The true tax burden, US against Europe, once healthcare is on the same line

By Skyler Bissell · August 8, 2026 · 8 min read

Seattle's effective tax rate for a two-earner family on a USD 280,000 household income is 23.2%, and Berlin's is 40.2%. Both figures are correct. Setting them beside each other is still the most common error in this whole argument, because the Berlin number has already paid for that family's healthcare and the Seattle number has not.

A German payslip carries statutory health and long-term care insurance as a payroll deduction. It lands inside the tax column of every comparison anyone runs, quietly, before the reader has a chance to ask what the rate buys. A Seattle payslip carries Social Security and Medicare and stops. The family's actual coverage arrives later as a bill from an insurer: $14,828 a year for this household, once the employee's premium share, the realized cost sharing and a dental plan are added together. That bill sits in a cost row. It never touches a rate, so the rate flatters the American city by roughly the size of the bill.

One household, run both ways

The household is the one our published family comparison pages already use: two earners splitting a USD 280,000 income at a 100/60 ratio, children aged 3 and 7, a 2-bedroom rental, 6% of pay going into retirement. Abroad the same household income is restated in local currency (EUR 257,600 in Berlin and Amsterdam, GBP 221,200 in London, SEK 2,940,000 in Stockholm). What changes from row to row is the tax code and the health system, and nothing else.

Engine figures for the household described above, at current exchange rates, no inbound tax regime applied. Health cost is annual household spending in local currency: employee premium share, realized out-of-pocket cost sharing, and routine dental and vision. The tax-only ladder for a single filer across fifteen cities is in take-home pay by country.

Read the two rate columns against each other and the pattern is hard to miss. Every American city gains about five points of gross when the health bill joins the tax line. Every European city gains less than one point, with a single exception. This is not a rounding artifact. The health column runs $14,828 in Seattle against the equivalent of $1,546 in Berlin, a difference of $13,282 on identical children and an identical household income.

Why the American rate is missing a line

Germany charges one employee social-insurance line of 21.15% of gross, and roughly half of it is health and long-term care insurance. That half stops at a contribution ceiling of EUR 69,750, which is why a German rate can fall as pay climbs. Every euro of it is withheld by the employer and reported by GKV-Spitzenverband as insurance, and every euro of it sits inside Berlin's 40.2%. What the family still pays directly is small: about EUR 740 of prescription and treatment co-payments across four people, plus supplementary dental.

Britain and Sweden reach the same place by a different route. The NHS is funded from general taxation and National Insurance, so London's 32.3% has already bought the family's care, and the £1,620 left over is mostly private dentistry, optical work and over-the-counter medicine. NHS charges are a small slice of it, a split the ONS UK Health Accounts spells out. Sweden funds care regionally and caps what a patient can spend in a year through the hoegkostnadsskydd ceilings, but adult dentistry sits outside the ceiling: at SEK 350 a month per adult, the dentist is the larger part of Stockholm's SEK 12,000.

Now the American column. Federal payroll tax runs 7.65% between Social Security and Medicare, and neither of those covers a working-age family. Coverage comes from an employer plan, and the employee's share of it is a deduction that no effective-rate calculation has ever counted. The KFF 2025 employer survey puts the average worker's contribution toward a family premium at $6,850 a year before a single deductible is met, with the employer paying roughly $20,000 more on the same policy. The premium is the visible part. Deductibles, coinsurance and out-of-network bills are the rest, and they are why Seattle's health column lands $12,645 above what the same family pays in London.

Amsterdam is where this argument is weakest

The Netherlands does not run a tax-funded health service. Every adult resident buys a basisverzekering from a private insurer, at a community-rated premium the insurer cannot vary by age, and carries a statutory eigen risico before the policy pays anything. Children under 18 are covered free. For this household that comes to EUR 300 a month of nominal premium across the two adults, plus about EUR 820 of realized cost sharing, sitting on top of an income-dependent contribution that is already inside the payroll line. Rijksoverheid publishes the scheme.

So Amsterdam moves about two points when health joins the rate, from 37.6% to 39.6%, where London moves less than a point and Berlin and Stockholm move about half of one. Anyone who tells a prospective Dutch hire that healthcare is already inside the tax rate is off by a couple of points of gross pay, which on this household is real money. It is worth saying plainly, because the tidy version of this post would have every European city moving by nothing and would be quietly wrong about a country plenty of readers are moving to. It also changes how the Netherlands reads against the United States. Measured all-in, this household's distance from New York to Amsterdam is 4.2% of gross, down from 7.6% on the tax line alone. That is a smaller correction than the German or Swedish pairings get, because the Dutch side of it moved too.

