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caniff
Joined: 03 Feb 2004
Location: All over the map
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 Posted: Wed Apr 28, 2010 4:09 am Post subject: Korean Taxes: A Comparative Study |
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So, I was wondering how I should evaluate my earnings here in the ROK in light of the fact that I'm paying less taxes here than I would back home (in my case, the USA). I thought a thread on this might be interesting to others (of whatever nationality) as well as hopefully make some feel a little better about their earnings.
I did a quick google search, but didn't see a site that would make a comparison of earnings in one country as opposed another that takes into consideration the differing tax rates. There may well be one, but in any event I'm sure you (the reader) get the gist of what I'm aiming for.
Anybody care to provide any factual information, opinions or just gut feelings on this topic? |
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crossmr
Joined: 22 Nov 2008
Location: Hwayangdong, Seoul
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| Posted: Wed Apr 28, 2010 4:30 am Post subject: |
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Because it is all really unique to your situation. Average earnings and taxes are useless to you if you're not earning that.
If you want to compare it, just compare it to the job you had or the job you think you can get.
Look at the papers for the cost of rent and online for utilities. Figure out what you'd spend on food, transportation, etc.
There are many calculators you can use to figure out what your taxes would be anywhere dependent on how much you made.
Not a huge deal to make a 2 column spreadsheet for yourself and compare it.
I think dependent on cities and living situation, someone over here teaching on a standard 2.4~ contract with the included apartment contract is probably going to make out well compared to someone living in a major city in Canada on their own making 50k. Take home there is about $2700, but by the time you throw $1000 or more out for an apartment in Canada and factor in everything else (utilities, transit, food, etc) you're probably on par at best, but likely making a little more here. |
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caniff
Joined: 03 Feb 2004
Location: All over the map
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| Posted: Wed Apr 28, 2010 4:38 am Post subject: |
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| crossmr wrote: |
Not a huge deal to make a 2 column spreadsheet for yourself and compare it. |
Speak for yourself - I get a rash just thinking about numbers. Let's say you pull (for example) 4 million won a month here. That currently would be $3,574.14 US.
http://www.xe.com/ucc/convert.cgi?Amount=4%2C000%2C000&From=KRW&To=USD&x=48&y=19
Forget the cost of living for a minute - just the take-home. How does that convert when you take into account the reduced tax rate in the ROK? |
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crossmr
Joined: 22 Nov 2008
Location: Hwayangdong, Seoul
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| Posted: Wed Apr 28, 2010 5:15 am Post subject: |
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| caniff wrote: |
| crossmr wrote: |
Not a huge deal to make a 2 column spreadsheet for yourself and compare it. |
Speak for yourself - I get a rash just thinking about numbers. Let's say you pull (for example) 4 million won a month here. That currently would be $3,574.14 US.
http://www.xe.com/ucc/convert.cgi?Amount=4%2C000%2C000&From=KRW&To=USD&x=48&y=19
Forget the cost of living for a minute - just the take-home. How does that convert when you take into account the reduced tax rate in the ROK? |
It doesn't matter unless you're going to get that at home. I don't know about the US, but I know in Canada taxes vary slightly from province to province.
The Canadian government actually has an app you can download that you can input your pay each period, what the period is and what province you're in (along with any other relevant things like married, dependents, etc) and it'll calculate your pay cheque each period with the relevant taxes listed. The only real comparison you can make between the two is how much you have left after necessities and your normal "entertainment" budget that you'd expect to spend in both places.
Otherwise the comparisons are moot.
So what if you have $500 more leftover there than here if you're spending 5x the amount on rent.
It really isn't even that big of a spreadsheet:
Take home $2700 W2200
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Rent $1200 W0
utilities included W80/W200
phone $80 W50
internet $40 W35
food $300 W300
transit $80 W40
entertainment $100 W50
2700-1880=$820 CAD left over
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2200-515/635= 1685/1565W left over
that's a perfect budget which you'd likely never hit in either country as there are always things to nickle and dime you to death, but that is really the only way you can compare it.
