From: likcheng@micron.Eng.Sun.COM (Lik T. Cheng)
Newsgroups: soc.culture.hongkong
Subject: Re: Pay Range in HK
Date: 9 Jan 1993 00:34:20 GMT
Organization: Sun
NNTP-Posting-Host: micron

In article <1993Jan8.185626.19915@nynexst.com> hchu@nynexst.com writes:
>In article 26574@pasteur.Berkeley.EDU, mcleung@cory.Berkeley.EDU (Man C. Leung) writes:
>> In article <93Jan7.150923est.251205-1@descartes.uwaterloo.ca> mkcman@undergrad.math.uwaterloo.ca (Marcus Man) writes:
>[Deleted]
>> Tax rate for singles at 40K is above 30%, twice as much as the 15%
>  ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
>> flat rate in HK.  I don't know what the cost of living in HK is
>> nowadays.  Can someone take that into consideration and come up
>> with some objective/subjective evaluations?
>
>The U. S. does not have a flat tax rate.  For Federal taxes, the rates are 15%, 28%,
>and 31%, depending on your income. Of course, you have to add any state and local 
>income taxes.  But even if your marginal tax rate is 31%, you don't pay 31% on the
>entire amount.  Maybe an example can clarify this.  I don't remember the break down
>of the tax brackets.  For the purpose of this example, let's assume that the brackets
>are as follows: 15% for income of 0 - $20,000; 28% for income of $20,000 to $35,000;
>and 31% for income exceeding $35,000.  For a person earning $50,000 a year, assuming
>that he/she takes the standard deduction, plus one exemption, you can subtract at 
>least $5000 from your taxable income.  That leaves you with $45,000 of taxable income.
>You pay 15% taxes on the first $20,000, 28% on the next $15,000, and 31% only for 
>the remaining $10,000 of your taxable income.  So when you average out the tax rates,
>the effective rate is way below 30%.   In addition, you can still have a lot of
>deductions to shield your income.  For example, the interest payment on your house
>mortgage, and your contribution to the 401(k) plan (up to about $9,000 a year) both
>can reduce your taxable income substantially.  If your company offers it, the
>Helath Care Spending Plan can make your health care spending tax deductible.   If you
>have kids, the Dependent Spending Account can reduce your taxable income by another
>$4,800.  With all these deductions, my effective tax rate (e.g. total taxes paid/ total
>income) is only 20%, even though my wife and I have a combined six figure income and
>I live in the tax hell of America, New York City.  Studies show that the average
>effective tax rate for all Americans is about 20%, and it is among the lowest among
			^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
>the industrialized countries.  
>
>I don't know anything about the tax system in Hong Kong.  Is it a flat rate tax
>applied to all income?  are there any deductions?   Can someone enlighten me?
>
>
>Harry Chu
>
>Even though the rates seem to be quite high, the effective rate that 
>you pay can be substantially lower 

you forgot to add 7.65% FICA and Medicare, and in some states you have to pay 1%
short term Disability Insurance. So the effective rate is still ~30%. Well I haven't
add sales Tax which is none exist in Hongkong.  If I don't remember wrong, HongKong's 
Tax rate is also progressive and top rate is 15%. SO overall, HK's tax rate is half
of what we pay here in States. :( :(


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