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The cost of being American...

tax

It's that time of year again, when American workers get to see how many of their hard-earned dollars were contributed to taxes, social security and Medicare in 2015. You can see my contribution to the system here, in the W-2 Form that was just handed to me by our cute mail room boy.

- Salary: $114,107.40 - this is $30,000 less than prior years because I now work a reduced schedule to have more time to pursue hobbies and passions, and mostly for mental balance. I don't want to waste my life away at the computer or desk, and need other forms of intellectual stimulation besides legal work to stay sane.
- Federal Income Tax Withheld: $22,137.33!!
- Virginia State Tax Withheld: $6,077.78
- Social Security Withheld: $7,074.66
- Medicare: $1,654.56

The last two are contributions to the Federal government's pension and medical insurance plans for retirees. I will see none of this money until at least age 62, when you can begin to collect a pension, and it will not be enough for survival. As a result, I have a separate investment plan on my own and through my work, where a certain percentage of my salary is invested in stocks and bonds. I've had this since I first started working at age 16. My parents always made me aware that it's necessary to first be able to support and provide for yourself, and for this I'm very grateful. Perhaps it helps you better understand why I have absolutely no relation to females who rely on men solely for financial support and basic living needs. I get few tax breaks because I have no children, and can't claim them as dependents or receive tax credits. I get a larger portion than necessary deducted so I usually get a refund of about $1,000 - $2,000 each year. I use these funds for my annual birthday trip each February. The only relief I can claim is through interest paid on my doctorate loans and real estate property I own.

So, which do you think is better? A flat tax system like Russia, or being taxed based on income and earning brackets as in the U.S.? The more you earn, the more you pay....seems fair to me.

Comments

( 213 comments — Leave a comment )
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logofilka
Jan. 29th, 2016 05:11 pm (UTC)
I must show it to my dear husband. He is under the impression that the corporate lawyers who are not solo practitioners do not get less than $300K (and, yes, I know that it is not true, but he does not believe me and does not know any of these lawyers personally to verify).
peacetraveler22
Jan. 29th, 2016 05:14 pm (UTC)
Ordinary people don't understand anything about how much lawyers earn. It's a big misconception that all lawyers are making a lot of money. Actually, at my level I could go to another big DC law firm, work full time and earn over 200K, but I will be in a sweat shop, working constantly, and I don't want this for my life. Money isn't so important to me. The only way to earn big is to work at a large law firm. Solo practitioners, government attorneys, most of them earn under $75k. When you factor in the cost of a law degree in the U.S., this is barely enough to survive if you have to repay student loans.
(no subject) - logofilka - Jan. 29th, 2016 05:17 pm (UTC) - Expand
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blog_niochem
Jan. 29th, 2016 05:13 pm (UTC)

Theproblem is not costs. The biggest problem in Russia is that you never can be sure, that you'll get this services when it's needed.
For example I pay for medicare, but also I pay doctor. Just because state medicine is dangerous. And I can't stop paying for this.



Edited at 2016-01-29 05:14 pm (UTC)
peacetraveler22
Jan. 29th, 2016 05:16 pm (UTC)
Exactly. :) That's why I don't really complain so much. I'm taxed very high, but my life in the U.S. is very comfortable and I have absolutely everything I need as far as infrastructure and medicine are concerned. I don't think any health care is really "free," even under the socialized systems.
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sasadad
Jan. 29th, 2016 05:22 pm (UTC)
In Russia total Tax from that salary in 2015 was 31475.
Difference that all taxes pay the Employer.

