London vs Chicago (or even NYC)
Currently a first year analyst at a BB in London. I’m originally from the US Midwest and am currently visiting extended family here for the Christmas Holiday.
My immediate family moved to the UK right after I finished middle school in America, so I did high school and university in the UK.
This is my first time visiting since I started FT. It got me thinking how much more money I could make in the US. London really sucks financially. Total comp is lower than what some banks are paying as base in the US, plus taxes are way higher. 50k to 100k GBP is taxed at 40% and 150k+ is 45%. Capital gains is 28% which I guess isn’t that bad compared to America’a. On top of that, you have to pay 20% sales tax (“VAT Tax”) on most things you buy (most groceries being the big exception, but I don’t eat home often). Even NYC’s sales tax is just under 9%. Since I’m from the Midwest, I was thinking of trying an A2A transfer to Chicago since it’s close to where I grew up and is also just insanely cheap compared to NYC, or I could also just try to lateral which I don’t think would be hard since I have US citizenship.
On the flip side, London culture is a bit more laid back culturally. Obviously other stuff like healthcare is cheaper, but banks in the US have good insurance so idk.
Prolly stick it out here until the end of being an analyst. After that though, what would you do? Considering Chicago mostly then NYC. SF off the table.
Don’t you also have to pay US tax once you earn enough?
As US citizen you are required to pay US taxes no matter where you work. However, there are provisions between the UK and US that generally prevent you having to pay double tax so generally its a non-factor.
Oh so it only matters if the country you’re in has lower taxes
Well it depends what sort of tax treaty the US has the with the country in question but yeah generally.
You will def be better off financially in NYC but imo it's overstated at junior levels (idk much about Chicago so I'll just discuss NYC). Firstly, the difference in taxes is slightly overstated because NY state and city taxes are quite high and UK income tax is 0% on first 12k which brings your average tax rate down a fair bit when you're junior and the 12k represents around 10% of your total income.
Second, after recent raises the gross pay differential in IB is not that massive. Many banks are offering £60-70k base with bonus bringing you to £90-120k as a first year depending on bank/ performance. This is around $120-160k. Obviously a $40-50k pretax pay cut but this is only $25kish post tax. 25k is not zero but its absurd to move countries for a 25k raise imo.
Also rent at the moment is considerably more expensive in NYC than London. This data point is purely based on my personal experience looking for rental places in both cities. The difference was smaller in the past but post covid NYC rental market is crazy.
Also I think your professional opportunities will generally be broader in America just given a larger economy, more companies, more productive economy, more innovation etc.
HOWEVER, your lifestyle in London and NYC will be extremely similar ( what you can buy, where you can eat, what you consume). The incremental differences in pay will likely just be in savings. At the end of the day, bankers in London and NY have really similar qualities of life even of you get paid a bit more in NYC. Imo things like family and friends, and which city you culturally prefer and where you'd rather live should be more important than the financial differences cuz that is smaller than you think and the impact on your life is smaller than you think as a 20 year old
You get ~12k off in here too
https://www.investopedia.com/terms/s/standarddeduction.asp
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