This is bad for Europe because our salaries (before tax) have already been lower than US salaries. Additionally we pay much more taxes than you guys on salaries (up to 50%) and on VAT (~20%).
Means at the moment until salaries get inflation adjusted that we pay a premium price for everything.
Many Europeans don’t know how much taxes Americans actually pay. It’s not that little, but often paid differently with high property taxes and sales taxes instead of VAT. And most of us (Europeans) don’t have to pay €1000 or so in health insurance for ourself and our family. We might make a bit less money, but most of us have at least 5 weeks of paid vacation (I’ve got almost 7).
- Working professionals making low 6 figures (espicially in states with income taxes) pay much closer to EU taxes than most people think.
- Non professional jobs (service industry and blue-collar) are taxed very lightly, but have worse benefits, less job protection, and an extremely limited social safety net.
- Government jobs have better benefits than other non-professional jobs, but often the pay is not great (I suspect no better than EU, but honestly have no clue what e.g. a postal worker in the EU makes).
- The very wealthy are taxed very lightly compared to the EU.
Agree with most of this. Although to be fair the social safety net is not as weak in the US as most people think, either. The majority of the Federal government's budget goes to Medicare and Social Security, the main gap is just that for working-aged people there is no universal healthcare in the US.
Not sure what you mean by the last point, though, it kind of conflicts with your first point. And in e.g. France the capital gains rate is 19% I believe vs 20% in the US. Various countries in Europe have experimented with a wealth tax, but they've now all gotten rid of it. In what ways are the very wealthy taxed heavier in the EU?
> Agree with most of this. Although to be fair the social safety net is not as weak in the US as most people think, either.
No way. It's almost impossible to become homeless in Sweden while you have the entire homeless villages everywhere. People with disability get paid a living income and are allowed to save money, which they aren't in the US. Then we have tons of other services like child care, health care and universally just way better everything regarding infrastructure and social service. I've lived half my life in each place and honestly the difference is Grand Canyon sized. Even Portugal, one of the poorest still has great free healthcare and all kinds of social safety net sand services.
America is the only country that doesn't offer any type of parental leave.
You might get two or three days or something like that, and then everyone pats themselves on the back saying how progressive we are.
It's absolutely horrific when you consider people may have medical issues which cause them to need to take a bit more time off.
But guess what, you now have insane medical bills, and pressure to get back to work. It's not unheard of for a woman to just get fired if she takes off too much time for a pregnancy.
Sure, that's illegal, but workers are treated so horribly in America. You're lucky to get your paycheck half the time.
No idea. My company employees tens of thousands of people who all of this access. What I don't know is how many more also have similar benefits. I would guess most large companies give this sort of benefit.
>Today, only 21% of US workers have access to paid family leave through their employers, even though, according to the Pew Research Center in 2015, both parents work full-time in almost half all two-parent families.
These lists are almost always useless for comparisons since the definitions between countries vary so widely.
edit: Digging into the sources, the US has 6.4 unsheltered homeless per 10k, but Sweden doesn't even track unsheltered homeless, the most acute category (at 4.5/10k) also contains people in immediate access shelter/hospice.
This is a fair point. To Wikipedia's credit, I think it's adequately addressed in the article I linked.
I think a more general statement could be made. It's nearly useless to make comparisons between countries. The United States cannot adopt Swedish policies and expect to achieve Swedish outcomes. I'd much prefer we discuss policies for our countries in our own contexts rather than introducing comparisons between them.
The parent comment introduced a comparison, though. So, I think it's only fair to introduce some form of statistics.
Thanks for providing a more founded empirical interpretation of the facts! It seems Sweden has some edge on the USA, but the original claim (that it's almost impossible to be homeless in Sweden) still seems as unfounded as I expected.
As another commentator noted, I think climate is something to consider. I expect that you'll find higher concentrations of shelter-less people in more temperate (or at least warm) places. Cultures will evolve to prevent people from needlessly dying, but we aren't inclined to give more than the bare minimum.
> The United States cannot adopt Swedish policies and expect to achieve Swedish outcomes. I'd much prefer we discuss policies for our countries in our own contexts rather than introducing comparisons between them.