Your take home is meaningless without putting it in the context of your cost of living.
Even a take home of $4000 a month is a world of difference between New York City and the middle of nowhere Iowa. Actually from that it looks like a standard teacher salary here is probably on par with a little more in Canada. Maybe 57-60K depending on the tax. |
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thegadfly
Joined: 01 Feb 2003
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| Posted: Wed Apr 28, 2010 5:36 am Post subject: |
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For a quick-and-dirty view of the taxes you may pay, you can use links on this site:
http://www.nts.go.kr/eng/help/help_52.asp
I put in 4 million a month and it said that you would have 236,670 won taken out a month for taxes....
That leaves 3,763,330 won take-home...which converts to $3,365-ish US currency...so you are looking at $210 or so....
Assuming you are single, 48 million won a year (about $43k) puts you in the 25% bracket in the US for 2009:
http://taxes.about.com/od/2009taxes/qt/2009_tax_rates.htm
...which would mean the US taxes on the same salary ($3575, your number) would be about $894.
$894 - $210 = $684 less per month...or about $8,200 a year more that you take home from your salary here.
Does that help? |
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World Traveler
Joined: 29 May 2009
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| Posted: Wed Apr 28, 2010 9:00 am Post subject: Re: Korean Taxes: A Comparative Study |
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| caniff wrote: |
| So, I was wondering how I should evaluate my earnings here in the ROK in light of the fact that I'm paying less taxes here than I would back home (in my case, the USA) |
OK, in Korea, there is a 10% V.A.T. sales tax on everything. Import taxes on non-Korean goods are huge, making superior quality products very expensive.
How about in the U.S.?
Half of U.S. pays no federal income tax
http://www.msnbc.msn.com/id/36226444/ns/business-personal_finance/
For half of the people living in the U.S., they either got all their federal taxes back plus more, or they had to pay nothing at all. The tax system in the U.S. is strongly progressive, meaning the richest people shoulder most of the tax burden. |
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madoka
Joined: 27 Mar 2008
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| Posted: Wed Apr 28, 2010 12:17 pm Post subject: Re: Korean Taxes: A Comparative Study |
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| World Traveler wrote: |
OK, in Korea, there is a 10% V.A.T. sales tax on everything. Import taxes on non-Korean goods are huge, making superior quality products very expensive.
How about in the U.S.?
Half of U.S. pays no federal income tax
http://www.msnbc.msn.com/id/36226444/ns/business-personal_finance/
For half of the people living in the U.S., they either got all their federal taxes back plus more, or they had to pay nothing at all. The tax system in the U.S. is strongly progressive, meaning the richest people shoulder most of the tax burden. |
So you are comparing Korea's VAT tax to US federal taxes????
I have to pay 9.25% sales tax in CA. Effectively, I have to pay over 35% income tax as well. Realizing that I pay so much in taxes that I could buy a nice 3,000 sq. foot house every year, is quite depressing. |
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uklathemock
Joined: 26 Dec 2009
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| Posted: Wed Apr 28, 2010 5:00 pm Post subject: |
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I was taxed more than that, after you factor in CA state taxes as well.
Also, capital gains taxes here (both long and short) are really low. ^^ |
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vaticanhotline
Joined: 18 Jun 2009
Location: in the most decent sometimes sun
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| Posted: Wed Apr 28, 2010 5:15 pm Post subject: Re: Korean Taxes: A Comparative Study |
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| World Traveler wrote: |
| The tax system in the U.S. is strongly progressive, meaning the richest people shoulder most of the tax burden. |
I don't believe you. In no country in the world do the richest people "shoulder most of the tax burden". |
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World Traveler
Joined: 29 May 2009
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| Posted: Wed Apr 28, 2010 5:46 pm Post subject: |
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| Quote: |
| the top 10 percent of earners � households making an average of $366,400 in 2006 � paid about 73 percent of the income taxes collected by the federal government. |
How about people on an ESL teacher's salary? How much would they pay? Negative tax below 0%?
