How much does somebody in this kind of field in the US pay in taxes? As for me (Germany) I have to basically give away half, such a posting would pay me basically like a very entry position after taxes.
In the US you would pay roughly 35% to 40% in taxes. However (in general), expenses incurred in the course of your business would not be taxable.
For example, if you earned $150,000 as a contractor, but you incurred $30,000 in expenses then you would have $120,000 in potentially taxable income.
The tax code is very, very complex, though, and there isn't a simple answer to this question. There are a vast array of factors that would shift how much you pay in tax up or down, and this complexity is heavily exploited by lots of folks.
I would include health insurance premiums in the US as a tax when comparing to other developed countries since they don’t have to pay those. Easily $5k/per family member per year plus $28k available in case of emergencies due to out of pocket maximums and $10k to $15k per family member per year if you’re 45+.
I think if you do that it becomes really hard to compare a lot of things.
So health insurance is a cost ... albeit not the same for everyone, at some companies you pay surprisingly little and that is compensation ON TOP OF your pay...
Other places not.
It's really hard to get good 1:1 comparisons.
Taxes and etc in the US are widely unevenly applied depending on the situation compared to what seem to be 'more' standardized and predictable numbers, services, in Europe.
This topic is concerning freelancer income, so it doesn’t involve an employer paying for a portion of an employee’s health insurance premiums.
It’s also very easy to compare even if you are an employee, as health insurance premiums are shown in box 12 code DD of an employee’s W-2. And health insurance premiums don’t vary that much between healthcare.gov and ACA complaint insurance that employers subsidize.
What is clear is that there exists a healthcare expense in life, and so if you are paying for it via taxes in one region, you would have to figure out how much it costs in the other region where it’s not included in taxes to make the comparison more accurate.
You can use this table from the state of NJ to reasonably guess how much healthcare will cost you in a moderately high CoL area in the US:
Valid point, I lost track of the freelancer situation.
As for the differing costs of insurance outside of the freelancer world, I've found the costs in the US can vary wildly. Those tax boxes aren't the only way / shouldn't be the only comparison for US healthcare costs.
I don’t understand why they can’t be used to reasonably estimate healthcare costs. ACA compliant plans are pretty standardized, as well as the metal levels indicating expected healthcare costs.
Some plans will cover some providers and some won’t, and rural areas will have issues with even having providers at all, but for most major urban/suburban regions, it should be comparable, +/- 10%, even 20%.
Either way, you know that healthcare costs are in the thousands and $10k+ per year per family, which is a lower bound you can add to calculating US tax rates.
Keep in mind that contractors can put up to $57k per year into a retirement account and can deduct 20% of income from the QBI deduction which will drastically reduce your taxable income.
Earned around $130k in consulting last year. After deductions/expenses, US federal taxes were around $8k. Now.. FICA was something else (which I can't remember offhand), and state tax was something like $3k. Federal/state taxes where ~$11k. health insurance - that was around $10k.
As a Dutch freelancer, my marginal tax rate is a bit over 50%, but I think I've got way too many tax breaks and deductibles compared to regular employees. I'm not going to complain if they decide to cat some of those back a bit (thoug I'm sure other freelancers will).
