What are the Tax Rates in the USA?

Antonio Vieira

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#1
Hi!

Can anyone tell me the approximate values of taxes in USA?
For example you have the IRS for the earnings related to work. For example a person with a wage of 3000 USD/month what is the IRS he has to pay?
Do you also have to pay taxes for the state you belong?
You also have the VAT for the things you buy, what is the percentage of VAT?

Thanks
 
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Ninja

Looking for Reality
Staff member
Super Moderator
#2
Howdy Antonio,

A number of taxes that tend to be interrelated:

IRS = Federal Income Tax
State Income Tax (but not all states charge tax, and the rate varies state to state)
Local Income tax (but not all areas charge this)
State Sales Tax on purchases (varies by state)

and additional taxes for other items (though some may argue that they are not formally "taxes"):
Social Security
Medical Care
Emergency response (Fire, police, etc.)
Right to work fee
Property tax
School tax
Special local taxes to cover bond issues
...and I'm sure I missed quite a few...

I am not aware of any VAT in the USA but I am not 100% sure...
 

ScottK

Not out of the crisis
Staff member
Super Moderator
#3
Hi!

Can anyone tell me the approximate values of taxes in USA?
For example you have the IRS for the earnings related to work. For example a person with a wage of 3000 USD/month what is the IRS he has to pay?
Do you also have to pay taxes for the state you belong?
You also have the VAT for the things you buy, what is the percentage of VAT?

Thanks
Federal Income tax Brackets: http://www.moneychimp.com/features/tax_brackets.htm
Some states collect income tax, some don't.
There is no Nationwide VAT - it's dependant on the state and municipality. For example I live in NJ where the general state sales tax is 7.0%. But there are areas where it is only 3% (economic development areas). And not everything is taxed, clothing for example is not taxed in NJ, but it is in other states.

In addition to Federal income tax and State income tax if you own Real Estate you often have property taxes, school taxes, etc... it's all dependant on the state, county and municipality. My property tax is lower than my friend's in the next town over. It's not an easy system.
 

Michael_M

Trusted Information Resource
#4
I live in Nevada, sales tax runs around 7.7% (varies by county)--food is not taxes (unless it is served). We have no income tax, but have property taxes.

Most taxes are 'hidden' as in Gasoline Taxes, electrical tax (or fee), etc.

As you can see, taxes varies allot from state to state, and even area by area.
 

Kales Veggie

People: The Vital Few
#5
Hi!

Can anyone tell me the approximate values of taxes in USA?
For example you have the IRS for the earnings related to work. For example a person with a wage of 3000 USD/month what is the IRS he has to pay?
Do you also have to pay taxes for the state you belong?
You also have the VAT for the things you buy, what is the percentage of VAT?

Thanks
It is complicated.

Federal Taxes: See IRS tax table (Link (differences for single, married, head of household). Tax law allows deduction for several things: mortgage interest rates, education, adoption, certain retirement contribution (with maximum and income limits).

State Income Taxes: most states do, some states do not (Link State also allows deductions to calculate taxable income.

County / City tax: depends, many variations.

Sales tax: most states do, some do not Link

Property tax: if ones one real estate (home, land), property taxes are to be paid (these often include a school tax, 911 fee, library tax and so on)

Other: Social Security and Medicare (around 7.5% of income)

States / Localities without some of the taxes mentioned above, have higher other taxes and/or fees.
 

TPMB4

Quite Involved in Discussions
#6
Isn't sales tax in the USA the same or equivalent as VAT in other countries? Someone said there is not VAT but there is it is just called something else.

USA on average has a lower tax burden than a lot of western countries, especially European countries. UK is kind of trying to achieve the levels of state of European countries but with the lower tax burden that USA succeeds in having. It doesn't work. Either big state with higher tax burden or small state with low overall tax burden. No such thing as halfway house.

