax code has not kept up with how the wealthy increasingly earn their income.
No income at all generally means you're eligible for either Medicaid or Medicare, or COBRA coverage if you're recently unemployed.
The worst off are people who have low paying jobs- they make too much for benefits (typically 138% or more of the federal poverty level) but not enough to afford employer-sponsored or private-market insurance.
Even if you count the greater metropolitan area (where I'm part of the Barcelona one myself, although I live 30 minutes away from the city), you only get up ~20% of the population living in either Madrid or Barcelona. Even then I'd say we're in minority compared to the people who don't live in either those "metropolitan" areas.
What seems to indicate I didn't like where I currently live? Not sure why I'd want to live in something similar to the USSR, that sounds all-around bad. Did I misunderstand something or are you misunderstanding what I've been writing?
I'm smart (anecdotal, but still) and ambitious, and I moved to Spain, and I'm planning to stay here, yeah. Yes, I'm OK with the government taking the excess profits us "rich" people earn so others who cannot work still can survive and even get health-care, like the rest of us.
> This is basically inviting your best and brightest to move to the US and other low tax countries.
If that leads to all the soulless money-chasers move to the US, then that sounds like a positive to me. I prefer a society where everyone gets equal chance and a good life, regardless of income, and the ones who want to ruin that can continue to build their utopia in the US.
Most people don't understand how taxation works; in many places, there is progressive tax, which means you are not taxed at 45% or 50% or whatever, but only on the portions you make above certain thresholds.
That's a matter of perspective, isn't it? :)
> No, it's not "can help"
I could employ similar tax-avoidance schemes as other rich people regularly do, but chose not to. I could live outside the country for 51% of the year and also avoid taxes that way, but also chose not to.
Ultimately, you do have a choice on how to approach things, and how you see them. You see them as "The nanny-state is taking what's rightfully yours" then yeah, that's the perspective you have, but it's not a ground-truth and it isn't the only perspective.
The US is not a "low tax" country, it's just underdeveloped in social services. Which might give the impression the tax rate is low, but it's not - it's very high. Not only are you going to be paying income tax within 10% that of a western European nation, but you also have lots and lots of invisible taxes.
For example, did you know that about 30% of all compensation in the US goes just to providing health insurance and other benefits to employees? One of the downsides of having an underdeveloped health sector is that it's quite expensive.
Or, how about the fact that the average American spends 15% of their gross income just on transportation cost? Turns out having all that underdeveloped transit infrastructure isn't free. We pay for that.
Anyway, ambitious entrepreneurs don't start business in Spain, they emigrate to countries with low tax rate where the chances are much higher that they won't go bankrupt after a year, and it's a vicious circle. Of course, the reaction now is that there are populists in Spain and elsewhere trying to dictate to other countries what their "wealthy" people shall pay in taxes :-)
Despite all the flaws of the US, let alone the ones of the current administration, keeping the economy competitive is the one thing that all US administrations have understood correctly, whether Dems or Reps or MAGA
That some chose, true. Europeans have a choice if to "work and still have a life" or "work a bit more, have a bit less free-time", but just like in many other places, if you put in the time and effort, you can get "rich" too, if that's so important for you.
> If you've ever been to Spain, you will have certainly noticed these graffitis "tourists go home" a bit everywhere
That is true, you go to the hotspots of tourism in Spain, you'll notice that people are being fed up with it. If you visit the rest of 80% of Spain, you'll notice they aren't overloaded by tourists, and the sentiment is different.
Next time, try visit less popular places, it'll be more unique and fun too :)
> ambitious entrepreneurs don't start business in Spain
We absolutely do, the work/life balance is unmatched, and living in a state that actually cares about its people makes it better for everyone, not just "The Poor". There are no "vicious circles" of going bankrupt because of taxes, if you have friends where that commonly happens with their companies in Spain, they're doing something seriously wrong.
> keeping the economy competitive is the one thing that all US administrations have understood correctly, whether Dems or Reps or MAGA
I don't know if you're American, keeping up with American politics or what's going on, but "economy competitiveness" is clearly off the table with the current administration, I think if anything is clear that's the thing. They're just starting to see the effects of their choices, but maybe it'll also be clear to you in a bit.
Forgive my ignorance, but aren't those all federal programs? Or are they somehow indirectly paid by income taxes from the states themselves?
Do a state with no income tax have the same coverage for Medicaid,Medicare, or COBRA as a state with 50% income tax, for example?
> The United Nations estimated in 2023 the total economic damage to the Cuban economy to be in the "trillions of dollars" since inception [1958].
- https://en.wikipedia.org/wiki/United_States_embargo_against_...
Putting that into perspective, a trillion dollars would be about $100,000 for every man woman and child in Cuba today.
And yes, Cuban economy would have imploded even without sanctions, just like Venezuela's did.
> yes, Cuban economy would have imploded even without sanctions, just like Venezuela's did.
That would carry more weight - or any weight at all - if you addressed the argument. $100,000 per person is significant.
And using Venezuela to make your point is very silly, considering they were hit with massive sanctions as well.
Also, if you wonder why so few big unicorn companies appear in Europe, look no further than their tax policies.
How long would a state required to be socialist before you consider it to not be in a perpetual state of "this will fail tomorrow"?
Since you consider Spain socialist, that means you probably consider Sweden socialist as well then, since it's more "socialist" on basically every metric I can think of? If so, Sweden been socialist close to 100 years (about 3 times longer than Spain), is Sweden also about to go down the drain then because of the welfare policies?
> Look at Spanish economy: high public debt, high unemployment, low productivity growth
Good example. For the last 10 years, debt is slightly worse, unemployment is dramatically better and the productivity remains unchanged. Yet, we have public health care. So seems socialism might not actually be so bad after all.