Post: #1

There’s an interesting article on the BBC website about tax rates around the world http://www.bbc.co.uk/news/magazine-26327114

Here's the figures from the article

High Income Earners (400k salary, 1.2mil mortgage, married with two kids, one under six yrs) Take home portion of salary

• Italy - 50.59% (takes home $202,360 out of $400,000 salary)
• India - 54.90%
• United Kingdom - 57.28%
• France - 58.10%
• Canada - 58.13%
• Japan - 58.68%
• Australia - 59.30%
• United States - 60.45% (based on New York state tax)
• Germany - 60.61%
• South Africa - 61.78%
• China - 62.05%
• Argentina - 64.02%
• Turkey - 64.64%
• South Korea - 65.75%
• Indonesia - 69.78%
• Mexico - 70.60%
• Brazil - 73.32%
• Russia - 87%
• Saudi Arabia - 96.86% (so you take home $387,400 out of the $400,000 salary)


These tax rates apply to single people with no children, on an average salary for their country.

• Belgium - 42.80%
• Germany - 39.90%
• Denmark - 38.90%
• Hungary - 35%
• Austria - 34%
• Greece - 25.4%
• OECD Average - 25.10%
• UK - 24.90%
• USA - 22.70%
• New Zealand - 16.40%
• Israel - 15.50%
• Korea - 13%
• Mexico - 9.50%
• Chile - 7%

The following tax rates apply to married couples with two children.

• Denmark - 34.8%
• Austria - 31.9%
• Belgium - 31.8%
• Finland - 29.4%
• Netherlands - 28.7%
• Greece 26.7%
• UK - 24.9%
• Germany - 21.3%
• OECD average - 19.6%
• USA - 10.4%
• Korea - 10.2%
• Slovak Republic - 10%
• Mexico - 9.5%
• Chile - 7%
• Czech Republic - 5.6%

Note the first list is take home portion of salary whereas the last two are the tax rate

Post: #2

What pisses me off is the lower tax rates for married couples vs single people. Countries like Germany, Belgium and the US seem to tax single people to help families out. I assume it’s by giving families a bunch of tax credits.

I don’t have a problem with encouraging families but I hate the Government interfering in our lives through taxing us more to try and make us have families. It’s our choice whether we want a family or not. There’s nothing wrong with wanting to be single. Why do single people have to pay money to fund other people’s babies and allow married couples to renovate their houses out the single persons pocket.

I blame it on female influenced government, trying to make single guys settle down into good family men who are nice and passive.

Post: #3

What makes the US unique though is that it taxes its citizens no matter where they live in the world. This is in stark contrast to virtually every other nation in the world, as the vast majority of nations do not tax its citizens that live outside of the home country.

This is the overwhelming reason why there has been a dramatic increase every year in the number of Americans overseas that are renouncing American citizenship. Some haven't lived in the country for decades but are required to file taxes while getting no services from the US government in return.

Unfortunately, neither party in the US government is interested in changing this scenario. They very much feel the cost-benefit analysis in acquiring revenue for the government from Americans abroad is worth the relatively few who renounce their citizenship.

http://www.npr.org/blogs/parallels/2014/...itizenship

Post: #4

That's just false.

http://www.bankrate.com/financing/taxes/...-brackets/

Look at the 28% bracket. 89.4K versus 148K for married. You pay more tax married.

It actually is hilarious because if you make $400K and your spouse makes $50K (we all know hot chicks don't have good jobs) then she has to pay at the same high tax rate as you.

Anyway this is a problem for the government because they are too stupid to realize people will just cohabitate (the smart above average ones) I have a few friends who are "married" but not legally for tax purposes. They both make about $175K and don't want to pay the 33% tax ... I secretly root in the corner for him because he is not legally married if shit hits the fan (likely won't matter but at least it is a glimmer of hope in court rooms).

Actually scratch that, the government is smart because your average idiot is going to get married may as well make him pay 5% more for making such a bad decision.

