Portugal seeks to become low-tax haven for young people(ft.com)
ft.com
Portugal seeks to become low-tax haven for young people
https://www.ft.com/content/41dd7994-3b1f-4562-a59f-11879b5e3f68
261 comments
https://archive.ph/jfRjL
Portugal is an interesting microcosm of the general economic problems in EU vs US.
I don't think tinkering with income tax brackets/credits is going to fix the actual problem - robust and steady job creation of good paying jobs.
There are ~11M people in Portugal, 3M of which are in Lisbon metro and 2M are in Porto metro areas. This leads them to having the same problem as Japan - the population is decreasing, BUT the countryside and 2nd/3rd tier cities are emptying out.
So housing affordability in the major cities remains poor. The youth therefore get squeezed out and emigrate, leaving an increasing tax burden problem paying for all the benefits given to the increasingly aging population.
My father visited his home town in the countryside in the last decade and found much of the town essentially abandoned. No one lived in the home he grew up in. His uncle owned an inn that had no guests, etc.
Meanwhile, Portugal remains a beautiful place and I will visit more in the future, and could even see wanting to retire there.
I don't think tinkering with income tax brackets/credits is going to fix the actual problem - robust and steady job creation of good paying jobs.
There are ~11M people in Portugal, 3M of which are in Lisbon metro and 2M are in Porto metro areas. This leads them to having the same problem as Japan - the population is decreasing, BUT the countryside and 2nd/3rd tier cities are emptying out.
So housing affordability in the major cities remains poor. The youth therefore get squeezed out and emigrate, leaving an increasing tax burden problem paying for all the benefits given to the increasingly aging population.
My father visited his home town in the countryside in the last decade and found much of the town essentially abandoned. No one lived in the home he grew up in. His uncle owned an inn that had no guests, etc.
Meanwhile, Portugal remains a beautiful place and I will visit more in the future, and could even see wanting to retire there.
The EU and USA both have free movement between states.
But the USA has massive federal tax revenue and spending which redistributes wealth from rich states to poor states. Federal taxes are much higher than state taxes.
By comparison the EU has high state taxes, but very tiny "confederal" EU level revenue. So much less ability to balance things between rich and poor member states.
This puts poor states like Portugal into a bad position where they suffer from brain drain due to the free movement, but don't get enough monetary benefits from the EU to counteract that.
This turns Portugal into a gateway country for the EU: they have loose immigration rules because they want to attract young workers. But as soon as those workers live in Portugal long enough to get an EU passport, many brain drain away to other (better paying) EU countries, and need to be replaced with even more immigrants.
But the USA has massive federal tax revenue and spending which redistributes wealth from rich states to poor states. Federal taxes are much higher than state taxes.
By comparison the EU has high state taxes, but very tiny "confederal" EU level revenue. So much less ability to balance things between rich and poor member states.
This puts poor states like Portugal into a bad position where they suffer from brain drain due to the free movement, but don't get enough monetary benefits from the EU to counteract that.
This turns Portugal into a gateway country for the EU: they have loose immigration rules because they want to attract young workers. But as soon as those workers live in Portugal long enough to get an EU passport, many brain drain away to other (better paying) EU countries, and need to be replaced with even more immigrants.
Yes, EU is hurt a lot by being a currency union with freedom of movement without being a true federal state.
It is helpful to the core rich countries and to elite/upwards mobile across countries. But it hollows out the periphery.
A lot of the GFC era EU debt crisis was German banks lending to southern European states to then buy goods/services from.. German industry. So I was not as understanding of the northern countries looking down at the "lazy south". It was far more complicated than this and they were happy to look the other way while it worked for the first decade.
I'm honestly not sure where EU goes from here as the GFC & the response dampers any enthusiasm for a true federal government, unified military, etc. Not that there was much appetite to hand over that much sovereignty to start with. Nor does it help that post-GFC, even the rich parts of EU have further diverged in terms of wealth/income from the US, so they are probably feeling even less "generous".
