Don't Europeans pay similar levels of tax to Americans?

Depends greatly by country. In the US, the total tax wedge (which includes employer tax contributions, such as payroll taxes) is 31.7% of total labour costs[1]. In the UK it is 30.8%, while e.g. in Denmark it is 36.4%. The OECD average is 35.9%

Belgium is the extreme - at 55.3% it's the highest in the OECD. Three European countries (UK, Ireland, Switzerland) come in below the US on this metric.

The numbers are basically all over the place, and depends more on overall culture and priorities than things like healthcare etc. by themselves.

In terms of what is directly visible to the employee, US is at 25.6% of gross wages (note the difference - these numbers can not be directly compared to the ones above, as the ones above are percentages of total labour cost including the employer contributions) compared to 23.4% for the UK, 36.1% for Denmark (Denmark is one of very few countries that don't "hide" hardly any of labour costs as part of employer social security contributions), or 28.4% for Norway, 24.7% for Sweden or 42% for Belgium. So still all over the place.

It also depends greatly on how much you earn, and how progressive your specific country's tax system is.

The only thing that's clear is that the US does not stand out as being nearly as much of a low tax country as people sometimes like to think. E.g. the OECD average (which to be fair is pulled down by several non-European countries) of employee contributions is 25.5%, so slightly below the US.

[1] http://www.keepeek.com/Digital-Asset-Management/oecd/taxatio...

[2] http://www.keepeek.com/Digital-Asset-Management/oecd/taxatio...

It's also interesting to compare the tax burden plus the costs of healthcare: since the U.S. medical system is so inefficient that tends to close the gap even further: e.g. taking those figures shows the average Dane making 54,013 and paying 36.1% (19,444) while the average American makes 50,964 and pays 25.6% (12,741). That $6,703 difference looks great until you notice that Denmark pays for almost all of their citizens healthcare cost but the average American has to kick in an extra $4-5K, steadily increasing year-over-year:

http://www.pbs.org/newshour/rundown/health-costs-how-the-us-...

Are you sure the numbers for the UK include national insurance contributions? Between employee contributions (which are basically an income tax with a weird regressive structure) and employer contributions (similar to US payroll tax) i would expect that figure to be higher.

Nb income based taxes are only the start anyway property tax aka Council tax is quite a burden on lower income households in the UK.

Yes, they do. (EDIT: In addition to the breakdown, look through the report I linked above, it splits out the employee and employer social security contributions in several of the tables and diagrams, which for the UK are the employee and employer national insurance contributions)

The median salary in the UK in 2015 was roughly 27,500 GBP.

Let's do the numbers as percent of wages first. This won't match perfectly with the OECD numbers as I haven't matched up the personal allowance rates etc. by tax year.

But currently, 27,500 means your taxable income is 16,500 (after subtracting the personal allowance). On this you'd pay 20% income tax, or 3,300 and 8.5% employee national insurance for roughly 2,332. Your total tax would be 28.5% of your taxable income, but only 20.5% of income once you factor your personal allowance back in.

If w're looking at employer contributions, I don't know exactly what they stand at this moment, but it used to be 12.5% of gross salary. If we adjust the numbers above, that means 3437.5 in employer contributions for a total tax wedge of ~29.3%. Note that I have not taken into account the lower earnings threshold etc. for employer national insurance contributions, which I believe you should, so I think the total would actually be lower, but even so even when applying it to the full amount you actually still end up below the OECD figure.

Both of the above excludes council tax. Council tax is of course tricky because it depends on the property you live in and your council, and whether or not you live in the property alone.

Now in my property that adds 1600/year for a family. Though you wouldn't live here if you were a single earner family on an 27.5k salary, that'd drive the total tax wedge up to 34.5%. As a single, you'd get half off, and end up with a total tax wedge of 31.9%. Looking at the gross wage percentages, it'd bring taxes to 26.3% (couple) or 23.4% (single) respectively.

Good point. I'd forgotten how much the recent raises in personal allowance had decreased the effective tax rate.

Short answer.The spending priorities are different. We get a much smaller military for example.