Post: #5

Yeah that sucks. Governments taxing you to try and discourage you from working overseas. A single American working overseas gets a triple hit. Tax from the country they are working in, tax to the US government, extra tax rate to finance married people.

Post: #6

^ you can avoid the triple taxation with a shell company.

Anyway, taxes are definitely higher on married people, and using averages doesn't work because the bottom half of the USA doesn't even really pay any tax

The best part of foreign companies is a lot of them offer tax free flips on companies in a short time frame. Pulling that off however... Haha

Another reason to say NO to marriage.

A 5% hit is a lot of money man.

Post: #7

(02-25-2014 11:04 AM)WestCoast Wrote:  That's just false.

http://www.bankrate.com/financing/taxes/...-brackets/

Look at the 28% bracket. 89.4K versus 148K for married. You pay more tax married.

It actually is hilarious because if you make $400K and your spouse makes $50K (we all know hot chicks don't have good jobs) then she has to pay at the same high tax rate as you.

Anyway this is a problem for the government because they are too stupid to realize people will just cohabitate (the smart above average ones) I have a few friends who are "married" but not legally for tax purposes. They both make about $175K and don't want to pay the 33% tax ... I secretly root in the corner for him because he is not legally married if shit hits the fan (likely won't matter but at least it is a glimmer of hope in court rooms).

Actually scratch that, the government is smart because your average idiot is going to get married may as well make him pay 5% more for making such a bad decision.

This is a quote from the article

"It is difficult to compare tax rates. Income tax is only one tax - most of us will pay other kinds of tax, like social security, and those with children might get some tax relief. "

So this could be why married people overall get taxed less

Post: #8

Sounds like there are alot of tax credits that couples in the US get for having children. This is maybe why the married overall tax rate is lower

Post: #9

^ it doesn't matter.

If you adjust for a tax break for having kids... Well you have a kid right?

That's like saying well they make $200K and we should give them a tax break to offset the higher taxes they are already paying. If the tax break was on top of a equal effective rate then at least you're giving them a break for having kids.

Basically if you have a high income and get married you pay more tax. Period. If you get married and have a kid you may or may not pay more tax but again you have a kid.

Couple 1 no kids = higher tax
Couple 2 not married = lower tax

Throwing deductions in there has nothing to do with the effective tax rate. It is like adjusting my tax rate because I have interest deductions from a mortgage... Well even if the interest is deductible more cash is leaving my pocket.

Finally notice the article is BBC news, ie big Media. They want to tell you to get married because the number of people who can even do their taxes is probably in the 5% so they will just read and think "ya lets get married for that tax deduction!"

Post: #10

With regards to citizenship it's true, but it should be pointed out that this is not really a phenomenon of guys packing up and leaving the country in protest as it is sometimes portrayed here. These are citizens who move overseas for work, and have been there a number of years. After a time they are settled in, and the dual tax regulations become such a PITA that they wonder if maintaining US citizenship is really worth it. Once they acquire citizenship in a country with a good standard of living, and they don't travel to the USA that much anymore, the answer to that question is becoming more and more often, "no".

Post: #11

Single people, especially men aren't creating future wage slaves, so you have to get them for whatever you can while they're the most productive.

Post: #12

From a US perspective, being a W2 wage earner with decent income is the worst. There are precious few ways to shelter (reduce) your income from taxes...401(k), mortgage + property taxes, 2nd home, kids/childcare, and home office. That's pretty much it. WC, you got any other ideas? I didn't do home office this year, but will next year.

Post: #13

(02-25-2014 11:29 AM)WestCoast Wrote:  ^ it doesn't matter.

The article says that that it is for an average salary in the country. The tax rates in the US in the table you provided are exactly the same for single and married couples up to when two people are earning $75k each. So the tax rates are the same for the average earner in the US but the married couple with kids gets tax credits for children. Maybe they get other benefits such as its cheaper healthcare? Study says it's a married couple with 2 kids, one under 6.