Draghi wrote a whole report on EU competitiveness recently and in standard Eurocrat form its like a 500 page paper no one will read, let alone action.
It is helpful to the core rich countries and to elite/upwards mobile across countries. But it hollows out the periphery.
A lot of the GFC era EU debt crisis was German banks lending to southern European states to then buy goods/services from.. German industry. So I was not as understanding of the northern countries looking down at the "lazy south". It was far more complicated than this and they were happy to look the other way while it worked for the first decade.
I'm honestly not sure where EU goes from here as the GFC & the response dampers any enthusiasm for a true federal government, unified military, etc. Not that there was much appetite to hand over that much sovereignty to start with. Nor does it help that post-GFC, even the rich parts of EU have further diverged in terms of wealth/income from the US, so they are probably feeling even less "generous".
Draghi wrote a whole report on EU competitiveness recently and in standard Eurocrat form its like a 500 page paper no one will read, let alone action.
And that is precisely the issue with the EU.
I was always supportive of the spirit of the European Union and its ultimate objectives, but in its current state, it's a brutalized self-sabotaging entity that has disillusioned the general public to veer rightwards. And with furthermore technological lagging vis-a-vis China and the US, and the immigration crisis, not to mention the Russian Axis round the corner and the collective inaction of a number of EU states around that, and it's no wonder the EU is falling back into 3rd place.
And for some reason, the EU still thinks net uncontrolled refugee migration is good for their economics,their population and their electability, as is letting American private equity buy up large swathes of residential properties. Guess that's what you get when you let freeloaders who haven't worked a real job in their lives hold unelected positions of power.
I was always supportive of the spirit of the European Union and its ultimate objectives, but in its current state, it's a brutalized self-sabotaging entity that has disillusioned the general public to veer rightwards. And with furthermore technological lagging vis-a-vis China and the US, and the immigration crisis, not to mention the Russian Axis round the corner and the collective inaction of a number of EU states around that, and it's no wonder the EU is falling back into 3rd place.
And for some reason, the EU still thinks net uncontrolled refugee migration is good for their economics,their population and their electability, as is letting American private equity buy up large swathes of residential properties. Guess that's what you get when you let freeloaders who haven't worked a real job in their lives hold unelected positions of power.
> it's a brutalized self-sabotaging entity that has disillusioned the general public to veer rightwards
It hasn’t, it only disillusioned those people (like the brits) who didn’t understand the purpose of the EU to begin with. The economic benefits were always considered secondary objectives, subordinated to the main principle of cooperation. This is public knowledge, it was made very clear in the foundational documents of the EU. And therefore the EU has indeed been very successful and its effect is unprecedented: since its inception, we are seeing the longest period ever recorded without a war between European countries.
It hasn’t, it only disillusioned those people (like the brits) who didn’t understand the purpose of the EU to begin with. The economic benefits were always considered secondary objectives, subordinated to the main principle of cooperation. This is public knowledge, it was made very clear in the foundational documents of the EU. And therefore the EU has indeed been very successful and its effect is unprecedented: since its inception, we are seeing the longest period ever recorded without a war between European countries.
The Brits perfectly understood one of the aims of the EU and always disagreed with it.
One of the aim is political integration and weakening of each member's sovereignty. The UK does not want this but was OK with the common market.
One of the aim is political integration and weakening of each member's sovereignty. The UK does not want this but was OK with the common market.
When the question of whether to join the EU, the brits were actually manipulated by their politicians, who presented the EU as an “economic” project. This perception never went away, so when the EU proceeded as it had intended from the beginning, the brits started to resist and realised they had been mislead. The EU stipulates very clearly that the common market and its potential economic benefits are simply a means to an end; that end is to get European countries to see each other as equals.
No, the end is to destroy national identities and cultures and we are seeing an increasing pushback against that.
I feel that if British concerns, including about immigration and free movement had been addressed Brexit and the current turmoil within the EU would have all been averted. This disconnect with the people's concerns is a key issue the EU has to face or be torn apart.
Germany suddenly deciding to reintroduce border controls is especially telling and highly ironic.