But in fact there is a equal the tax burden
peacetraveler22
Jan. 29th, 2016 05:23 pm (UTC)
My employer also deducts the taxes from my check every two weeks, so I think it's the same as in Russia. The difference is in the percentage.
(no subject) - sasadad - Jan. 29th, 2016 05:29 pm (UTC) - Expand
(no subject) - megawiz - Jan. 29th, 2016 05:48 pm (UTC) - Expand
(no subject) - peacetraveler22 - Jan. 29th, 2016 06:07 pm (UTC) - Expand
(no subject) - redheadrat - Jan. 29th, 2016 07:20 pm (UTC) - Expand
perycalypsis
Jan. 29th, 2016 05:25 pm (UTC)
There is a conspiracy theory that a half of all us money is a 'paper bubble' and soon or later all stock indexes will be divided on 2. But the most fundamental thing about money was said by Forrest Gump's mom: you need only limited amount of money, all the rest is excess.
peacetraveler22
Jan. 29th, 2016 05:26 pm (UTC)
Absolutely, I'm a low maintenance person. I don't need much to survive and be happy. :) Some Russian propagandists have been predicting the collapse of the dollar for the past five years, and people continue to believe it.
irisha8787
Jan. 29th, 2016 05:25 pm (UTC)
I don't mind paying taxes, but why do I have to pay 28% after 89K? If you have a flat percentage, you still pay more money the more you get paid, right? My yearly bonuses put me in a different cap and plus they are heavily taxes.

But oh well.. I heard after 75K a year your salary doesn't really affect your level of happiness.
peacetraveler22
Jan. 29th, 2016 05:27 pm (UTC)
Bonus checks are always taxed at a much higher rate...this sucks! :(
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e_d_w
Jan. 29th, 2016 05:27 pm (UTC)
Russian flat scale of taxation is robbery of the common people.


