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Comment by rayiner | Hacker News Reader

> We've given up on taxation as a means to raise money for the public good.

Have we? California's marginal tax rate is over 50%, higher than many European countries. The Internet suggests that someone making $260,000 (200,000 pounds) will pay about 41.5% of their income in taxes in the U.K. https://www.thesalarycalculator.co.uk/salary.php. Using a similar tax calculator for California suggests that they'd pay about 39%. I assume the U.K. is also in a post-Reagan, post-tax world?

Must be Reagan. Couldn't be total mismanagement at all levels of California government.

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Bay area tax rates are about the same as living in Toronto, minus the public health insurance. I'm also skeptical a lack of tax money is the root problem here...

Wow that is a lot closer than I realised. I was always of the assumption that the US tax rate was much lower than the UK and Europe.

That 2.5% extra in the UK (so about £5k/$8k a year) includes free healthcare too (plus at £200k you'd almost certainly be in a job that also has excellent private health care for you and your family with no extra payments as well as the free NHS). I understand that this can cost many tens of thousand in the US even before you use it.

I just don't get the US system sometimes I really don't. Perhaps instead of calling for SV companies to move elsewhere in the US, why not just come to London or Zurich or Berlin?

> California's marginal tax rate was over 50%,

Is that really true? This official calculator [1] says I'd have to pay only 16k on 200k income.

And this source [2] says income tax tops out at 13.3%.

[1] = https://webapp.ftb.ca.gov/TaxCalc/Home/Results

[2] = https://www.communitytax.com/state-taxes/california-taxes/

They mean on top of federal taxes. The right phrasing is probably "The marginal tax rate for a California resident."

That is on top of the Federal tax rate. Americans pay into two separate tax systems. It would be like paying taxes to the EU in addition to your country, which is how the US system works.

I'm guessing they're talking about the total taxes for someone living in California, including federal and local as well as state.

Which is disingenuous, because 75% of those taxes would remain, regardless of where a person lives in the US.

It‘s not disingenuous - the point was that a lot of tax is being collected not that California is special.

Tax is comparable to Europe and yet services are not. The problem is therefore the government.

16k on 200k isn't a marginal rate calculation.

Top federal rate is 37%, top state rate is 13.3%. Total top marginal rate is 50.3%.

This is not remotely true. I make more than that, and my effective tax rate is 27%. This because, US has a very convoluted tax system with a whole bunch of deductions. And both Fed and state tax systems are progressive, so you simply cannot add them up, since only a portion of that is applied to your highest income level. Not factor in property related deductions, health care related deductions, children related deductions, and various investment loopholes.

Note that the 50% figure is marginal tax rate. In California, it’s basically what you pay in your 500,000-th dollar. Which is higher than the 45% you’d pay in the UK. (Though the tax burden is higher in the U.K. unless you make millions because the brackets kick in earlier.)

The figure I cited above is from a tax calculator that I’ve found to be pretty accurate. Note that the various deductions are much less valuable for high income earners under Trump’s new tax plan due to the limit on SALT deductions. Finally, while the calculator I used excludes US credits for healthcare, children, etc., the calculator I used for the U.K. also does that. The hypothetical is basically a single Google programmer who rents and has no kids.

You are literally just spreading a lie over and over again.

CA's top marginal tax rate is 12.3%. If it were >50% no rich person would live in the state.

The combined state and federal rate is not >50% either, and any calculator that claims otherwise is lying. And that's before you even take deductions into account.

If you're paying >50% marginal tax rate in CA, your accountant should be fired. And possibly investigated for embezzling funds from you in the form of "tax payments."

I think it’s pretty clear from my post that I’m talking about combined state and federal taxes in California, especially given the comparison to the U.K. which has a single level of income tax. It makes no sense to just look at state taxes, because a lot of federal taxes go back to the state as grants (transit, highway, Medicaid, ACA subsidies, education), or go to pay for social services the state would otherwise have to pay for itself (Medicare, Social Security, food security, etc.)

As to the combined marginal rate, it’s 50.75% on labor income above $576,000 (12.3% state, 37% federal, 1.45% Medicare). Then there is a 1% surcharge on incomes over $1 million. I’m not sure why you’re talking about dedications because that won’t affect the top marginal rate.

I don’t know how tax system works in the UK, but to calculate US taxes you cannot just simply add the tax rates. Because taxes in the US are progressive. For both Fed and CA taxes, your first $x gets taxed at a lower rate, next $y gets taxed at a slightly higher rate. The highest rate kicks in >$1mn. Then we have a standard deduction of $23k for married couples. Which means $23k of your income is not taxed. Then state taxes are deductible on your Fed income, which means you can subtract the state taxes to calculate your Fed tax income bracket. Then there are myriad of deductions for property tax, mortgage, child care, health care, etc etc. Finally SSN and Medicare tops out at $100k, and you don’t pay beyond that. Net effect is you are probably paying close to 25-30% in effective tax rate

You are talking about effective rates (affected by deductions); parent (and I below) are talking about marginal rates (the rate isn't generally affected by deductions - only the income theshold)

> The combined state and federal rate is not >50% either, and any calculator that claims otherwise is lying.

Why are you so confident here? The top CA marginal rate is 13.3%. Top federal marginal rate is 37%. Medicare tax is 1.45%. simple addition gives a top marginal rate for wage income of 51.75%. I have no idea how your accountant can get that lower.

See my reply above

The top marginal rate in California is 12.3%. The 1% is a separate levy, so if your take that into account you have to do the same for your comparison rates.

And then you find that your tax burden in Texas ends up being close to the same as it was in California, but your taxes in Texas don't get you any public services.

> California's marginal tax rate is over 50%

It is not. The top tax bracket (income $1m+) is 13.3%[1]. Where are you getting this number from?

1. https://www.tax-brackets.org/californiataxtable

GP is obviously referring to the combined fed + state rate in context.

1. It's not obvious at all.

2. It's slightly disingenuous to call it "California's marginal tax rate" when 2/3 of that figure comes from federal taxes. It's like saying "Texas's marginal tax rate is 37%".

3. The SALT deduction changes have made it so that residents of states with high taxes are effectively double-taxed. California isn't responsible for this state of affairs.

As a mechanical point: income tax comparisons should also include payroll taxes. It may not flip the analysis here, but payroll taxes tend to be much higher in Europe.

I think the calculator above includes payroll tax (= national insurance tax in the U.K.)

They should also include health insurance, which they don't in the US, and costs about $10K/yr (with high variance for family size and benefits package), or another 2-4 % on rayiner's example (again, high variance due to # of wage earners).

California's top marginal tax rate is 12.3%.

The combined state and federal marginal tax rate does not exceed 50% either.

For 2019, the federal top rate is 37% and the California state top tax rate is 13.3%. You'll have hit the SALT deduction cap way before you hit the top marginal rate, so if you get there, you're looking at a marginal rate of 50.3%, which does exceed 50%.

Medicare adds another 1.45% as well.

Your CA rate is off by 1%, and you're adding additional contingent levies to breach 50%.

The U.K. is in a post-Thatcher world, yes.

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