This is complicated. Taxes in the US are different. For example, a lot of higher earners are concentrated in California and New York, which have fairly high taxes; in New York or San Francisco a single person making $105k would take home about $75k (slightly less in SF, slightly more in NY) or about £3k more. I would suspect (but do not know) that the UK government pension and health-care is at least slightly better than the US version.
On top of that, people of a given income level spend more in the US (either because things are actually more expensive, or people in the US are more spendthrift; probably a bit of both), so if you come to spend like a typical American[1] your savings won't necessarily be higher in the US. Bay area rent, in particular is insane (rent alone would be more than the £2k a month you proposed for expenses, though $105k/year in the bay area would be a very low salary for a bay-area tech worker).
Now, you can do better. I have a friend who works as a DBA in a very inexpensive part of the country; he makes more than the $105k per year. In fact his yearly salary is higher than what he paid for his house. When remote became normal during COVID a lot of people moved to cheaper parts of the country while keeping their high salaries. Also, everything else being equal, a higher top-line will always provide more opportunities for savings
1: Before you dismiss this completely, there are real social costs to spending less than your peer group. IMO they are worth it, but they should be factored into any planning you do.
> For example, a lot of higher earners are concentrated in California and New York, which have fairly high taxes; in New York or San Francisco a single person making $105k would take home about $75k (slightly less in SF, slightly more in NY) or about £3k more.
That's income taxes; states aren't that different when you actually count "taxes" ie property, sales, income, and whatever else is left over.
Texas is theoretically a little worse for the middle class because property taxes are much higher. It's better if you're rich though.
> Texas is theoretically a little worse for the middle class because property taxes are much higher. It's better if you're rich though.
I know they are higher in relative terms, but are they higher in absolute terms? I live in a single-family house in SoCal and pay over $12k/year in property taxes.
Average property tax rate for the Houston area is 2.31%. There's lots of things that come into the equation (homestead caps, exemptions, etc.), but for an average priced home of, say $350,000 you'll be owing ~$8,000 in property taxes.
The trickiest part is that your property values are reassessed every year, so for a long time our tax bill has just gone up, whether your income has or not.
I'll still take Texas economics over California economics, but everywhere has its tax pros and cons.
> The trickiest part is that your property values are reassessed every year, so for a long time our tax bill has just gone up, whether your income has or not.
I kind of wish it was that way here; the previous owner of the house I am in was paying $1400 per year in taxes, after purchasing it (pre-covid price boom) we pay $12000 in taxes (note the extra zero). I get people not wanting to be priced out of their housing by taxes, but:
1. If your property actually went up by a large fraction in value, so did your equity, and if you have a mortgage, then the equity goes up faster than the value due to leverage.
2. MIN(2%, inflation) is an absurdly low cap. Since it is applied annually, even if inflation averages 2% per year, the property tax increase will lag inflation.
Ultimately when far more people want to live in a place than there is housing, bad things happen, and Prop 13 and rent control just try to shift the advantage from "has lots of money" to "got there first" with lots of annoying second-order effects.
Too late to edit, but I found this[1] from 2019 which multiplies the effective tax rate by the median price (multiplying a mean by a median is questionable, but I don't have a better proposal) which puts CA as more expensive than TX.
Also the most expensive states by this metric are almost all in the Northeast, which matches my intuition.
California is complicated because Prop 13 means it's totally different depending on how long you've lived there. Ideally property tax would be higher and income lower… well ideally it'd be an LVT which doesn't tax building improvements.
I don't know that LVT would make much of a difference; the majority of the value where I live is tied up in the right to have a building of a particular type on the property; not sure if that would count as "Land Value" or not.
My previous residence in particular was "interesting" because under the now-current zoning rules it would only be allowed to be 1/2 the square-footage, but as long as it stays as the current floor-plan it's grandfathered in. If you make it illegal to improve the usage of a property, then an LVT has no effect!
This is complicated. Taxes in the US are different. For example, a lot of higher earners are concentrated in California and New York, which have fairly high taxes; in New York or San Francisco a single person making $105k would take home about $75k (slightly less in SF, slightly more in NY) or about £3k more. I would suspect (but do not know) that the UK government pension and health-care is at least slightly better than the US version.
On top of that, people of a given income level spend more in the US (either because things are actually more expensive, or people in the US are more spendthrift; probably a bit of both), so if you come to spend like a typical American[1] your savings won't necessarily be higher in the US. Bay area rent, in particular is insane (rent alone would be more than the £2k a month you proposed for expenses, though $105k/year in the bay area would be a very low salary for a bay-area tech worker).
Now, you can do better. I have a friend who works as a DBA in a very inexpensive part of the country; he makes more than the $105k per year. In fact his yearly salary is higher than what he paid for his house. When remote became normal during COVID a lot of people moved to cheaper parts of the country while keeping their high salaries. Also, everything else being equal, a higher top-line will always provide more opportunities for savings
1: Before you dismiss this completely, there are real social costs to spending less than your peer group. IMO they are worth it, but they should be factored into any planning you do.