And this isn't what anyone seriously proposing for the US to take control of its social issues to do. The mention of other countries usually is just to show it can be done, to be inspired by it and forge your own way to solve social issues.
I don't know why it's usually taken in this absolutist view, where solutions should be implemented as-is because it worked somewhere else. It worked, get inspired by it and figure a way out of the hole in your own local environment...
Yeah, Sweden and the US are different, people are still people and have some overlapping needs, learn how others have done instead of this hubris of "we're different". Everyone is.
I'm not from Sweden but I'd expect homelessness there to be almost never caused purely by financial difficulties or unemployment. The vast majority of homelessness in the Nordic countries is either due to mental health or substance abuse problems, or a combination of financial difficulties and other compounding factors such as those.
GP probably meant it's almost impossible to become homeless in Sweden because of a lack of a social safety net alone.
And one bit of Swedish society that is a bit invisible to the outside: it has an extremely draconian approach to drug abuse. Even though it's a Nordic country and touted for being socially progressive, drug policy here is extremely regressive when compared to Portugal or the Netherlands.
So usually the homeless I see in Stockholm are addicts (alcohol, heroin, amphetamines) that fall through the cracks of the system as they won't stop abusing substances which Swedish policies have no way around to help them, it's extremely punitive for drug use, as even use is a criminal offence. In the case you are taken in custody by the police they may force a drug test and if detected you'll be punished.
This all compounds to leave a marginalised population that has inadequate support to fight their addictions (usually caused by mental health issues) and kept in limbo between the streets and courts to be ordered to get clean.
Yeah that list is meaningless. You won't see homeless camps of homelesd, almost never see a homeless person and if a homeless person doesn't want to be homeless anymore then they suddenly aren't (I know of precisely one exception to this.)
Yeah, don't believe everything you read on the Internet. That list has little to do with actual reality here. You won't see homeless camps of homelesd, almost never see a homeless person and if a homeless person doesn't want to be homeless anymore then they suddenly aren't (I know of precisely one exception to this.)
All that list means is the US vastly under-counts actual homeless people. This is the same well known effect we see in suicide statistics: Sweden just keeps far more accurate statistics.
and most european software engineers (uk/germany etc) their take home pay is similar to what a dev in the midwest would make i.e the rest of the usa. not SV salaries that people like to post about as if they're the norm
Do you have some links that show the tax burden for Europe vs US is similar for low 6-figure earners? I can find plenty of calculators that estimate total tax burden for the US states, but not most European countries.
For example, I used someone in New Jersey (a US state known to be high-tax) vs France at a salary of 100K (which is the same in Euros now!): In NJ, including Federal, state and sales taxes, total tax is $27K. That seems to be a far cry from the $41K (sorry, Euro) I get in France from a very basic calculator that only includes country-level taxes AFAICT.
In Germany, the total taxes on 100K is 34%. The marginal rate is 44%. That's before deductions, which in Germany will be plentiful.
At that level you will pay 800€ per month for public health insurance (it's a percentage up to about 65K income, then capped). Public health insurance allows you to cover children and non-working spouses for free.
So the premiums are not too different between US and Germany. The two advantages I see with Germany is the premiums are proportional to income and likely costs of procedures and medications are better negotiated by the government. Do you have to deal with copay (a small amount you pay per procedure)?
If you are curious about US insurance plans, here is California website for estimating insurance costs. Basically the costs scale with income, number of individuals and their age and their desired level of coverage.
Note that France has one of the highest levels of government spending as a share of GDP (and hence represented by taxes, though this includes sales taxes/VATs/etc/etc) in Europe, at 62% or so.
For comparison, Germany is at 51%, UK at 50%, Netherlands at 47%.
Belgium is close to France at about 61%...
The US (not in Europe, obviously) is at 46%.
And Switzerland at 36%; this is the European outlier in the opposite direction from France.
But a priori, just from this data I would expect French taxes to be about 1.4x US taxes and Dutch taxes to be similar to US ones...
Honestly, it really is true that upper middle class and wealthy Americans pay less tax than their European counterparts.
VAT is broadly much higher than sales tax, property taxes are not exactly unknown in Europe, and if you are an employed professional, your health insurance burden is typically pretty close to zero.