I feel that if British concerns, including about immigration and free movement had been addressed Brexit and the current turmoil within the EU would have all been averted. This disconnect with the people's concerns is a key issue the EU has to face or be torn apart.
Germany suddenly deciding to reintroduce border controls is especially telling and highly ironic.
> No, the end is to destroy national identities and cultures
I was referring to the official position of the EU, which is verifiable in their public documents; I don’t care about far-right propaganda. People of course are free to care more about “cultural identity” (whatever it means in the 21st century), than about war. But it doesn’t change the fact that the EU has been successful in creating the longest period of continuous peace in the history of the continent. And this is what it intended from the beginning.
I was referring to the official position of the EU, which is verifiable in their public documents; I don’t care about far-right propaganda. People of course are free to care more about “cultural identity” (whatever it means in the 21st century), than about war. But it doesn’t change the fact that the EU has been successful in creating the longest period of continuous peace in the history of the continent. And this is what it intended from the beginning.
I think throwing abuse like calling my previous comment "far right propaganda" is a case in point of how rotten the debate has become in Europe on any actual, serious issues, and especially on the possibility to express concerns.
To deny the very existence of cultural identities is also quite bizarre. Of course countries have their own cultural identies and this is in fact something absolutely key in the current political dynamics in Europe.
To deny the very existence of cultural identities is also quite bizarre. Of course countries have their own cultural identies and this is in fact something absolutely key in the current political dynamics in Europe.
Your theory about EU intentionally destroying cultural identities, isn’t supported by any document published by the EU or any conference transcripts. No EU official has ever described this to be the goal. I’ve only heard about it in far right media. So as a matter of fact, it is far right propaganda.
If you want real cultural identities, build a time machine and travel back before airplanes, the internet and neoliberal finance rendered cultural divisions in western countries obsolete.
If you want real cultural identities, build a time machine and travel back before airplanes, the internet and neoliberal finance rendered cultural divisions in western countries obsolete.
> Your theory about EU intentionally destroying cultural identities, isn’t supported by any document published by the EU or any conference transcripts.
You yourself state that the final objective of the EU has always been complete integration across all departments. I don't see how it's possible to retain individual cultural identities in that construct - either you'd have to compromise on representative democracy and equally distribute representation across all cultures, making the vote of a Croat valued more than that of a German, or you'd end up making the vote of the Bulgarian irrelevant against the vote of the French. This is kind of already the case in more closely integrated federations of a similar kind - India and Russia. Individual cultures are slowly being replaced across regions, as people are forced to learn Hindi and Russian to get a job or access some government benefits, in spite of the protests of their respective state governments.
> If you want real cultural identities, build a time machine and travel back before airplanes, the internet and neoliberal finance rendered cultural divisions in western countries obsolete.
Your arguments are precisely the kind of uneducated drivel that provide fuel to anti-EU sentiment
You yourself state that the final objective of the EU has always been complete integration across all departments. I don't see how it's possible to retain individual cultural identities in that construct - either you'd have to compromise on representative democracy and equally distribute representation across all cultures, making the vote of a Croat valued more than that of a German, or you'd end up making the vote of the Bulgarian irrelevant against the vote of the French. This is kind of already the case in more closely integrated federations of a similar kind - India and Russia. Individual cultures are slowly being replaced across regions, as people are forced to learn Hindi and Russian to get a job or access some government benefits, in spite of the protests of their respective state governments.
> If you want real cultural identities, build a time machine and travel back before airplanes, the internet and neoliberal finance rendered cultural divisions in western countries obsolete.
Your arguments are precisely the kind of uneducated drivel that provide fuel to anti-EU sentiment
I see... Have a very nice day.
I think the formation of EU was irrelevant for peace.
It's all NATO.
And even then, it's arguable whether they did a good job or put too much unneeded pressure to Russia.
It's all NATO.
And even then, it's arguable whether they did a good job or put too much unneeded pressure to Russia.
I think the formation of EU was irrelevant for peace.