What the all-in rate still leaves out

Three things, and they pull in different directions. First, the employer's share of an American premium, which KFF sizes at roughly $20,000 a year on a family plan. It is compensation, it is spent on the family's health, and it never appears on a payslip, so we leave it out. Counting it would push every US row several points higher and the comparison would stop describing anything a reader recognises.

Second, the health column is a realized average and not a worst case. An American family that meets its out-of-pocket maximum in a bad year pays far more than $14,828; a German or Swedish family in the same bad year is protected by a statutory ceiling and can barely move. The all-in gap in the table is the typical year. The tail risk is asymmetric in a way no single rate can show.

Third, Europe collects again at the till. Standard VAT of 19% to 25% sits inside every posted price in the European rows and nothing in this basis touches it, while American state and local sales tax rarely clears 10%. That side of the ledger runs the other way, and it is worked through in our companion piece on whether Europeans pay more taxes than Americans, which prices a single filer on the tax line only and leaves the health question to this page. For the mechanics of how each country builds its rate in the first place, brackets, payroll charges and the ceilings that bend them, the reference is how countries tax your salary.

What this changes, and what it does not

On the tax line, Berlin sits 17.0% of gross above Seattle. On the all-in basis it sits 12.2% above. Counting health on both sides closes a bit over a quarter of the distance and leaves the rest standing, which is the honest answer and a duller one than either side of this argument usually wants. Berlin still taxes this family harder than Seattle does. It taxes them harder by less than the headline says.

The same correction lands harder on the closer pairings. Seattle against London goes from 9.1% of gross to 4.5%, roughly halving. If your shortlist is a US city against Britain or Sweden rather than against Germany, the health correction is a bigger share of what separates them, and it is worth running your own pair on the salary comparison calculator before you argue from a national average.

One more thing worth saying, because a family reading this is about to draw the wrong conclusion from a tax table. Health is not the line that decides where this household ends up. Childcare is. The same two children cost $30,000 a year in Seattle and the equivalent of $1,384 in Berlin, a swing of $28,616, which is more than double the entire health difference and roughly the size of a raise nobody is going to give you. The full receipt for that pairing is at Seattle vs Berlin for a family, and the Dutch version, where the nominal premium is real and childcare still lands far under New York's $38,400, is at New York vs Amsterdam for a family.

FAQ

How much do Americans pay in tax and healthcare combined?

For a two-earner family on a USD 280,000 household income, the combined figure runs from 26.4% of gross in Austin to 35.4% in New York, against tax-only rates of 21.8% and 30.1%. Those figures count the employee's premium share, realized cost sharing and a dental plan. They exclude the employer's contribution to the same policy, which KFF measures in five figures a year and which never appears on a payslip.

Is healthcare included in European income tax rates?

In most of Europe, yes, through one of three routes. Germany charges health and long-term care insurance as part of a single employee social-insurance line, so it is already inside the effective rate. Britain and Sweden fund care from general taxation and National Insurance, so it is inside the rate there too. The Netherlands is the exception: every adult buys a policy from a private insurer at a nominal premium that sits outside the payroll line entirely.

Why is the US effective tax rate lower if Americans pay more for healthcare?

Because a premium is billed by an insurer and a tax is withheld by a government, and only the second one lands in the rate. US federal payroll tax funds Social Security and Medicare, neither of which covers a working-age family, so the family's coverage arrives as a separate bill that no effective-rate calculation touches. American income tax at this level is also measurably lower than Germany's, so the rate gap is real even after the health line is added back.

Which US city has the lowest true tax burden once healthcare is counted?

Of the four in this comparison, Austin, at 26.4%. San Francisco, the closest thing to a peer on tech pay, lands at 33.5%. Texas charges no state income tax and Austin's family premiums are the cheapest of the four at $12,885 a year. Texas recovers a good part of that through property tax, which a renting household dodges and an owner does not, so the ranking can move once you buy.

Next time someone quotes a European rate at you, ask what the American number underneath it includes. If the answer stops at federal, state and FICA, the comparison is missing a five-figure line that the European rate has already paid. Add it back. Then look at the childcare row, which swings this family by more than twice what health does, and which no version of the tax argument ever mentions.

Sources. US premium and worker-share figures: the KFF 2025 Employer Health Benefits Survey, with realized out-of-pocket spending from the Peterson-KFF Health System Tracker. German statutory contributions: GKV-Spitzenverband. UK household health spending: ONS UK Health Accounts 2023 and 2024. Dutch basic insurance: Rijksoverheid. City tax and cost figures are computed by cityparity's per-city engine; per-field provenance is in data/_meta.json.

Rates, premiums and exchange rates move; treat the figures as current at publication. See the methodology.