Like I said, 16%.

 

don't see why it isn't zero?? see below quote from lowtax.net

The territorial principle of only taxing income arising or derived from a trade within Hong Kong has resulted in reduced or nil tax being levied in a variety of situations. Thus:

*
Income paid in Hong Kong but which relates to services rendered outside the islands is exempt from salaries tax if the fiscal authorities are satisfied that tax has already been paid on that income in a foreign jurisdiction.
*
An individual with Hong Kong source employment who works abroad but renders services in Hong Kong for less than 60 days in any tax year is exempt from salaries tax in the jurisdiction.
*
An individual with Hong Kong source employment who works abroad but renders services in Hong Kong for more than 60 days in any tax year is assessed to tax on that proportion of his income as is represented by the number of days he worked in Hong Kong as a proportion of 365.
*
Tax is not payable on that proportion of income earned in relation to work done outside Hong Kong by the Hong Kong based employee of a non resident corporation on a contract governed by the laws of a foreign jurisdiction, where the employees are paid outside Hong Kong and where the employee's activities are not limited to working within the territory.

 

Alright, here's a more detailed synopsis using 2006 rates:

Single
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

U.S. Tax obligation without exclusion
150,000 - 74,200 = 75,800 * .28 = 21,224 + 15,107.50 = 36,331.50

U.S. with exclusion
$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650
150,000 - 85,000 = 65,000 - 30,650 = 34,350 * .25 = 8587.50 + 4220 = 12807.50

Hong Kong taxes at 16%
150,000 * .16 = 24,000

With the tax exclusion, you'd owe:
12,807.50 + 24,000 = 36,807.50, so you'd lose 476.00 (36,331.50- 36,807.50) vs. the tax equalization package.

France calculates their taxes based on parts (family members), so it is my assumption, that since Hong Kong is touted as the lowest tax structure in the world, that France is higher, which means you lose more money by not using tax equalization.

Source: http://www.irs.gov/formspubs/article...150856,00.html

 

Yah...But what if I made $167,000?

What would the numbers be?

 

Single
$154,800 $336,550 $37,675.50 plus 33% of the amount over 154,800

Without exclusion
167,000 - 154,800 = 12,200 * .33 = 4026 + 37,675.50 = 41,701.50

$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

With exclusion
167,000 - 85,000 = 82,000 - 74,200 = 7800 * .28 = 2184 + 15107.50 = 17,291.50

Hong Kong
167,000 * .16 = 26,720

17,291.50 + 26,720 = 44,011.50 for a loss of 2,310 by not using tax equalization.

 

OK. Well, what if I made $120,000?

 

Start pumping em out circus boy.

 

How about then Donut Lady, how many would I have left then?

 

Hey, but what if you watched the movie Freedom to Fascism, realized that you didnt have to pay taxes, and then bid an FDA, and was obligated thru PW to pay? Then you got really screwed!!

 

Single
$74,200 $154,800 $15,107.50 plus 28% of the amount over 74,200

Without exclusion
120,000 - 74,200 = 45,800 * .28 = 12,824 + 15,107.50 = 27,931.50

$30,650 $74,200 $4,220.00 plus 25% of the amount over 30,650

With exclusion
120,000 - 85,000 = 35,000 - 30,650 = 4,350 * .25 = 1087.50 + 4220 = 5307.50

Hong Kong
120,000 * .16 = 19,200

19,200 + 5307.50 = 24,507.50 for an upside of 3,424.

Looking at raw numbers, it looks like 148k is the break even point between equalization and foreign exclusion. Considering that Hong Kong is a widebody domicile, it's fairly safe to assume that most FO's and all Capt's will benefit with equalization.

France works differently, so the 16% flat tax is not accurate.