What are typical American taxes? It was hard to find info, the calculators are confusing. I also heard some cities like manhattan have income taxes too. What would a New Yorker or Californian pay?
We do have a 13% national sales tax which I don't think states have.
Yeah, for those earning over $200K it's quite punishing, and would probably amount to more than the health savings. I think there aren't corporate structures that make it less rough though.
Being from Quebec and working in Manhattan, I figure I can have some input on this.
In Quebec, at income X, my effective tax rate was around 34%, which includes federal and provincial rates. I did have a private plan at work although I don't fully recall how much it would cost me per paycheck, it was really low.
In NY, at income 3X (including exchange rate), the rate is similar, I think around 33-34% including federal, state and municipal income tax (which is ballpark 3%). I do have private insurance here which amounts to a couple hundred a month.
Personally in the end, I get better service in the States but I'm probably biased.
The highest US federal bracket is 39.6% and I believe the highest state bracket is around 12.3% (California). The highest state sales tax is around 9.5% (Tennessee and other states without income tax). Local taxes are typically much lower in magnitude. (NYC income tax is another 3.9% for the highest earners.)
So at the very high end, someone in NYC might pay 52.3% income tax (edit: marginal rate) and 8% in sales tax.
And at the high end in California (San Francisco), someone might pay 51.9% income tax (edit: marginal rate) and 8.75% in sales tax.
(This is a little simplistic; I think you can deduct state income tax from federal tax, lowering the overall high marginal rate somewhat.)
>And at the high end in California (San Francisco), someone might pay 51.9% income tax and 8.75% in sales tax.
What you're talking about is the marginal tax rate, i.e. the limit as income -> infinity, but it's typically much much lower than this (even for the wealthy). Most people pay in the 10-20% range for federal income taxes. Millionares pay in this range too for several reasons, capital gains and write-offs.
> What you're talking about is the marginal tax rate
Yes, this whole comment thread has been discussing marginal rates. I thought that was clear from mentioning tax brackets in both my comment and refurb's grandparent comment, which mine is in comparison to.
I've edited the comment to be really clear that this is not an average rate.
Edit: Whoops, and I left out FICA taxes and it's too late to edit the above comment again. That adds another 7.65% (W-2), up to $118,500; 1.45% above that, and a little more at the top rate.
I see... I guess I'll just point out what you may already know: the way you guys are framing this discussion is really flawed. Marginal rates have no meaning without discussing brackets (and other important details), which can be quite different in different countries. Effective tax rate distributions are the only meaningful way to compare different countries' rates.
As an analogy, it would be like comparing Buffalo's weather to San Diego's based on the average high temperature in the summer (which may lead you to believe Buffalo is hotter than San Diego).
Most states have a income tax [1]. Our federal tax is progressive so you pay 15% of the first $X. Anything you make over that is taxed at 25% and on and on.
We get a standard deduction, which varies depending on whether you are single, married, and/or have children. Deductions reduce your taxable income. For example a single person making $35,000 would get a standard deduction of $6,300 making their taxable income $28,700.
You are entitled to a dependent deduction, so if the hypothetical single person above has a kid he can knock another $4,050 [2] off of his taxable income making it $24,650.
The other ways to reduce your taxable income for working people are retirement plan and health saving (HSA) contributions. every dollar you take out of you paycheck and contribute to either of those is not counted towards your taxable income. There are maximum amounts to both. Typically a person making $35,000 won't have much income available to put away in this way so working people don't usually get to take advantage of those [3]. There's also flexible spending accounts which work the same as HSAs except if you don't spend the money input in a set amount of time you lose it. These accounts make sense for sunk costs like daycare.
Lastly there are tax credits. Credits reduce the amount of tax owed (as opposed to the amount of taxable income). For example, if my taxable income $10,000 and I was taxed at 15%, I would have a tax bill of $1,500. If I also got a $500 tax credit, my tax bill would be reduced to $1,000. Parents get a $1,000 for each child[4]. There's also a childcare credit which is a pain to calculate so I won't do it here.
There are of course other exemptions and credits but for most people, what I've listed sums up how our tax code works.
High tax bracket in Quebec... $103K+ = 25.95% Lowest tax bracket in Canada (BC)... $106K+ = 14.7%
That's added on top of the highest federal bracket of 33% for income over $200K.
I'd say Quebec taxes are a LOT higher.
[1]https://en.wikipedia.org/wiki/Income_taxes_in_Canada#Quebec