If you live in a no-income-tax state like Washington or Texas, and you are single making $200,000 a year, your effective (not marginal) tax rate, including FICA, is around 26%. I doubt that anywhere in Europe comes close.
The flip side is that poor people in America absolutely get shafted.
Except that our social safety nets are practically non-existent. I bet if you made a middle-class comparison where you took a bunch of the typical EU social benefits, and equated the private costs middle class Americans pay to take care of them privately (healthcare, especially for a family, care of elder relatives, how much they'll need to save up to put their kids in college and retire even meagerly on their private income, etc)... I bet the Americans come out on the losing end of it on average.
I haven't calculated in financial terms which side would be the losing one but when I think about the stress and insecurity it brings, to always be on the edge to not lose your job and avoid struggle in your family. To always be only dependent on yourself while living in a society. It's maddening, I see lots of parallels to Brazilian society and it isn't healthy, even less to such a rich nation.
By my math, I'm come out with around 62.5% of my base income per year. But that includes a payment to pension. I pay for health myself (around €100 per month) but if something happens to me, I'm covered on some things. [edit: based in Ireland]
>" If you work for a richer EU country or the US, you can do very well financially."
Will richer EU country and US companies pay you better than your local wage bracket in the EU? How do you find that? This sounds like the best of both worlds. I'm guessing its tricky?
> Will richer EU country and US companies pay you better than your local wage bracket in the EU?
Of course. Competition to find better remote talent.
> How do you find that? This sounds like the best of both worlds. I'm guessing its tricky?
You have less bargaining power because you are competing in a bigger pool of remote workers. There is a little problem with timezones. But you can get $100K+. If you're good and got connections you can get SF/NY wage wherever you are.
Been thinking about moving to Europe while continuing to work for US companies. But it may difficult to maintain full time status while in the EU. On the other hands, there are plenty of contract jobs I can take on then move to the EU. My biggest problems are:
1) how does one manage works hours in different timezones? Perhaps one can make arrangements?
2) tax: should I take my earning into a personal account in the US/EU? Or alternatively start a corp and do corp to corp without and only pay myself minimum amount?
3) tax: do I pay taxes in the US and in the EU? Do they go after my US corporate?
I know those are difficult questions to answer but I want to put themnout there
> 1) how does one manage works hours in different timezones?
I simply only apply to jobs where I work on my timezone. We have some meetings that end at 6PM locally.
> 2) tax: should I take my earning into a personal account in the US/EU?
Depends on your residency. And depends on the law of the country you end up residing in.
> Or alternatively start a corp and do corp to corp without and only pay myself minimum amount? 3) tax: do I pay taxes in the US and in the EU? Do they go after my US corporate?
You'll maybe need a VISA on the new country were you reside. Easiest would be a working visa. The country may have an agreement with USA where they run a sql-query to find tax-evaders and join it with a table of residents.
You might be found out. The USA may come after you for taxes on revenue of I believe +$150K/year. The USA has some fancy global taxation.
>"Been thinking about moving to Europe while continuing to work for US companies. But it may difficult to maintain full time status while in the EU."
I'm curious are you an EU citizen already? If not I believe you would need a US company that has an EU entity which could supply you with Blue Card in order to work in the EU.
It’s way more than “a bit less”. As someone that has had global teams in multiple countries, the country in Europe that approaches USA salaries is Switzerland. The rest in my experience are paid significantly less that their counterparts in the USA. Especially their counterparts in high cost of living areas.
For example, people I was paying $190k in the USA were making around $110 in Europe and this was well before parity - $1.25 per euro, etc.
It’s probably around 50% of an Americans salary today or there about.
The tech salaries you see discussed in the US are in jobs that also cover healthcare, so we don't pay out of pocket each month for health insurance. And these jobs include "unlimited vacation", however most people don't take more than about 4 weeks a year.
central Europe here: You have to take the vacation! You can take a few weeks in the new year, but not everything and you have to consume them.
Why "have to"? Because it's by law forbidden to bully employees into taking money instead of going on vacation. To never have to deal with this, most employers are very strict wrt vacation days :)
When I worked for US companies that paid employee health insurance premiums, my family's premiums appeared on my W2 as taxable income. Only my own premium was "covered" in a way that did not increase my tax burden.