Such taxation leads Russia to revolution again.
peacetraveler22
Jan. 29th, 2016 05:30 pm (UTC)
Russian revolution...it doesn't seem possible when the majority of the population worships their fearless leader, and don't hold officials accountable for anything.
(no subject) - e_d_w - Jan. 29th, 2016 05:45 pm (UTC) - Expand
(no subject) - sergechel - Jan. 29th, 2016 06:39 pm (UTC) - Expand
(no subject) - onkel_hans - Jan. 30th, 2016 04:14 am (UTC) - Expand
wojzeh
Jan. 29th, 2016 05:42 pm (UTC)
given the loonie current rate and my salary, i'm flirting with the idea to become a contractor for amercian companies...
peacetraveler22
Jan. 29th, 2016 05:43 pm (UTC)
I thought Canada had a flat tax system?
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pin_gwin
Jan. 29th, 2016 05:48 pm (UTC)
W-2 is just the begining...
Do you expect any tax refund?
About the taxation - I would say that US tax laws should be simplified down to the level when you can fill your forms with no computer in one evening. The only way to do it - set the flat rates where it's possible.
That's in general, but personally, I am topping up all my 401k and IRA, therefore with 3 dependent deductions I pay zero taxes while having gross income 30k less than you. I live in MN though, it's a bit cheaper here, so my dollars bring me more.
peacetraveler22
Jan. 29th, 2016 05:52 pm (UTC)
Re: W-2 is just the begining...
I always get a refund. We can't compare the cost of living in Minnesota with the Northern Virginia/DC metro region. We are one of the most expensive. :( If all of my family wasn't here, I would have left a long time ago.
Re: W-2 is just the begining... - pin_gwin - Jan. 29th, 2016 05:55 pm (UTC) - Expand
Re: W-2 is just the begining... - peacetraveler22 - Jan. 29th, 2016 05:56 pm (UTC) - Expand
Re: W-2 is just the begining... - pin_gwin - Jan. 29th, 2016 06:01 pm (UTC) - Expand
Re: W-2 is just the begining... - peacetraveler22 - Jan. 29th, 2016 06:03 pm (UTC) - Expand
Re: W-2 is just the begining... - pin_gwin - Jan. 29th, 2016 06:20 pm (UTC) - Expand
Re: W-2 is just the begining... - peacetraveler22 - Jan. 29th, 2016 06:25 pm (UTC) - Expand
Re: W-2 is just the begining... - pin_gwin - Jan. 29th, 2016 06:30 pm (UTC) - Expand
Re: W-2 is just the begining... - peacetraveler22 - Jan. 29th, 2016 06:31 pm (UTC) - Expand
Re: W-2 is just the begining... - south_of_broad - Jan. 29th, 2016 07:49 pm (UTC) - Expand
Re: W-2 is just the begining... - pin_gwin - Jan. 29th, 2016 07:58 pm (UTC) - Expand
notabler
Jan. 29th, 2016 05:54 pm (UTC)
Your tax seems normal for me. If any country want to have an advanced social care, it needs proper taxes.
peacetraveler22
Jan. 29th, 2016 06:00 pm (UTC)
I think those who constantly bitch and complain about the tax rates in the U.S. have never been to a country where there is absolutely no infrastructure, and major inefficiencies with government resources. Of course, governments in all countries are lazy and inefficient, but whenever I need the help of local agencies, they have always been there and provided decent service.
3as7
Jan. 29th, 2016 05:56 pm (UTC)
I actually don't expect to see Social Security benefits myself, even though I am paying the tax. They should be either fased out, or removed altogether- depending on how the US economy will work.
Because it is the largest US government expenditure, and liabilities are growing, since baby boomers are retiring.
peacetraveler22
Jan. 29th, 2016 06:01 pm (UTC)
So what to you do to prepare for retirement? Do you have a 401K through your employer?
(no subject) - 3as7 - Jan. 29th, 2016 11:00 pm (UTC) - Expand
teaboo
Jan. 29th, 2016 06:04 pm (UTC)
It is great misconception in the world that Russia is tax paradise. It's tax base even greater than US because of:
Personal income tax - 13%
Employer pays on top of any salary to government 42% rate for retirement (not sufficient to survive a week) and for health care (which used only poor people because of unacceptable quality)
VAT - 20% of any goods
So now you can calculate how many rich RU gov taking off people in addition to oil money.
13% is created simple reason - it much easier to control legal entities than population and you regulate businesses in contrary to report to the crowd....
Russia is occupied by mafia
peacetraveler22
Jan. 29th, 2016 06:11 pm (UTC)
In some U.S. States, there is no VAT. :) But in Virginia, it's high, and differs depending on the commodity. Clothes, liquor, food, all taxed at different percentages.
(no subject) - 3as7 - Jan. 29th, 2016 11:04 pm (UTC) - Expand
xuswan
Jan. 29th, 2016 06:08 pm (UTC)
First I and my parents have learned about additional income when we had read the books of Kiyosaki (12 years ago) . These books changed our financial mind and we tried to use discribed in the books way on practise. But the crisis of 2008 failed our attemptes.
peacetraveler22
Jan. 29th, 2016 06:09 pm (UTC)
This is what I don't really understand. So, most Russians will rely simply on their government pensions in old age? In other words, it is not common to have private investments throughout your lifetime to supplement the pension and live better in old age?
(no subject) - logofilka - Jan. 29th, 2016 06:13 pm (UTC) - Expand
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peacetraveler22
Jan. 29th, 2016 06:24 pm (UTC)
When you have a family, you have different responsibilities. I don't have children, am not married, and thus have more freedom. I need to worry only about myself. But I also work for a very good law firm and people who appreciate a healthy work/life balance. I could never work for a boss who behaved as a dictator, or treated me badly. I've worked with a few older attorneys who tried to patronize and belittle me, and I was removed from the cases after I confronted them. No one pushes me around, regardless of title or position. It's always necessary to speak up and defend yourself. I'm not sure about Canada, but in my law firm, people typically take 3 - 4 weeks vacation per year, and we have flexible schedules. We can work from home, or anywhere else. Good luck! I hope you find some relief from your brutal work schedule so you can better enjoy life and your family.
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peacetraveler22
Jan. 29th, 2016 07:50 pm (UTC)
Flax tax seems unfair to me, because distribution of wealth is not equal in any country.

Edited at 2016-01-29 07:51 pm (UTC)
(Deleted comment)
redheadrat
Jan. 29th, 2016 07:17 pm (UTC)
I favor low flat tax for all and completely separate help for those who need it, with high luxury purchasing taxes for additional revenue.
peacetraveler22
Jan. 29th, 2016 07:49 pm (UTC)
We already have help for those who need it. All kinds of welfare, unemployment, benefits for low-income children (like SNAP in schools). These programs should exist, but they are too often abused!!
(no subject) - redheadrat - Jan. 29th, 2016 08:09 pm (UTC) - Expand
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