Long answer (includes speculation). One primary function of the nation state is to provide its people security. I think most European societies include healthcare and unemployment in their concept of security. This means that spending on these things is seen (by a majority) as a primary function of the state in European cultures. Whereas in US culture these things are seen by a majority as outside the primary scope of the nation state's role in providing security to its population. (NB the UK falls somewhere in between and these things are in flux all the time.)

Depends on which europeans you mean. The higher taxed countries like the nordics pay mad taxes. I don't mind though because I feel it's well spent (i.e. my attitude towards public spending is that it is usually pretty efficient). That's probably a big difference to the US where the attitude seems to be that taxes are pretty much a black hole.

Tax calc for me:

Employer pays $8k

Payroll taxes deducted: $2k

My gross salary: $6k

My income tax: $2k

My net salary: $4k

If I make one big pruchase for all my $4k, the VAT is (with some exceptions, 25%) so I buy goods for $3k + $1k tax.

So basically, of $8 paid by my employer each month, I can buy goods or services for $3k. That's pretty steep! If you look at the income tax above, you'll see it's only 1/3 however.

>seems to be that taxes are pretty much a black hole.

Our defense and war spending is very much a black hole. I'm sorry if I fight being taxed to death in regards to this. Not all of us have a tiny military like your country does.

Worse, federal taxes are just one piece of the pie for Americans. We're usually taxed heavily on the local level with property taxes, state taxes, etc. With those taxes we can certainly see providing value. What the federal government takes goes into a budgetary black box that pays for some pretty odious things. Currently my taxes pay for NASA to stop studying climate change and for the White House family to constantly vacation and live in places other than DC. Things like medicare and social security are taxed separately anyway. So I can see those as individual items and largely don't have an issue with them.

I think a lot of anti-tax attitudes here in the US aren't ignorance, but a protest against a corrupt system wasting money and using it for a net negative for us and the world (Iraq conflict, endless drone strikes, sabre-rattling with China, etc).

There's a moral position for the left to criticize taxation. Imagine if your country spent the kinds of money we did on defense. Would you be so happy with it?

> Our defense and war spending is very much a black hole. I'm sorry if I fight being taxed to death in regards to this. > Not all of us have a tiny military like your country does.

I think US defense (which is really very little defense and mostly power projection) is completely bizarre. A reasonable level would be perhaps 3% GDP which would still be huge. The Swedish military is tiny, and by GDP it's a joke (around 1%). We should be spending at least 2% and I think we will pretty soon, the way things are going now.

> I'm sorry if I fight being taxed to death in regards to this.

But are you fighting taxes or arguing that money is being spent on the wrong things? I.e. are you saying "I oppose high taxes because they just get spent on X!" whereas in most countries you'd see people say "Let's spend less of the tax money on X".

> Currently my taxes pay for NASA to stop studying climate change and for the White House family to constantly vacation and live in places other than DC.

I think a lot (most western?) countries have funding for space exploration, climate research etc. I certainly pay for ESA research just like you'd pay for NASA, and we obviously have climate research etc. I think the cost of the US presidency seems like a blank check if the president himself is able to choose where to go/stay/live.

I also pay for the living and security expenses of a prime minister. They obviously are nothing like the US expenses of the same kind - but that's because I'd vote to change that if it was too high. Now that I'm thinking about it, my (official, ceremonial) head of state is the King. So I pay for a King to live in a castle!. I don't mind doing that though. The costs are "reasonable". Any excess is immediately causing headlines and calling for a republic...

> Worse, federal taxes are just one piece of the pie for Americans.

That's not unique to the US. Obviously in every single country of the world you have administrative divisions on various levels (cantons, counties, regions, states, ...) and often several of these administrative divisions have taxation. In Sweden i'm income taxed on 3 levels (local, regionl, national). But it's deducted in one place from my paycheck so I don't notice much. The state level taxes are also used to pay our expensive EU membership which effectively makes that a fourth level, a kind of federal spending - so my tax money is for example subsidizing farmers in eastern europe.