Health insurance (for dumb, path dependent, historical reasons) for individuals and their families are not taxable, haven't been since WW2.
What you may have seen is the AMA line item that just tells you how much your employer spent on your healthcare. This is a weird attempt to get people to realize how much their employers are paying (much more than the premiums people generally think of as covering their health insurance).
If your employer happened to pay you more than the maximum allowable cost per employee, then your employer had to pay a 40% excise tax on the amount above the limit, but even then, it wouldn't be taxable to you. The roll out of this tax was delayed several times, it may have been repealed, I wasn't paying attention during the pandemic.
While you wish to make it sound "not so bad" the fact is that you do pay more in taxes, and drastically much less money then for USA. 7 weeks of Vacation sounds nice, but depending on your org/work in USA, it can rival that, most FAANG, tech companies and such offer minimum 4 weeks of vacation, 20 days, which is 28 days including weekends "total."
Then many states do not have income taxes, Washington, Nevada, Florida and Texas for example.
Sales tax is also not that high, topping around 10% for the most expensive of cities, but as low as 5%.
Then on income tax, we have very favorable tax brackets that allow us to reduce our tax liabilities. Someone making 250K w/ an LLC can easily drop their bracket to as low as 13%.
As an American, we have pros. You being an European, you have pros - but if you're experienced in the game and have time - there is a reason why USA can have very favorable tax, income
Now if you talk about your public transit, rails and trains - yes I'll concede and say that is much much ahead of USA. :)
You pay health insurance in Europe, it's just that it's baked-in in the salary and you have no choice than to pay for the public system (as there is very little competition).
For example, in Estonia the minimum you have to pay per month just to health insurance is 201.20 EUR and this barely covers anything except extreme injuries, so on top you add a private insurance :|
In finland you are also required to pay for public health care. But employers are also required to provide private healthcare for workers. Vey nice to pay for both public and private healthcare on top of insane income taxes.
Can you elaborate? If you're talking about government health insurance fund (Haigekassa), AFAIK it covers everything fully, and limited dental and eye, doesn't it? Or am I missing something?
You can't in Austria - you can additionally get a private insurance, but it's by no means mandatory.
Although I pay most of my urgent stuff in cash, and get it back later (not everything), because otherwise I have to wait 3 months + for a simple scan :/
Oh yeah, definitely. The security net is great. And I get that for it to work, it needs to be paid for.
I think that the downwards movement is more based in the population aging though.
And the reason I hate it, is literally because there is no opt out at all. Hell, I'd use the public option if there were an opt out because it works well enough for me.
German healthcare system is really interesting, and I wonder if it should be a model for US more so than Canada. Not even because there are some inherent advantages, but because it would be an easier sell politically. Even the "public" part isn't really state-run, but rather a bunch of heavily regulated but still independent non-profits - some territorial, some industrial, some specific to (particularly large) employees.
The opt out is after a fairly high income. Most people will be in the public option (yes,yes, private insurance but required by law). Most people will average 300-500 euro per month plus the employer contribution.
I am curious about the 300-500. If this is per house hold or per employed adult.
Even the vacation thing depends. As an American, I just finished a six week paid sabbatical. I also get 10 paid holidays. And I get another paid day that I can use as a floating holiday. And I get 8 hours of vacation each paycheck, up to 400 hours of which can rollover from year to year. And we get a paid week off in the summer. And we get every Friday as a paid vacation day in the summer (between labor day and Memorial Day). And every five years a six week sabbatical, as I already mentioned.
Well, it's typical for the tens of thousands of employees at the company I work for. I have zero idea how other large companies structure their vacation time.
Yep, health care costs for a family can run $10k/year for Americans (out of pocket maximum) and so basically any kind of major illness or baby delivery will cost that much.
That varies widely by your insurance. And given that tech companies use insurance as a way to attract more employees, software employees often pay way less than that. I'm about to have a child and I will pay $0 for it. My wife's company pays everything. Even if we were using my companies insurance instead of hers, we wouldn't pay anywhere near $10k.