I think it is scary at both ends of the tax burden spectrum. Low taxes often mean lower levels of safety net. Higher tax burdens might mean better healthcare for all, better social benefits, etc. but that comes with over 50% tax burden!! I think the Scandinavian countries are an good example of that, IIRC one of them pays unemployment benefit at a %age of your last salary. Imagine earning $100k and then losing your job to get say $70k back in benefits. Doubt I'd go back to work!!

Sorry off topic a bit.
 

ScottK

Not out of the crisis
Staff member
Super Moderator
#7
Isn't sales tax in the USA the same or equivalent as VAT in other countries? Someone said there is not VAT but there is it is just called something else.

USA on average has a lower tax burden than a lot of western countries, especially European countries. UK is kind of trying to achieve the levels of state of European countries but with the lower tax burden that USA succeeds in having. It doesn't work. Either big state with higher tax burden or small state with low overall tax burden. No such thing as halfway house.

I think it is scary at both ends of the tax burden spectrum. Low taxes often mean lower levels of safety net. Higher tax burdens might mean better healthcare for all, better social benefits, etc. but that comes with over 50% tax burden!! I think the Scandinavian countries are an good example of that, IIRC one of them pays unemployment benefit at a %age of your last salary. Imagine earning $100k and then losing your job to get say $70k back in benefits. Doubt I'd go back to work!!

Sorry off topic a bit.
The big difference is that sales tax is set by the state, not the national government.
Wikipedia covers every state: http://en.wikipedia.org/wiki/Sales_taxes_in_the_United_States#New_Hampshire
 

Kales Veggie

People: The Vital Few
#8
Isn't sales tax in the USA the same or equivalent as VAT in other countries? Someone said there is not VAT but there is it is just called something else.

USA on average has a lower tax burden than a lot of western countries, especially European countries. UK is kind of trying to achieve the levels of state of European countries but with the lower tax burden that USA succeeds in having. It doesn't work. Either big state with higher tax burden or small state with low overall tax burden. No such thing as halfway house.

I think it is scary at both ends of the tax burden spectrum. Low taxes often mean lower levels of safety net. Higher tax burdens might mean better healthcare for all, better social benefits, etc. but that comes with over 50% tax burden!! I think the Scandinavian countries are an good example of that, IIRC one of them pays unemployment benefit at a %age of your last salary. Imagine earning $100k and then losing your job to get say $70k back in benefits. Doubt I'd go back to work!!

Sorry off topic a bit.
No. VAT is a value added tax. Only the value added is taxed.

With sales tax, every time something is sold, the whole amount is taxed. (good deal for the tax agency)
 

Antonio Vieira

Involved - Posts
Trusted Information Resource
#9
No. VAT is a value added tax. Only the value added is taxed.

With sales tax, every time something is sold, the whole amount is taxed. (good deal for the tax agency)
It's the same here with VAT...
And now it's 23% of the sale price!!!
For example if you are a consultant every receipt you fill you have to charge your client with 23% VAT!!!
 

Wes Bucey

Quite Involved in Discussions
#10
No. VAT is a value added tax. Only the value added is taxed.

With sales tax, every time something is sold, the whole amount is taxed. (good deal for the tax agency)
It is important to realize that VAT means EVERY transaction where "value" is added is taxed, but, usually, in a sales tax, only the final retail sale is taxed.

An example:

  1. ABC makes a widget and sells to DEF wholesaler (no tax)
  2. DEF sells to Mom & Pop retailer [M&P] no tax (but price is marked up)
  3. M&P sells to John Q Public [JQ] at markup; depending on state and product, the sales tax may range from 0% to 10-1/2%
Complicating this is the fact that some states allow local government subdivisions (counties, townships, cities and towns) to also levy a sales tax. (In Illinois, a Chicago purchase would include state, county, and city sales tax for a total of 10-1/2%)


Also note that states differentiate between goods (products) sold to be incorporated into another product to be resold and goods used directly by the buyer. Thus, as a machinist, I would pay sales tax on my turning center and tool bits, but not on the steel I turn into a widget and sell to the next link in the supply chain.
 
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