There are many other countries on the list where being single is worse off, Belgium has a massive difference. I imagine in those countries the single person is paying the same for the healthcare and in effect subsidising the married person's kids.

Post: #14

Man. Averages again don't matter.

Let's say you are single. Okay, now what is stopping you from claiming a child as a depend? Literally nothing.

So that entire argument is out the window.

The second part is the tax structure. By combining incomes you are directly increasing your rate unless you are equal wage earners under the correct tax umbrella.

What do I mean?

Since we love being average for whatever reason lets say a couple makes $100K a year.

Okay well do they both make $50k? Absoltely not.

Statistically more likely one earns a higher wage. From a pure tax basis it would be better to remain single and cohabitate and give the deduction to the higher wage earner to decrease the tax rate.

Run the math guys.

60K + 40K taxed at marriage rate is worse than
60K single (deductions) 40K solo because you're not paying the higher effective tax rate.

I worry you guys are over paying on your taxes if this is complicated math.

---

Menace it really depends, if you are in the 300K to 1M range and run a biz generally an LLC or S Corp will serve you best.

Post: #15

@Menace, being a W2 wage earner for an uncooperative employer is pretty terrible. Being a W2 employee for a cooperative, tax friendly, employer is not bad there are some good benefit programs that they can work with you on to reduce or defer your income. I think a 1099 contractor for a single client is the worst option, you get to pay all of the self employment tax (yes it deductible but deductible doesn't mean free) along with secretary of state and reporting fees.

On the OP
I think the whole married/single/kids and differing tax rates was originally intended to reward people for having kids and adding to the population/workforce. Now it can be abused by 'head of household' status. Also, I wish they picked a state other than new york to rank for America, Wyoming or Tennessee would increase the takehome by 6.85% right off the top, putting that family into the top 5 for take home.

Post: #16

^ correct.

The tax bracket means the new rate applies to income above X.

If you combine and you could have knocked one of you down by giving them deductions to a different bracket you lost a lot of money.

Post: #17

(02-25-2014 12:04 PM)WestCoast Wrote:  Man. Averages again don't matter.

Run the math guys.

---

I like when West Coast is having on "On" day for posting vs. raging at people. This is good advice If a couple is married, their CPA, themselves or tax preparer should run a married filing jointly and married filing separately scenario to see if not averaging incomes will be an advantage.

Remaining unmarried while living under the same roof is the best setup for taxes though it does have some tradeoffs that may or may not matter to the individual. You can't transfer assets to your fake spouse without consideration and there are some estate issues.

Edit: Add on - the 'best' status for a middle income family is actually divorced. Child support does not count as income for the wife on many calculations including social benefits. A man in a relationship with his 'ex wife' on paper could have two homes, food stamps, subsidized housing, subsidized utilities, earning income credit and subsidized daycare because if child support is the vehicle he uses to transfer money to 'her' it has no income implications on her end. There is nothing preventing her from then sharing those benefits with her 'ex husband' or even just re depositing the child support in another bank account. Find me a woman who will go for that arrangement without just leaving on a whim and you've got a keeper. All of the single mom benefits are dependent on an adversarial relationship with the ex spouse. If its a cooperative relationship it creates a flaw that can be taken advantage of.

Post: #18

^ I think the funnier part is when I am angry people view my posts as useful but when I am actually in a great mood my posts borderline on permanent ban.

But yes you get it. You basically work the tax system because averaging your incomes together is just a way for the government to look at a high combined number and justify taxing the hell out of you.

The government is only interested in finding ways to take more money out of your pocket.

Post: #19

(02-25-2014 11:08 AM)RonnieB Wrote:  Yeah that sucks. Governments taxing you to try and discourage you from working overseas. A single American working overseas gets a triple hit. Tax from the country they are working in, tax to the US government, extra tax rate to finance married people.