> I think a lot of anti-tax attitudes here in the US aren't ignorance, but a protest against a corrupt system wasting money

I realize that. But it seems like an indirect and inefficient way of protesting wars and corruption! Don't starve government, change it. Vote. If voting doesn't change anything then change that (i.e. change first-past-the-post elections, gerrymandering and all those other defects - until voting actually changes things). Especially since in the US, budget cuts tend to kill things like meals on wheels before it kills foreign wars.

None of the Nordic countries have taxes as high as the ones you outline above for average earners, though it is possible in some instances if you're earning substantially above average.

For average earners, the tax levels you outline are possible in Belgium, Austria, Germany, France, Hungary or Italy, based on OECD numbers. All of which outdistance the Nordics when it comes to taxation.

Again when looking at averages, of the Nordics, Sweden is highest with ~42.7% of total labour cost going to taxes for an average earner (of which 23.7% is employer payroll taxes). Norway has 36.6%, with 11.5% employer payroll taxes. Denmark 36.4% with 0.8% employer payroll taxes. Finland 43.9% with 18.7% payroll taxes.

Your VAT calculation is vastly exaggerated in any case, as from your net salary you also have to deduct housing costs, food and other essentials, many of which are tax exempt in most European countries. Last time I calculcated how much of my gross salary (excluding payroll taxes) went on VAT, while I lived in Norway, it was closer to 4% (of gross wages, so lower as percentag of total labour costs to make it comparable with the numbers above) despite earning way above average and having a higher disposable income after housing costs etc. than average. For lower earners it will typically be lower, as a lower earner tends to have less disposable income to spend on products that are rated at the full VAT rate.

> None of the Nordic countries have taxes as high as the ones you outline above for average earners, though it is possible in some instances if you're earning substantially above average.

Yes, I'm above average income for Sweden. Roughly my employer pays 1/4 payroll and 3/4 to me as gross salary. I pay 1/3 tax on gross salary and keep. 2/3. That means the net share of the employers' expense is roughly (2/3)x(3/4) which is 1/2 or 50%.

For a median income, the calculation would roughly instead be: the employer pays 1/4 payroll and the employee 1/4 income tax on that, meaning the employees take-home earnings are (3/4)x(3/4) ~ 0.56 so about 44% taxes (Which is surprisingly close to the figure you had there of 42.7%)

The VAT in my calculation was obviously the most exaggerated one because as you point out - a lot of my expenses have lower vat, or even negative tax (I pay a boat load of interests every month, which effectively have a -30% tax since they are completely deductible, even from earned income not just cap gains).

Oh: A source of great injustice in Sweden is that renters (predominantly low income earners) don't deduct interest rate expenses of those who own property (their landlords) while those who own their property deduct a crapload of interest, especially since we have a weird housing system with lots of huge long-term loans (100y mortgages are norm). Basically anyone who owns a flat or house deducts $5-25k a year of interest rates from their income tax. Essentially it's a huge transfer of money from renters to owners. A very regressive tax if you ask me.

> (Which is surprisingly close to the figure you had there of 42.7%)

I've cross checked the OECD numbers many times, and they are very precise. Any discrepancy tend to be year to year changes in deductions etc.

> Oh: A source of great injustice in Sweden is that renters (predominantly low income earners) don't deduct interest rate expenses of those who own property (their landlords) while those who own their property deduct a crapload of interest

This is interesting. Norway has that for a long time as well, and I believe the US allows it, but very few other countries in the world does and didn't realise Sweden also allowed it. Norway allows deductions of all debt interest, which makes it one of the most extreme examples of this, and is one of the big confounding factors when people look at tax rates without taking into account that e.g. even credit card interest paid gives a deduction towards taxable income...

In Norway at least I believe it's largely been seen as an incentive to reward home ownership, and making the average worker a home owner has been as one of the big goals of the labour movement, to the extent that any growth in proportion of population renting has come to be seen as a sign of collective failure.

The UK had tax relief for mortgage interest payments for a while as well, but it was abolished in 2000:

https://en.wikipedia.org/wiki/Mortgage_interest_relief_at_so...