Disagree. Going from a bombed-out, stone-age hellscape to conflict-free and essentially borderless in just 47 years was a very impressive achievement. Unfortunately for the past several years we've been headed in the reverse direction.
Disagree. Going from a bombed-out, stone-age hellscape to conflict-free and essentially borderless in just 47 years was a very impressive achievement. Unfortunately for the past several years we've been headed in the reverse direction.
Nobody will declare war on their neighbour when they depend on them for food and other essential resources.
The EU addresses resource and cultural motivations.
NATO intimidates countries that already want to take resources from their neighbours.
NATO has its merit as well, but the EU is unarguably one of the main reasons why EU countries have not even begun to think about creating military conflict within member states since the 1950s.
The EU addresses resource and cultural motivations.
NATO intimidates countries that already want to take resources from their neighbours.
NATO has its merit as well, but the EU is unarguably one of the main reasons why EU countries have not even begun to think about creating military conflict within member states since the 1950s.
Germany is reintroducing border controls to stop immigration from OUTSIDE Europe. They aren't doing it to keep out the Dutch or Austrians.
Nobody is against freedom of movement of EU citizens.
Nobody is against freedom of movement of EU citizens.
There is not enough internal immigration to cause any disruption to national identity.
Sure people have been complaining about criminals from poor eastern europe moving to wealthy countries but the numbers were never high enough to actually change the national identity. Internal transfers of hard working people were (and are) always cherished and we celebrated diversity as long as laws were respected.
Importing people from Africa and the Middle East in large numbers changed the face of Europe dramatically.
Sure people have been complaining about criminals from poor eastern europe moving to wealthy countries but the numbers were never high enough to actually change the national identity. Internal transfers of hard working people were (and are) always cherished and we celebrated diversity as long as laws were respected.
Importing people from Africa and the Middle East in large numbers changed the face of Europe dramatically.
> There is not enough internal immigration to cause any disruption to national identity.
The British expats in Spain and Portugal are famous for learning the local language and culture.
The British expats in Spain and Portugal are famous for learning the local language and culture.
Control of non-EU immigration is a concern that is not being addressed. In fact Germany's catastrophic open door policy in 2015 probably
precipitated Brexit and is what coming back to bite them now.
But there has also been concerns about internal migration since 2004 when Eastern European countries joined. This is not only in the UK and is still the case now.
But there has also been concerns about internal migration since 2004 when Eastern European countries joined. This is not only in the UK and is still the case now.
Eastern European migration only threatened local jobs, which ended up being a non-issue eventually, as mid-level jobs in all sectors move back to Eastern Europe. The one exception here is healthcare, where Eastern European professionalsbleave as soon as they get the chance to.
The current crop of unfettered non-EU migration is not only an employment threat but also a security threat and a threat to the entire concept of the European welfare state.
The current crop of unfettered non-EU migration is not only an employment threat but also a security threat and a threat to the entire concept of the European welfare state.
> No, the end is to destroy national identities and cultures and we are seeing an increasing pushback against that.
The creation of a pan-European identity does not in anyway degrade from having a "British identity", as you can see in places like the USA with Texas.
Whilst net migration was above 0, this was mostly due to arrivals from outside the EU, as we can see from post-Brexit immigration figures, EU free movement has always been a two way street that many Brits took advantage of (those "expats" in Spain).
The creation of a pan-European identity does not in anyway degrade from having a "British identity", as you can see in places like the USA with Texas.
Whilst net migration was above 0, this was mostly due to arrivals from outside the EU, as we can see from post-Brexit immigration figures, EU free movement has always been a two way street that many Brits took advantage of (those "expats" in Spain).
I think the EU project is partially trying to thread the needle of maintaining ethnostates without the nationalism. That is, maintain the culture/language/food without the periodic bouts of war/etc.
Neat idea, but is quite a challenge.
The US in general is different from even an imaginary future federal EU in that, as some say, "America is an idea". I know people who can trace their "American Heritage" back to pilgrims/boats, and others who naturalized in the last decade. No one aside from true nutcases really gives much thought to the difference. There is no legal distinction aside from naturalized citizens being unable to be President, is about it.