It is not the norm for birthing to be 100% covered even at a place like Microsoft or Salesforce, it is the norm for it to apply towards your deductible and then coinsurance ultimately going up to your out-of-pocket maximum. If yours is covered 100% that’s great but definitely not the norm
News to me, I spent less than 50% of my income last year on everything. Not just taxes, everything. And I'm in roughly the highest tax bracket in the US and have roughly the highest state and local taxes.
I would guess my effective tax rate including sales and local and healthcare and everything else is ~40%
You single and don't have a personal vehicle? I'm Married, and have kids, in a lower COL area. I paid ~9% federal income tax, ~7% state income tax, ~1% of that in property tax, without attributing for healthcare insurance every paycheck, and uncounted more in sales tax, gas tax, etc etc. I have spent ~90% of my take home income trying to barely survive in the last year.
Being able to save 50% of your income is a level of privilege many don't have regardless of effective tax rates.
Took the time to add it all up. Between federal,state,city income tax, sales tax, property tax, excise taxes, healthcare (which European taxes pay for already) premiums; I pay 53% of my income in some form of taxes. I'm not sure if that's less taxes than in Europe, but I'm pretty sure they don't pay 50%+ of their pay towards tax.
Incredible. I wonder what you're doing differently. My rate is around 30% and I live in San Francisco and pay ~9% to the state. Like most of my 150,000 coworkers, I pay ~0% out of pocket for healthcare. Maybe that's the main difference?
A lot goes to fund a military that gets almost as much as the worlds other militaries combined. And the 2023 budget is being held up because some thinkthe annual increase is too small.
I haven't looked at it in awhile but I think the military is around 20% of the federal budget. The big items are Medicare/Medicaid/Social Security. Maybe interest on the debt.
20% (assuming that's what it is) is still no small amount but I'm personally doubtful there would be some sort of sea change in what's possible if it were cut in half or even eliminated.
Careful what you wish for. We (in the UK) fund the NHS significantly to the point that it's now a political football - freezing funding to it and wanting it to be better run is political suicide, but wanting to cancel a piece of national infrastructure (HS2, our second high speed railway) that would demonstrable add to the country's GDP, and cost a tiny amount in comparison, is fine.
A lot of people working in tech in California pay above 40% effective income tax rate with a top marginal tax rate of like 48%. So Europe income tax rates are not as much higher as you might think.
The tax brackets in the US tend to be much progressive though, so for people earning lower salaries their taxes in the US are much lower.
To put this into perspective a little, Belgian income tax is 40% after 23000 euros (which is now 23k dollar) and 50% after 43000 euros. So the issue here is the middle and even lower class being hit with incredibly high taxes.
A California family of two (no kids) making $400k, with no deductions, not even contributions to their retirement, will pay an effective 32% tax rate on all income.
At $600k, it's 37% effective tax rate (again, with zero deductions).
You have to make $817k, with zero deductions, before you'll pay 40% effective tax rate in California.
None of this includes sales tax, which is 10-11% depending on municipality in California. Europe's lowest VAT is 17% in Luxembourg.
It is not my impression that "a lot of people" in tech are making that much, even by the extreme standards of the Bay Area these days.
If you count social security and medicaid taxes the $400k couple is paying 36% and the 600k couple is paying 40%.
So yeah it's not the majority of people in the Bay Area paying 40% but if both spouses are working at big tech companies and they're more than a few years into their career then they will likely be somewhere in this range and paying close to 40%
Most Americans think that taxes are high elsewhere and low in America, and I guess Europeans think that? Maybe it’s true but I think American taxes are higher than people seem to believe though.
A tech worker in Silicon Valley will easily hit >40% income tax (30+ federal, 10 Cali). Sales tax is up to 10%. Many places have affordable property tax due to American laws on home ownership. California may be a state with laws closer to Europe than many other American states (eg texas). Massachusetts/New England generally have “better” laws too (eg MA has stronger healthcare protections than most states).
Not sure what ordinary Europeans actual pay, but an internet search says German taxes go up to 40s, which seems pretty inline with Cali.
Obviously a tech worker in SV will be top few % for American salaries, but you need to be a well paid urban worker in America to be able to get healthcare and an income that affords college for children and good public transit and other things Europeans get from their governments.
