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0 pointsb9a2cab54y ago0 comments

Perhaps not hard to live on, but it's easy to see how the state taxes away any chance you have to build any semblance of wealth due to the insane cost of living in the Bay.

Basic 1 bedroom apartment rent, at least 45min commute or less to Menlo Park/Palo Alto - $4000/mo

CalTrain/BART/car insurance/bus/Uber - $1000/mo (this is conservative, since car insurance costs more in the Bay since the DA won't enforce anti-theft laws)

Groceries - $400/mo

Utilities and phone bill - $400/mo

Health insurance - $300/mo

Miscellaneous other expenses (e.g. soap, toilet paper, etc.) - $500/mo

CA tax bracket for the 57k-295k income range is 9.3%, so your average rate for that 250k is going to be pretty close to 9%. Your effective federal rate under the new tax plan being discussed in Congress right now is going to come in the mid 30's - let's say 32% to be conservative. Social Security adds 6.2%, Medicare another 1.45% under current rates. CA SDI is another 1%. Total effective rate: 49.65%. Post-tax earnings: $125,875 out of $250,000.

What about your expenses? Well, if you do the math, the above comes out to $79,200/year. You now have $46,000/year to save towards a house... which oh by the way, costs $1.5M at present day for a shack in Fremont. Oh, and forget about having kids too.

Yes, you aren't starving, but considering you're making $250k it's kind of egregious that you aren't able to purchase a run-down house in 30 years from your income. The problem is twofold: the state taxes away half your income so you can't build wealth, and NIMBYs opposing the development of new housing suck away the rest of your income.

And before you say we should be focusing on actual poor people first: perhaps consider that the state clearly has the resources for both?

0 comments

ryan_lane4y ago

Everything in this list is overinflated, or you're really poor at budgeting. A $4k a month 1br is going to be a luxury high rise; not a basic 1br. $1k a month on travel expenses is insane. I never spent more than $400 a month and I used Lyft at least twice a day every day. Health insurance is covered by your employer, unless you're working for a really shitty employer.

Also, you don't understand marginal taxes. Please, go read up on them, because anytime you talk to someone who understands them, they're going to think you're an idiot when you start whipping out your calculations.

b9a2cab5OP4y ago

I quoted the effective tax rate. The marginal rates are higher. Federal marginal rate at 250k under the new proposed tax plan is 35%, excluding Medicare and Social Security. CA's marginal rate at 250k is 9.3%. All of the numbers I quoted are lower than that.

Maybe try to understand that your taxes are composed of more than just federal+state and that Medicare+Social Security+CA SDI actually adds a substantial amount?

> luxury high rise

Have you seen real estate prices recently? Luxury high rise has you paying much more than 4k if you're anywhere close to a good neighborhood. And if you're trying to argue you can spend 2k to live in a 1930s apartment in the Tenderloin while making $250k, I think you're too far in the echo chamber to have your mind changed.

> Health insurance is covered by your employer

This is in the context of startups, so no, it's not. The employer will subsidize it but it isn't free.

joshuamorton4y ago

You're comically overestimating the effective tax rates.

SSI maxes at 140K, so you're paying an effective 3.5% rate at 250K. The effective federal and state tax rates for 250K of AGI are going to be below 32 and 9% and they won't be affected by any current Biden plan. The calculator I'm looking at[0] suggests an effective federal rate of 23.5%, CA rate of 8%, and FICA (SSI + Medicare) of 5%, for a total effective rate of just over 36% overall, 13% (or 32,000 a year) off of what you suggested. This more or less matches my experience with an AGI of around that much, although in practice my effective rates were lower than those.

To put that in perspective, that ~32,000 you're misestimating by is enough to afford a second apartment, or, you know, the annual SF minimum wage.

To hit an effective federal tax rate of 32%, you need to be making 800K/year. To hit an effective overall tax rate of 49%, you need to make more than 2 million/year (less after this year, but not a whole lot less, like 1.8 million a year or something).

> And if you're trying to argue you can spend 2k to live in a 1930s apartment in the Tenderloin while making $250k, I think you're too far in the echo chamber to have your mind changed.

I can find a handful of 1 and 2 bedroom apartments with W/D and dishwasher for <=3K. I can find plenty under 3.5K. Like, tons. And that's on zillow. You can usually find better rates on craigslist. "I want to live in a luxury high-rise downtown" is a very particular interpretation of the requirements you laid out.

[0]: https://smartasset.com/taxes/california-tax-calculator#oDlsn...

ztratar4y ago

I would argue it's not inflated at all.

$400 a month for groceries? In SF?

A single meal at an "affordable" restaurant is often $30 after tip.

Kbelicius4y ago

> A single meal at an "affordable" restaurant is often $30 after tip.

I've never considered nor seen anybody counting eating out as groceries. Is that normal?

2 more replies

lmm4y ago

> What about your expenses? Well, if you do the math, the above comes out to $79,200/year. You now have $46,000/year to save towards a house... which oh by the way, costs $1.5M at present day for a shack in Fremont. Oh, and forget about having kids too.

