yogiii
Junior Associate
Joined: Dec 20, 2010 19:38:00 GMT -5
Posts: 5,377
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Post by yogiii on May 25, 2017 6:57:44 GMT -5
But Ava.....those things cost money. Are you ok with 60% of your paycheck going for taxes? Sweden has some excellent benefits....but they are also undergoing a brain drain. Highly educated, hard working professionals are tired of 65+% of their paycheck going to taxes. There is no incentive to work harder because harder work does not mean more money in their pockets, just higher taxes. I was talking to one of the visiting dentists (who is now a US citizen and teaching at Harvard). Despite him working his ass off for a DDS, a specialty MS (in perio) and getting a PhD, his standard of living was not much more than the local sales person. So how would you feel, Ava....if after working your ass off for your degrees, passing all the certification exams, that any increase in salary you receive is going to go to the government? This is already an issue here in the US, even though our taxes are lower than the taxes in places like Sweden. DH and I have had many other good business ideas over the past few years, but when I put numbers down, it's just not appealing to do all the work required to get another startup going given that we'll keep less than 50% of the income. We already live a really nice, comfy life and remember well what effort it took to get this business going. The payoff isn't worth the work for us given that we already have a good income. If we were still just starting out or even at our prior corporate jobs it would definitely make sense for us to get one of these ideas going since most of them would likely generate 1% type income, but given every single extra dollar of income we make now is taxed around 50%, the amount of work required is disproportional to the enjoyment we'd get out of the extra money at this point. Not that this is a huge deal for society that people already making good money decide not to make more money, but our business does employ people and each of those other ideas would also create jobs and extra economic activity for our area, so we're not the only one that misses out on opportunities when we pass on starting more businesses. If our tax and income situation was flat like what Mich is describing in Sweden, there is no way in Hades I would have bothered to become a CPA or to have started a business at all. Work all those hours to make the same income as a local salesperson? No way. I'd happily work as a cashier at the local grocery store and enjoy my free time. And this works OK for a country for a short period of time, but over years the erosion of incentive and brain drain decreases the tax base. Right now, I pay six figures in taxes every year. I'm thinking as a cashier I'd be contributing a wee bit less and taking a lot more from the social safety net. I'll take on of your good ideas
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lund
Familiar Member
Joined: Jul 22, 2015 7:12:22 GMT -5
Posts: 787
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Post by lund on May 29, 2017 7:57:24 GMT -5
65% in income tax in Sweden? ROFLOL!!!
With a gross income of SEK1M, approx USD110k, you would in 2016 be paying about 43%. (Somebody earning half of that, which would be many dentists and doctors after getting licensed for independent work, would be paying about 28.5%.)
The employer tax would be 31.42%, but it would be paid by the employer. So the total taxation is high, and buying work/services is expensive here. But it still pays to work.
Those who earn much that is not from one single, large employer probably would have a company paying them salary, buying them extra pensions, medical insurances (there are fast-track self-pay unsubsidized care available -the official system is good but usually has waiting times/queues for non-urgent problems), and paying them dividends, which are taxed at 30%. They should employ a CFA/CPA/tax specialist for setting this up.
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lund
Familiar Member
Joined: Jul 22, 2015 7:12:22 GMT -5
Posts: 787
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Post by lund on May 29, 2017 8:03:53 GMT -5
And a normal sales person would probably earn about SEK 300k pre-tax, and according to my back of the napkin calculation pay less than one third in taxes.
And when comparing incomes between the US and the Scandinavian countries, remember that there are basically no tuition costs, even if room and board costs are much more than in the US and books usually are more expensive, and that basic medical insurance and long-term care insurance are included in the taxes. Most full-time PHD students are employed, earning credits in the system corresponding to Social Security, as well.
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milee
Senior Associate
Joined: Jan 17, 2012 13:20:00 GMT -5
Posts: 12,344
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Post by milee on May 29, 2017 17:52:18 GMT -5
Not sure who referenced 65% taxes in Sweden, but that was probably an aggregate of not just income tax but things like VAT, which the US doesn't have. No idea what Sweden's VAT rate is, but last time I checked Britain and France were at 20% for most purchases and Denmark and Finland were at 25%. The employer tax you reference of 31.42% sounds like Sweden's version of our social security + medicare taxes, which here in the US are15.3%, split between the employer and employee. Also, most of that is only paid on the first $127k in earnings.
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