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I have two job offers and have troubles to decide. I am married with 1 kid, original from China and don't have permanent residency in both Canada and US.
a) 104K CA$ from Saskatoon, Canada. Permanent job after one year probation, 4-5% increase per year. It easier for me getting permanent residency in Canada. Saskatoon is crazy cold.
b) 75K US$ from San Francisco, USA. Renewable contract per year. I don't have to paid health insurance for my whole family. I might get better chance to move other places if I stay in USA. And my wife have better chance to find a job in San Francisco. And the weather is SF is great.
My questions:
1) Considering the tax, price of consumer goods, housing costing, ect, how is the life in Saskatoon in San Francisco?
2) How expensive to live in SF. What kind of live we will have if my wife don't have job, which means 75K for three?
3) Which one you will take if you were me?
Thanks
I'd take San Francisco, without a doubt... of course I'm a US citizen with no intention on moving abroad, so that's a part. Even though, SF is my favorite American city. It's very expensive, and if you live in the city, you'll be really paying out. But many people live on less than that as well and are very happy. SF's also got one of (if not THE) biggest Asian American populations in the US... so if great Chinese food and Chinese cultural things are an interest, SF's only second to China itself (my Dad's from China as well.)
I have no idea about Canada, only been to the big cities, and of course the Canadian dollar is worth less than US dollars, so you'll have to do a conversion, since straight up comparing the numbers won't do. I'd expect taxes to be higher though, being a socialist country. The US is a pretty cheap place to live compared to other countries, but again I'm no expert on Canada.
tande1n5:
Thank you for your great advice! I agree with all you said. But I heard my family( 3 people, might want another kid) will live badly in SF with 75K per year. I am 31 years old, might need some stable life.
It's true that in San Francisco, people generally live in small apartments, and rent is quite high. However, a common thing to do in SF is to live across the bay, many suburbs in the east bay are much more affordable, and bart makes for a pretty easy commute... but things are expensive in the bay area, there's no way of getting around that.
I have no idea about Canada, only been to the big cities, and of course the Canadian dollar is worth less than US dollars, so you'll have to do a conversion, since straight up comparing the numbers won't do. I'd expect taxes to be higher though, being a socialist country. The US is a pretty cheap place to live compared to other countries, but again I'm no expert on Canada.
The rates are about equal now. 1 US dollar gives 1.0717 Canadian dollars. The US dollar has dropped a lot since Bush took office.
I'd say living in California is more socialist, considering federal, state, social security and medicare taxes, SDI. It would typically be about 44%. But in Canada it would be about 39% (federal and provincial), though I don't know all the taxes involved.
The rates are about equal now. 1 US dollar gives 1.0717 Canadian dollars. The US dollar has dropped a lot since Bush took office.
I'd say living in California is more socialist, considering federal, state, social security and medicare taxes, SDI. It would typically be about 44%. But in Canada it would be about 39% (federal and provincial), though I don't know all the taxes involved.
Where did you get that figure of 44%? Unreal. Hubby and I brought in around 100K last year -- less the business deductions and other things our AGI on our income tax return was around 65K. I pay ALL our taxes -- and we paid 18866.00 Fed and 1136.00 State -- total of 20002.00 -- that's 20% of our Gross... AND I GOT A REFUND totalling 5K.
That's no where NEAR your 44% -- OH -- AND we contribute to 2 IRA's at the full amount yearly and max our contribution to a SEP-IRA.
So you may come up with a mythical figure of 44%, but my reality says you're wrong.
Where did you get that figure of 44%? Unreal. Hubby and I brought in around 100K last year -- less the business deductions and other things our AGI on our income tax return was around 65K. I pay ALL our taxes -- and we paid 18866.00 Fed and 1136.00 State -- total of 20002.00 -- that's 20% of our Gross... AND I GOT A REFUND totalling 5K.
That's no where NEAR your 44% -- OH -- AND we contribute to 2 IRA's at the full amount yearly and max our contribution to a SEP-IRA.
So you may come up with a mythical figure of 44%, but my reality says you're wrong.