Most people I know have lived in multiple states, sometimes across completely different regions. People don't derive any strong identity to the state they were born or spent the most time in. Most people I know would just identify by the current state they live in.
There are of course regional differences, but you can move from one region to another and mostly drive the same car, eat the same food, wear the same clothes, buy the same products, shop the same stores, etc. This is a feature or bug depending on your perspective. I think we are sort of like a cultural Borg.
The plus side is the US quickly adapts and/or adopts aspects of the culture & cuisine of each wave of immigrants over time. You can get pho in random strip malls nowhere near a big city, and we'll adopt any holiday if it means more drinking, like say Cinco de Mayo.
Neat idea, but is quite a challenge.
The US in general is different from even an imaginary future federal EU in that, as some say, "America is an idea". I know people who can trace their "American Heritage" back to pilgrims/boats, and others who naturalized in the last decade. No one aside from true nutcases really gives much thought to the difference. There is no legal distinction aside from naturalized citizens being unable to be President, is about it.
Most people I know have lived in multiple states, sometimes across completely different regions. People don't derive any strong identity to the state they were born or spent the most time in. Most people I know would just identify by the current state they live in.
There are of course regional differences, but you can move from one region to another and mostly drive the same car, eat the same food, wear the same clothes, buy the same products, shop the same stores, etc. This is a feature or bug depending on your perspective. I think we are sort of like a cultural Borg.
The plus side is the US quickly adapts and/or adopts aspects of the culture & cuisine of each wave of immigrants over time. You can get pho in random strip malls nowhere near a big city, and we'll adopt any holiday if it means more drinking, like say Cinco de Mayo.
> This is a feature or bug depending on your perspective
For businesses that don't rely on national pride of patriotism as part of their image, it's a massive feature.
The press vilified the EU in the UK for decades, at school I had one lesson in geography on how the EU worked and that was it. Wasn't covered in history or anything. It just all added up and the European identity never took hold in the UK outside center liberals.
For businesses that don't rely on national pride of patriotism as part of their image, it's a massive feature.
The press vilified the EU in the UK for decades, at school I had one lesson in geography on how the EU worked and that was it. Wasn't covered in history or anything. It just all added up and the European identity never took hold in the UK outside center liberals.
> Germany suddenly deciding to reintroduce border controls is especially telling and highly ironic.
Well, I'm driving very often to Belgium via A4 and there are rarely any controls. A44 to Liege is more common but not A4. You could have always been stopped at the border, for whatever reason, even with free movement. It's not like they stop everyone at their border. By the way - from 16th of September for 6 months...
Well, I'm driving very often to Belgium via A4 and there are rarely any controls. A44 to Liege is more common but not A4. You could have always been stopped at the border, for whatever reason, even with free movement. It's not like they stop everyone at their border. By the way - from 16th of September for 6 months...
The EU has its problems.
No country in the EU would have been better off if the EU hadn’t been formed.
The only way the EU can be described in the economically apocalyptic way you are is if you don’t consider the alternatives at all.
Consider Greece, which is the poster child of the EU economic failures.
Outside the EU Greece would have completely collapsed. The only thing that gave it some sort of leverage to get out of a long standing mess was the fact that being part of the EU still gave it some credibility with lenders which gave it time to recover to whatever degree it has.
In a nutshell, the EU had a lot of problems but the pre-EU situation would have been significantly worse.
No country in the EU would have been better off if the EU hadn’t been formed.
The only way the EU can be described in the economically apocalyptic way you are is if you don’t consider the alternatives at all.
Consider Greece, which is the poster child of the EU economic failures.
Outside the EU Greece would have completely collapsed. The only thing that gave it some sort of leverage to get out of a long standing mess was the fact that being part of the EU still gave it some credibility with lenders which gave it time to recover to whatever degree it has.
In a nutshell, the EU had a lot of problems but the pre-EU situation would have been significantly worse.