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The bottom 40 percent, on average, make a profit from the federal income tax, meaning they get more money in tax credits than they would otherwise owe in taxes. For those people, the government sends them a payment.
"We have 50 percent of people who are getting something for nothing," said Curtis Dubay, senior tax policy analyst at the Heritage Foundation. |
Don't think that 35% of your paycheck will go to income tax. That simply isn't true. True in the U.S., you will have to pay into Social Security, but the amount you get when you retire depends on how much you paid into the system. So working here instead of the U.S. means less money you get back when you retire.
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| At 8.25% [this is temporarily 9.25% until June 30th], California has the highest state sales tax |
California must be a desirable place to live. Some states, such as Oregon, have a 0% state sales tax.
The bottom line is that people are not saving as much with taxes here as they think they are. |
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crossmr
Joined: 22 Nov 2008
Location: Hwayangdong, Seoul
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| Posted: Wed Apr 28, 2010 5:50 pm Post subject: |
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| Quote: |
| So working here instead of the U.S. means less money you get back when you retire. |
I don't know about the US but in Canada you can still pay into the Canada Pension Plan even if you're not there if you want. |
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World Traveler
Joined: 29 May 2009
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| Posted: Wed Apr 28, 2010 5:57 pm Post subject: |
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Canada has a population of 33 million and the U.S. has a population of 309, yet look at the proportion of American ESL teachers here to Canadian ESL teachers. Maybe coming from Canada is a comparatively better deal. It must be.
The thing some United Statesians on here don't realize is that professional jobs back home offer benefit packages that are worth many thousands of dollars. Working in Korea means less money in one's 401K. And we're talking thousands of dollars of employer contributions per year. |
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Solarian
Joined: 12 Nov 2009
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| Posted: Wed Apr 28, 2010 10:07 pm Post subject: |
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| Alternatively you could smarten up, live with your family and save up some real scratch back home and have a massive down payment when you buy a home so that your monthlies are reduced. I guess it's the European in me, but I don't feel the reason to shoot myself in the wallet just so I can feel more independent. I'll move out when I have enough money set aside to comfortably do so. |
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DeMayonnaise
Joined: 02 Nov 2008
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| Posted: Thu Apr 29, 2010 11:29 pm Post subject: |
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Like most Americans, I think things out with my gut, not with my head.
In the almost 2 years I've been here I've partied a lot, bought lots of cool electronic toys, traveled around Asia, and generally not worried about money whatsoever. I'm managed to save thousands of dollars in the process and hope to have around $15,000 cash when I leave (1st year paid off the debt I had)
If I was in the US, I'd probably not have a job and would not be having much fun, would live with my parents, couldn't travel, couldn't buy cool electronic toys and would probably be pretty miserable.
My earnings here in Korea absolutely destroy my "potential" earnings back in the US (or lack thereof) |
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Steelrails
Joined: 12 Mar 2009
Location: Earth, Solar System
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| Posted: Sat May 01, 2010 6:55 am Post subject: |
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| DeMayonnaise wrote: |
Like most Americans, I think things out with my gut, not with my head.
In the almost 2 years I've been here I've partied a lot, bought lots of cool electronic toys, traveled around Asia, and generally not worried about money whatsoever. I'm managed to save thousands of dollars in the process and hope to have around $15,000 cash when I leave (1st year paid off the debt I had)
If I was in the US, I'd probably not have a job and would not be having much fun, would live with my parents, couldn't travel, couldn't buy cool electronic toys and would probably be pretty miserable.
My earnings here in Korea absolutely destroy my "potential" earnings back in the US (or lack thereof) |
An honest answer, and one seconded by me.
| Quote: |
| Alternatively you could smarten up, live with your family and save up some real scratch back home |
This. A real rebel stays at home with mom and dad, studies, and doesn't smoke pot. Also shows the ability to have discipline over ones appetites and think for the longer term.
Too bad this is not me. |
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