$46,000/year is a decent pre-tax annual household income in most of the country, and saving 20% of your income is doing very well for yourself. If you're putting that much away even after those inflated expenses (are you seriously paying $50/working day for your commute?) you're in no position to complain about your tax rates. The bay-area housing situation sucks, but that doesn't mean you're entitled to take out of the tax fund.

hamandcheese4y ago

> If you're putting that much away even after those inflated expenses (are you seriously paying $50/working day for your commute?) you're in no position to complain about your tax rates.

Ahh the classic “well you aren’t poor so you don’t get to complain”.

Can we not aspire to have a middle class in this country?

barbazoo4y ago

I would consider $46,000/year in savings to be very, very far from poor. And that's with a budget many consider to be inflated.

1 more reply

lmm4y ago

Apparently we can't, because part of the social contract of a middle class is that they're happy to pay 50%-ish tax rates.

1 more reply

UncleMeat4y ago

> Basic 1 bedroom apartment rent, at least 45min commute or less to Menlo Park/Palo Alto - $4000/mo

I lived in a "luxury" 2br apartment that was 20m from Palo Alto just a few years ago for $4000. My 1br prior to that was $2250.

> CalTrain/BART/car insurance/bus/Uber - $1000/mo

But you live a shortish commute away. Why do you need CalTrain and Uber? Where is car insurance costing $12,000 a year?

> Utilities and phone bill - $400/mo

Huh? Power, water, trash, cell phone, and internet came to roughly $200/mo for two people when I was in the bay.

ahtihn4y ago

46k / year in savings is "hard to live on". What a joke.

imtringued4y ago

It's easy to inflate bills by pretending what you are getting is the bare minimum while paying premium prices.

ohashi4y ago

Your argument about tough to live is that you have more DISPOSABLE income than >40% of the country has total income.

j / k navigate · click thread line to collapse

0 pointsb9a2cab54y ago0 comments

Perhaps not hard to live on, but it's easy to see how the state taxes away any chance you have to build any semblance of wealth due to the insane cost of living in the Bay.

Basic 1 bedroom apartment rent, at least 45min commute or less to Menlo Park/Palo Alto - $4000/mo

CalTrain/BART/car insurance/bus/Uber - $1000/mo (this is conservative, since car insurance costs more in the Bay since the DA won't enforce anti-theft laws)

Groceries - $400/mo

Utilities and phone bill - $400/mo

Health insurance - $300/mo

Miscellaneous other expenses (e.g. soap, toilet paper, etc.) - $500/mo

And before you say we should be focusing on actual poor people first: perhaps consider that the state clearly has the resources for both?

0 comments

ryan_lane4y ago

b9a2cab5OP4y ago

Maybe try to understand that your taxes are composed of more than just federal+state and that Medicare+Social Security+CA SDI actually adds a substantial amount?

> luxury high rise

> Health insurance is covered by your employer

This is in the context of startups, so no, it's not. The employer will subsidize it but it isn't free.

joshuamorton4y ago

You're comically overestimating the effective tax rates.

To put that in perspective, that ~32,000 you're misestimating by is enough to afford a second apartment, or, you know, the annual SF minimum wage.

> And if you're trying to argue you can spend 2k to live in a 1930s apartment in the Tenderloin while making $250k, I think you're too far in the echo chamber to have your mind changed.

[0]: https://smartasset.com/taxes/california-tax-calculator#oDlsn...

ztratar4y ago

I would argue it's not inflated at all.

$400 a month for groceries? In SF?

A single meal at an "affordable" restaurant is often $30 after tip.

Kbelicius4y ago

> A single meal at an "affordable" restaurant is often $30 after tip.

I've never considered nor seen anybody counting eating out as groceries. Is that normal?

2 more replies

lmm4y ago

hamandcheese4y ago

> If you're putting that much away even after those inflated expenses (are you seriously paying $50/working day for your commute?) you're in no position to complain about your tax rates.

Ahh the classic “well you aren’t poor so you don’t get to complain”.

Can we not aspire to have a middle class in this country?

barbazoo4y ago

I would consider $46,000/year in savings to be very, very far from poor. And that's with a budget many consider to be inflated.

1 more reply

lmm4y ago

Apparently we can't, because part of the social contract of a middle class is that they're happy to pay 50%-ish tax rates.

1 more reply

UncleMeat4y ago

> Basic 1 bedroom apartment rent, at least 45min commute or less to Menlo Park/Palo Alto - $4000/mo

I lived in a "luxury" 2br apartment that was 20m from Palo Alto just a few years ago for $4000. My 1br prior to that was $2250.

> CalTrain/BART/car insurance/bus/Uber - $1000/mo

But you live a shortish commute away. Why do you need CalTrain and Uber? Where is car insurance costing $12,000 a year?

> Utilities and phone bill - $400/mo

Huh? Power, water, trash, cell phone, and internet came to roughly $200/mo for two people when I was in the bay.

ahtihn4y ago

46k / year in savings is "hard to live on". What a joke.

imtringued4y ago

It's easy to inflate bills by pretending what you are getting is the bare minimum while paying premium prices.

ohashi4y ago

Your argument about tough to live is that you have more DISPOSABLE income than >40% of the country has total income.

j / k navigate · click thread line to collapse