> No country in the EU would have been better off if the EU hadn’t been formed.
EU, the economic union. Not the political union and the bureaucratic machine that tagged along.
> Outside the EU Greece would have completely collapsed. The only thing that gave it some sort of leverage to get out of a long standing mess was the fact that being part of the EU still gave it some credibility with lenders which gave it time to recover to whatever degree it has.
You give Greeks too little credit. Outside the EU, they could have devalued their currency, spurred investment from second-world countries (notably China) without answering to a preachy EU blocking them, etc. Greeks imo are some of the most hard-working people in the EU at the moment, perhaps even the most. The EU didn't give them the flexibility to adapt, so that Germany could maintain its supremacy.
EU, the economic union. Not the political union and the bureaucratic machine that tagged along.
> Outside the EU Greece would have completely collapsed. The only thing that gave it some sort of leverage to get out of a long standing mess was the fact that being part of the EU still gave it some credibility with lenders which gave it time to recover to whatever degree it has.
You give Greeks too little credit. Outside the EU, they could have devalued their currency, spurred investment from second-world countries (notably China) without answering to a preachy EU blocking them, etc. Greeks imo are some of the most hard-working people in the EU at the moment, perhaps even the most. The EU didn't give them the flexibility to adapt, so that Germany could maintain its supremacy.
Outside the EU, Greece could devalue the Drachma.
From my impression of Germany I can tell you they would do the same suicide without the eu.
In my opinion, the problem is the people. The EU is going in the direction its going with the support of the people.
Every once-in-a-while you'll hear about how Europe is becoming less relevant, less competitive, and falling behind. Many reasons are pointed out: too many regulations, too much bureaucracy, too little investor funding, too little risk appetite etc. And then all of that is promptly ignored and we're back to
>but we need all of these regulations, otherwise we'll be like America!
and
>Europeans are actually better off!
Imo it's European people that defend all of these things, not just something unelected bureaucrats do.
Every once-in-a-while you'll hear about how Europe is becoming less relevant, less competitive, and falling behind. Many reasons are pointed out: too many regulations, too much bureaucracy, too little investor funding, too little risk appetite etc. And then all of that is promptly ignored and we're back to
>but we need all of these regulations, otherwise we'll be like America!
and
>Europeans are actually better off!
Imo it's European people that defend all of these things, not just something unelected bureaucrats do.
I think its a gerontocracy issue.
Older European generations have negotiated for the current state of affairs which are nice for existing homeowners who are near and in retirement.
This is at the expense of the youth who have eye watering levels of youth unemployment, near 20% in many EU countries. It's 25% in Portugal (vs 6.5% overall) and was as high as 35% in the last decade. These levels make it hard for the next generation to build a career, savings and future for themselves.
Note US current unemployment rate is about 4% with youth unemployment being 9%. So US youth unemployment is ~2x overall while Portugal for example has youth unemployment at 4x the overall rate... much more skewed.
Older European generations have negotiated for the current state of affairs which are nice for existing homeowners who are near and in retirement.
This is at the expense of the youth who have eye watering levels of youth unemployment, near 20% in many EU countries. It's 25% in Portugal (vs 6.5% overall) and was as high as 35% in the last decade. These levels make it hard for the next generation to build a career, savings and future for themselves.
Note US current unemployment rate is about 4% with youth unemployment being 9%. So US youth unemployment is ~2x overall while Portugal for example has youth unemployment at 4x the overall rate... much more skewed.
Portugal's GDP PPP is about 485 billion dollars. About the same as Tennessee.
Portugal received about 3 billion dollars from EU funds in 2021. About the same Tennessee received from the US federal government in that same year.
I fail to see how a nominal difference in internal organization leads to much different outcomes.
edit: I got some bad data on my search, my bad, will leave my mistake up.
Portugal received about 3 billion dollars from EU funds in 2021. About the same Tennessee received from the US federal government in that same year.
I fail to see how a nominal difference in internal organization leads to much different outcomes.
edit: I got some bad data on my search, my bad, will leave my mistake up.