No, I still don't think I'm wrong. Read below. Sorry for technical details.
At the lower AGI you don't feel the pinch of the high tax brackets because of the progressive tax system (both the US and Canada have progressive taxes) and deductions. When your household income is high, say around 200K after business expenses, you'll be paying taxes through your nose.
You said your AGI is 65K, married filing jointly. Now subtract the standard or itemized deductions to get the taxable income. Say your taxable California income is 50K. This amount is in the 6% tax bracket (for married filing jointly), but the tax is only 1248, which is only about 2.5%. Some of that 50K is taxed at 1%, some at 2%, some at 4%, some at 6%.
However, suppose you make an additional 1K. That 1K will be taxed at 6% in California, for an additional tax of $60. For federal it would be additional 15%. However, you also have to pay social security and medicare (both the employer and employee portion as you are self employed), which is 12.4% for social security and 2.9% for medicare. So, for making 1K additional salary, you pay an additional 6+15+12.4+2.9=36.3% in taxes. And there's also the SDI tax, but it's small (under 1%), but I don't know the details.
Now suppose your household income is 200K, married filing jointly. This is well into the 9.3% tax bracket for California, 33% for federal. Now suppose you make an additional 1K. As you've probably maxed out your social security contributions (only the first $94,200 is taxable), you don't have to pay this tax. But there's medicare of 2.9% (both employer and employee portion). So then your tax is 33+9.3+2.9=45.2% on this additional 1K of income.
If the income was from dividends and capital gains, then it would not be subject to medicare taxes. Then the tax would be 33+9.3=42.3% on this 1K. In my case I'm making over 30K a year in dividends, corporate and treasury bonds, so the taxes really add up! (But interest from treasury bonds is not subject to state and local tax.)
In addition, as your income increases, your itemized deductions get phased out (to 20% of their full value), and if your income is very high (around 200K to 350K) but not very very high (more than 350K), then you are subject to AMT. Under AMT, you pretty much don't get the deduction for property tax, charitable contributions, etc. At the very very high income your standard tax will so high that you won't have AMT, but your itemized deduction will be really phased out.
In addition, if you own your own business you can deduct a lot of things as business expenses, such as miles driving, office space, some airline tickets, some meals, etc which can reduce your gross income significantly.
Reference websites:
2006 Federal Tax Rate Schedules (http://www.irs.gov/formspubs/article/0,,id=150856,00.html - broken link) Social Security Update 2006
California Tax Rates and Exemptions (http://www.ftb.ca.gov/forms/catxrate_exmpt.html - broken link)
No, I still don't think I'm wrong. Read below. Sorry for technical details.
At the lower AGI you don't feel the pinch of the high tax brackets because of the progressive tax system (both the US and Canada have progressive taxes) and deductions. When your household income is high, say around 200K after business expenses, you'll be paying taxes through your nose.
You said your AGI is 65K, married filing jointly. Now subtract the standard or itemized deductions to get the taxable income. Say your taxable California income is 50K. This amount is in the 6% tax bracket (for married filing jointly), but the tax is only 1248, which is only about 2.5%. Some of that 50K is taxed at 1%, some at 2%, some at 4%, some at 6%.
However, suppose you make an additional 1K. That 1K will be taxed at 6% in California, for an additional tax of $60. For federal it would be additional 15%. However, you also have to pay social security and medicare (both the employer and employee portion as you are self employed), which is 12.4% for social security and 2.9% for medicare. So, for making 1K additional salary, you pay an additional 6+15+12.4+2.9=36.3% in taxes. And there's also the SDI tax, but it's small (under 1%), but I don't know the details.
Now suppose your household income is 200K, married filing jointly. This is well into the 9.3% tax bracket for California, 33% for federal. Now suppose you make an additional 1K. As you've probably maxed out your social security contributions (only the first $94,200 is taxable), you don't have to pay this tax. But there's medicare of 2.9% (both employer and employee portion). So then your tax is 33+9.3+2.9=45.2% on this additional 1K of income.