German net includes unemployment, social security and health care, among other things (did the stat include church tax or not?), not sure about the California thing. That being said, one million in mortgage buys you one hell of an house in Berlin! And mortgage payments can be tax deductible to an extent as well.
The FICA rate above for California is the social security/medicare tax. An equal portion is paid by the employee and employer. Unemployment is paid by the employer in California. Mortgage tax deductions are a lot more limited since the 2018 tax reforms. Health care is the big wild card since better employers might subsidize 80-100% of the premium while worse one hardly anything. The Obamacare ACA plans can provide subsidized health insurance for lower income workers but the subsidies taper off at a fairly low income given how much you need to survive in California.
So overall pretty much on par then. Higher net salaries in California are offset by better / more predictable healthcare costs in Germany.
Which leaves base pay, I assume the 200k in Berlin were choosen to make the comparison easier. On the surface, lower base pay in Berlin is offset by lower living costs, especially housing (I am aware Berlin is getting more expensive, it is still far from SV so).
In California (and pretty sure this is standard across the USA), unemployment insurance is paid by the employer so doesn't come out of your compensation.
The calculator I used also included payments for social security and medicare contributions, which you would use if you eventually fell below security security income bracket (knock on wood) or if you need medical as a senior (I believe age 65+)
For other health coverage, that is paid for by the employer so also wouldn't come out of your compensation.
Of course it comes out of your compensation in the end. It just doesn't come out of the "headline" compensation number you see.
Which is fine if you're comparing equivalent "headline" numbers. But for other purposes the ratio of take-home pay to what the employer has to pay out (so including all the employer-side taxes) might be more relevant in terms of determining your likelihood of receiving a certain level of take-home pay.
We're comparing headline numbers, not economic cost. There are so many other economic costs to hiring someone that it would be almost impossible to compare. The most blaring one of course is healthcare cost. In the US, the employer bears this cost which is enormous (as healthcare is astronomically expensive in the US) and by your argument this would reduce "your likelihood of receiving a certain level of take-home pay"
And yet incomes are much higher in the US than in Germany.
I think headline numbers are the only useful thing to compare here.
The German calculator (quite transparently) prices in {pension,health,unemployment} insurance. Still a ~10k difference favoring Cali but it shouldn't be left unsaid.
The calculator I used also includes a little bit of pension (called Social Security) beginning at age 62+, but it's not very much compared to what you put in. It is quite a bit different from a typical pension plan. The maximum you can get from social security today is $3345/mth.
As for health and unemployment insurance, both of those are paid for by the employer in the US.
This really isn't how it works. You might pay a premium price for specialty goods and foods imported from the US, but, based on a quick Google search, there doesn't appear to be many consumer items - our top 5 exports are aircraft, machinery, pharma, mineral oils, and medical instruments.
In developed countries, the majority of the costs for goods and services (and taxes) come from labor, which means they're not affected by currency fluctuations too much.
Not a good time to vacation to the US, nor is it a good deal for Americans working in the EU and paid in Euros who need to pay past bills back in the US
Once the salaries get inflation adjusted (20%+ of inflation in my country), then the production costs are going to increase, which is going to increase the risk for the prices to spiral up again.
If you want to talk about premiums, the US housing market is out of control right now; just having a roof over your head in any metropolitan area means paying through the nose. It’s rough all over :(
This isn't true. A certain well-known politician made this claim, but it turns out she counted everyone who had medical debt when they declared personal bankruptcy as a "bankruptcy caused by medical debt." If someone gambled away their home and incidentally had an unpaid doctor's bill, it's a stretch to call that a medical bankruptcy.
To expand on your comment, only 4% of US bankruptcies are because of medical bills <https://www.washingtonpost.com/blogs/post-partisan/wp/2018/0...>. A tipoff that [insert large percentage here] of bankruptcies aren't actually because of medical costs is that only 6% of bankruptcies by those without health insurance are because of that cause. The biggest cause of bankruptcies is lack of income, which health insurance doesn't affect.
Weak but not that weak as it’s roughly tracking the US dollar at 0.78 +/-. Benefits of its raw material/petrodollar nature. And others have pointed out a more aggressive move against inflation than say europe.
Means at the moment until salaries get inflation adjusted that we pay a premium price for everything.