Just checked, average LBS salaries are around GBP 60k, which is roughly USD 120k. The question is: how does this translate in NY prices? My guess is that it is roughly equivalent to USD 95k in NY (25% cost difference more or less). Plus this does not include the essential tax issue (I don't know the tax rate in both locations). Does anyone have a better take on the issue?
Tax Rates in the UK -
£2,320 - £36,000 --- 20%
£36000 + --- 40%
Also, Sales Tax (VAT is 17.5% for pretty much everything). Prices are about 25% more than those in the US.
The UK also has some more socialist concepts
such as Council Tax and TV License that people don't really know about.
Council Tax is a tax you pay for living in a property. This is in addition to the rent/mortgage payments you already pay. It varies by band but you can expect to pay atleast £100-120/month.
TV License - Charge for owning a TV set and getting free channels. It's charged to keep the BBC advertisment-free. It's about £15/month. Cable costs extra
These things really add up.
Tax Rates in the US -
All income over $350,000 is taxed at 35%. There are many lower bands as well. You can read more about tax bands on Wikipedia.http://en.wikipedia.org/wiki/Income_tax ... ted_States
Sales Tax varies by state but no state, to the best of my knowledge, has sales taxes at over 9%.
For starters, an IB salary in London is about £60,000 and bonuses are fairly comparable in absolute terms to those in NY (maybe a little lower even).
This actually brings me to the bigger question, what exactly is a 'GOOD' salary in a particular city anyway?
I came up with a method to determine how to calculate a good salary based on the city you're living in. No scientific basis to any of this. It's just something I came up with when I was bored
. I think it's quite true though. Feel free to let me know what you think about it and whether it holds true for your city.
I think the best way to compare salaries in different parts of the world is to compare them as a percentage of house prices. There are two parts to this. A good salary for a newly minted MBA and a good salary for a married guy in his 40s with two kids and still making mortgage payments.
Look at the cost of a house/2 Bedroom apartment (depending on the type of city) in a 'decent' part of the town (not the BEST but 'decent'). For example: in NY we would look at the cost of a 2 bedroom in the Upper West Side. This would cost you about $1.6 million (fair estimate?). This means that
A good salary (base + bonus + all other sources) for a newly minted MBA is = 1.6 million/10 = $160,000. '10' is just a random factor I came up with
A good salary (base + bonus + all other sources) for a married guy in his 40s with two kids and still making mortgage payments = 1.6 million/4 = $400,000. I chose '4' because salary * 4 = reasonably affordable mortgage.
So there you have it. It's a lot easier to find out property prices in a city than to find out someones salary.
This holds true for all of the cites I've lived in. In London for example;
Price of a 2 bedroom in Notting Hill (not exactly Knightsbridge but still 'decent') = $ 2 million
A good salary for a newly minted MBA is = 2 million/10 = $200,000.
A good salary for a married guy in his 40s with two kids and still making mortgage payments = 2 million/4 = $500,000.
This is just a theory of mine and would like to see what you guys think. Does this really apply to most cities?