If the income was from dividends and capital gains, then it would not be subject to medicare taxes. Then the tax would be 33+9.3=42.3% on this 1K. In my case I'm making over 30K a year in dividends, corporate and treasury bonds, so the taxes really add up! (But interest from treasury bonds is not subject to state and local tax.)
In addition, as your income increases, your itemized deductions get phased out (to 20% of their full value), and if your income is very high (around 200K to 350K) but not very very high (more than 350K), then you are subject to AMT. Under AMT, you pretty much don't get the deduction for property tax, charitable contributions, etc. At the very very high income your standard tax will so high that you won't have AMT, but your itemized deduction will be really phased out.
In addition, if you own your own business you can deduct a lot of things as business expenses, such as miles driving, office space, some airline tickets, some meals, etc which can reduce your gross income significantly.
Reference websites:
2006 Federal Tax Rate Schedules (http://www.irs.gov/formspubs/article/0,,id=150856,00.html - broken link) Social Security Update 2006
California Tax Rates and Exemptions (http://www.ftb.ca.gov/forms/catxrate_exmpt.html - broken link)
So, in other words, your 44% is an absolute worst case scenario for the highest earners.
But a guy earning 75K isn't going to have the worst case scenario. And he has a kid -- so expect medical deductions for kid health care because young ones tend to hit doctors a lot. No home deduction, but it also sounds like the OP could be considered a independeant contractor, so he could have a lot of business deductions. It also sounds, since his wife will be looking for work, that he might not have investment income that could be taxed so highly.
It also sounds like I'll HAVE to move to make a living off my savings, if investment income is taxed at those amounts.
Thanks for all of your response.
I have checked carefully. For the taxt part, my rate is about 20% in SF and about 30 in Saskatoon. So the absolute after-taxt salary is similar. However the similar house I can buy with 250K in saskatoon, 1000k in SF.
It is a tough one, I will make my mind next week
So, in other words, your 44% is an absolute worst case scenario for the highest earners.
But a guy earning 75K isn't going to have the worst case scenario. And he has a kid -- so expect medical deductions for kid health care because young ones tend to hit doctors a lot. No home deduction, but it also sounds like the OP could be considered a independeant contractor, so he could have a lot of business deductions. It also sounds, since his wife will be looking for work, that he might not have investment income that could be taxed so highly.
It also sounds like I'll HAVE to move to make a living off my savings, if investment income is taxed at those amounts.
Goody! I'm ready to get back to the East Coast...
Even if his wife finds a job paying 50K, their net income would be 125K, and every additional dollar they make would be taxed at 28 (federal) + 9.3 (state) + 7.65 (social security + medicare, employee contribution only) = 44.95%. That's a lot and yet his income is not so high!
Anyway, my main gripe with your original post is that you say Canada is more socialistic than the US, which I think is not true; and it might even be the other way around.
Only medical expenses in excess of 7.5% of your AGI are deductible on Schedule A. On AGI of $75,000 that's $5,625, and I doubt even young ones hit the doctor that often. You can pay for the young ones doctors visits using pre-tax dollars thanks to FSA. As for health insurance, you can get family health insurance, and the employee portion of the premium would be paid pre-tax (and the company pays the rest and it will be pre-tax for the company as well).
> So, in other words, your 44% is an absolute worst case scenario for
> the highest earners.
First, the only people who can afford to buy a house in the area are the so-called highest earners. So in other words, lots of people hit the absolute worst case scenario.
Second, as noted above, even if his wife finds a job paying 50K, they would be paying 44.95% tax on every dollar of income, and 75K+50K is not that much over here.
100K to 150K are 6.30% of all returns, and 14.04% of taxes.
150K to 200K are 2.15% of all returns, and 8.43% of taxes.
200K to 300K are 1.54% of all returns, and 9.28% of taxes.
In summary, all those making more than 100K paid 75% of taxes.
So you can see that the high income earners (where 100K is considered high), are a small percentage of returns but the bulk of personal income taxes. Is that not socialism?
I just don't see how a state like TX can function with no state tax and still do such a good job.
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