Taxes in Russia and America: where are they lower?
Russia and the USA have completely different approaches to taxation. The tax system is an important instrument of state economic policy. Understanding the differences between Russia and the United States will help you make more informed choices about where and how to invest your money. In the first case, a fixed rate of 13% is applied to the income of individuals. That is, regardless of the amount of earnings, a person is obliged to pay this percentage. In the USA, a progressive rate is applied from 10% to 37% depending on income level. In addition, each state can set its own rates on an individual's income and assets. Let's look at a specific example to make it clearer. On average, a single Californian earns $61,026 per year. On this amount, he will pay 10,1% in federal taxes, as well as 3,4% in state taxes. His total net income is $52,753.
Interestingly, you can deduct % of your mortgage, contributions to charity and % of real estate from your tax. But this only works for those who pay taxes of several thousand dollars. In addition, the tax amount will vary depending on the family: the presence of children, the wife and her salary.
Average earnings in Moscow are 1,200,000 rubles per year. Subtract 13%, the total net income remains 1,044,000. In total, an American citizen must pay 13,5% of taxes from his salary, while in the Russian Federation it is only 13%. But in the case of small businesses, things will be completely different. Take a New York entrepreneur who has an annual income of $142,737. He will already be subject to a higher federal tax of 17.50% plus state tax of 4.9%. This will leave him with approximately $110,701. Depending on the state, income taxes will vary up or down. Therefore, many entrepreneurs specifically open their companies where taxes are lower. An important point: the company must be located in the same state where it was registered. Also, depending on the industry, additional income taxes may apply.
As an example from Russia, let’s take the simplified tax system for small businesses. For example, individual entrepreneur Timofeev AA earned 11,000,000 rubles (approximately $142,000) in a year. According to the simplified taxation system, he will pay 6%. And mandatory insurance premiums for 2023 in the form of a fixed amount of 45,842, regardless of the individual entrepreneur’s earnings. Plus 1% on annual income over 300,000 rubles. As a result, after deducting this, the individual entrepreneur will be left with 10,184,158 rubles (about $127,240). As a result, it turns out that business taxes in America will be higher than in Russia. But the interesting thing is that the amount in the USA can be reduced by deducting housing rent and services used.
Author: Anton Nayanzin