That's the stated purpose of the US mortgage interest deduction too.

It's pretty obviously a failure.

US way:

You make $8k a month:

You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k.

You pay $500 in health and other benefits (employer pays another $500)

If you spend remaining $5.5k, you'll usually pay $250-$500 In sales taxes.

In other words, you have $5k remaining to spend on shit that you probably don't need.

> You pay $2k in taxes (Employer pays an additional $1k in tax), so your income is 9k.

How did the employer paying an extra k mean you make more? I think it's only relevant to talk about 2 figures: a) the expense to the employer and b) your take home (net) salary.

Everything in between there is "taxes" and who pays them and when is less important. If the employer needs $9k to hire you that's what it costs. Then the tax man takes $1k payroll, you get $8k, pay $2k income tax. That leaves you $6k after all payroll and income taxes from a starting $9k making the income+payroll taxes 33%.

Because of tax incidence. https://en.wikipedia.org/wiki/Tax_incidence

Just because your employer is the one writing the checks doesn't mean that the tax burden is really falling on them. The employer side of FICA, for example, is essentially a tax on employee's income.

That comparison doesn't make sense. He states $6k gross salary, which means you need to start with $6k, not $8k, before adding on the employer contribution/payroll tax.

Yeah - whether the "payroll tax" is seen as ever earned by me or not is just semantics. The employers expense is $8k in my case. I get that $8k minus payroll tax minus income tax to my bank account. The net is $4k. In this context if I'm asked how much I earn, the answer is $6k (i.e. before income tax but after payroll taxes). The fact that it's deducted first as $2k payroll then as $2k income tax doesn't change anything in terms of tax pressure however, and to include the total tax pressure obviously requires also including the VAT and other taxes (property, energy, ...)

It's just semantics, but it confuses matters because most people don't include the payroll tax amount when talking about tax rates. I agree it plays into the tax pressure, but it makes it necessary to be very precise when describing it or you end up with confusion like the one above...

Indeed, that's why I tried to list it as clearly as possible. Obviously we could essentially make income tax 0% in Sweden over night, by just moving it to payroll tax. But no one would argue Sweden was some kind of tax haven. So income taxes are relevant when discussing salaries (because really what you take home is the key figure). But for tax pressure you can't discuss just income taxes.

I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently)

> Obviously we could essentially make income tax 0% in Sweden over night, by just moving it to payroll tax. But no one would argue Sweden was some kind of tax haven.

Denmark is an example of the opposite of this: Employer social security contributions make up 0.8% of total tax wedge, and they've rolled all of the employee contributions into the income tax, which makes Danish income tax look really high compared to most other European countries that have much higher employer contributions, and presumably contributes to the idea that the Nordic countries are particularly high tax, while Denmark overall is actually roughly average for OECD.

> I don't know what the grandparent poster was trying to say "employer pays $1k payroll tax so you make $9k"? Just shows how confusing this is (apparently)

He clearly misinterpreted you and though $8k was your gross salary, rather than gross salary + payroll tax, hence my original comment to him.

>you have $5k remaining each month for when you decide to quit your job and start your own company, giving you autonomy that is the #1 factor for happiness and an all around healthy life.

Ehhhh... Personal preference, I don't want autonomy at work. I'm much happier being a cog in the machine, going to work at 9, leaving at 5.

I'm a software engineer and work is a means to an end for me, to feed my family, give me financial security, and enable me to do the things I want to do when I'm not at work. For the most part I enjoy what I do but I would strongly prefer to spend less time at work and have more "me" time. I certainly don't want the responsibility and stress of my own business.

The epitome of happiness is certainly not starting your own business for most of Americans.

8k a month!!! That's a damn nice salary. Even BEFORE taxes I don't make as much as $5k a month.

According to Wikipedia [1], in the US tax revenue is 26% of GDP and in the UK it's 34.4% (while in Denmark it's 50.8%). Moreover, the US spends large portion of its budget on military, so even less goes back directly to the people.

[1] https://en.wikipedia.org/wiki/List_of_countries_by_tax_reven...