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kruton
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Recruiting for Europe from US MBAs 22 Jul 2008, 11:38
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You can only exclude ~$85000 of foreign earned income from US taxes. Whatever value exceeds that amount is taxed not only in the foreign country, but also by the US.
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You can also deduct things such as housing expenses and meals from your income beyond $85,700 from what I remember. Although Bush was talking about eliminating the exclusion a year ago; hopefully they won't or it will make it nearly impossible to live overseas.

You also need to be outside of the US for 330 days out of the year. If you're in the US any more than that you don't get an exclusion.
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Recruiting for Europe from US MBAs 22 Jul 2008, 14:12
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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?
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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 :-D 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.

https://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?
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