Americans get substantial overseas tax break. It's around $98K yearly I believe (goes up every year). You still pay into social security, but those even top out too. This is a HUGE incentive to work for a U.S. firm abroad and stay out of country 330 days out of a 365 day time frame.

The problem I believe comes from getting residency in another country. Now you are on paper in two places, and guvmints like revenue. It was never a problem though for defense contractors in war zones, cause were just there to whoop ass. It's nice to work for a powerhouse nation, and see a ~$30K tax return in the spring.

Post: #20

(02-25-2014 12:04 PM)WestCoast Wrote:  Run the math guys.

60K + 40K taxed at marriage rate is worse than
60K single (deductions) 40K solo because you're not paying the higher effective tax rate.

I worry you guys are over paying on your taxes if this is complicated math.

Single person A Income $40k
- 10% up to $9075 = $907.50
- 15% from $9076 up to $36,900 = $4173.60
- 25% from $36,901 up to $40,000 = $774.75
Total tax for Single person A = 5855.85

Single person B Income $60k
- 10% up to $9075 = $907.50
- 15% from $9076 up to $36,900 = $4173.60
- 25% from $36,901 up to $60,000 = $5774.75
Total tax for Single person B = 10855.85

Total tax combined for both single people $16711.70

Married Couple
- 10% Up to $18,150 = $1815
- 15% $18,151 to $73,800 = $8347.35
- 25% from $73,801 to $100000 = $6549.75

Total tax for married couple $16712.10

They still pay the same tax

They still pay the same tax up until a $36,900/$63,100 split in income between the couple

Post: #21

(02-25-2014 12:21 PM)Aliblahba Wrote:  Americans get substantial overseas tax break. It's around $98K yearly I believe (goes up every year). You still pay into social security, but those even top out too. This is a HUGE incentive to work for a U.S. firm abroad and stay out of country 330 days out of a 365 day time frame.

Would you really call that a break?

Take, for example, a Canadian... they could work for the same US firm abroad without ever having to worry about US or Canadian tax. They could also spend up to 180 days in the US each year.

Now, there are some jobs which are only available to US citizens (military comes to mind), but for most Americans, the foreign tax rules are a burden.

Post: #22

(02-25-2014 12:04 PM)WestCoast Wrote:  Let's say you are single. Okay, now what is stopping you from claiming a child as a depend? Literally nothing.

So that entire argument is out the window.

I just hate the idea of paying for other people. People without kids are subsidising this tax break. Paying for others kids, that's what pisses me off. Johnny decides to have a kid but Carl with no kids has to pay more in tax so Johnny gets his tax break. Sucks for Carl

Post: #23

Ronnie you simply don't understand. You now place any deductions on the person closer to the lower tax bracket.

I have wasted my time. In the 60/40 k example clearly you push deductions onto the 40K person to push them below the 36K level and take the lower net tax payment. I am speaking in broad strokes.

How about this 70/30K couple. Clearly the answer is to file single. That one anyone here can understand.

DaveR you are also spot on. Calling it a break is pretty dumb, everyone needs to own a company these days for shelter.

Post: #24

(02-25-2014 01:01 PM)WestCoast Wrote:  DaveR you are also spot on. Calling it a break is pretty dumb, everyone needs to own a company these days for shelter.

Got any resources on doing this? Google is pretty useless.

Post: #25

(02-25-2014 01:01 PM)WestCoast Wrote:  Ronnie you simply don't understand. You now place any deductions on the person closer to the lower tax bracket.

You do understand how a progressive tax system works???

Here is a quote from the page link you sent "Remember, even if your taxable income falls into a higher tax bracket, that's not the full tax rate you'll pay. Because of our tax system's progressiveness, only your last dollars in your final tax bracket are taxed at that rate."

You are the one who gave the 40k/60k example and I showed that they pay the same tax as the married couple. Feel free to prove me wrong.

I agree the 30k/70k split will work out slighly worse for the single people. $36,900/$63,100 split is the cutoff.