Loans and Bonds are not serviced in purchasing power - they are serviced in exchange rate $s and €s.
Portugal (and a significant portion of EU members) had an economic meltdown during the Eurozone crisis from 2008-14, and are still trying to service those loans and bonds to this day.
Also, Portugal's GDP is half that of Tennessee's.
In fact, Portugal has the same population size as Michigan and North Carolina, yet a GDP that is ~50% and ~33% in size respectively.
Portugal (and a significant portion of EU members) had an economic meltdown during the Eurozone crisis from 2008-14, and are still trying to service those loans and bonds to this day.
Also, Portugal's GDP is half that of Tennessee's.
In fact, Portugal has the same population size as Michigan and North Carolina, yet a GDP that is ~50% and ~33% in size respectively.
PPP is used solely to compare Portugal to a US federation unit. The economy of Portugal happens in Euro and Tennessee in Dollars, and that is immaterial to this argument.
PPP is not a useful comparison unit when nominal $-€ conversions and costs are extremely well understood.
Which US state has an economy of a size comparable to that of Portugal?
Does that change when the relative value of Euro to Dollar fluctuates?
Does that change when the relative value of Euro to Dollar fluctuates?
> Which US state has an economy of a size comparable to that of Portugal
Oklahoma, but Oklahoma also only has 40% of the population of Portugal.
Despite being in the Western half of Europe, Portugal is economically comparable to an Eastern European country like Poland or Slovakia.
The only US territory (not state - even poor Mississippi has a higher median household income and GDP per capita than much of Western Europe excluding Germany and Scandinavia) that is comparable to Portugal is Puerto Rico.
In fact, the problems Puerto Rico faces today in the US mirror those that Portugal faces in the EU.
Oklahoma, but Oklahoma also only has 40% of the population of Portugal.
Despite being in the Western half of Europe, Portugal is economically comparable to an Eastern European country like Poland or Slovakia.
The only US territory (not state - even poor Mississippi has a higher median household income and GDP per capita than much of Western Europe excluding Germany and Scandinavia) that is comparable to Portugal is Puerto Rico.
In fact, the problems Puerto Rico faces today in the US mirror those that Portugal faces in the EU.
If you are comparing the aid an EU country gets vs the aid a US state gets..
You do not really need to do any PPP or currency conversion.
Take the GDP, in local value, against the aid they receive, in local value.
Then you have a percent, which you can compare between the two agnostic of PPP/currency/etc.
Take the GDP, in local value, against the aid they receive, in local value.
Then you have a percent, which you can compare between the two agnostic of PPP/currency/etc.
Right, Portugal nominal GDP is 300B EUR so that 3B EUR subsidy is 1% of GDP.
Tennessee nominal GDP is $420B and the last figure I found for federal aid to TN was $10B but this was 2014 data, at which point TN GDP was $350B. So ~2.5-3% of GDP in aid from the feds, quite a lot more than Portugal.
Also this is simply the direct aid in TN budget that comes from Feds. Often there are other direct payments/transfers from Feds to individuals who file federal taxes while living in TN, which is not captured in that $10B number.
Tennessee nominal GDP is $420B and the last figure I found for federal aid to TN was $10B but this was 2014 data, at which point TN GDP was $350B. So ~2.5-3% of GDP in aid from the feds, quite a lot more than Portugal.
Also this is simply the direct aid in TN budget that comes from Feds. Often there are other direct payments/transfers from Feds to individuals who file federal taxes while living in TN, which is not captured in that $10B number.
Yep.
A major issue was the ascension of then poorer CEE states in the 1990s and 2000s.
This meant the bulk of EU Development Funds which used to go to Southern European countries like Portugal and Greece ended up getting diverted to countries like Hungary, Poland, Romania, Bulgaria, Slovakia, etc.
Unlike the CEE countries, Portugal's pre-EU era rulers (eg. Salazar, post-Revolution military junta, trade unions) did not invest in human capital to the same degree that CEE's pre-EU rulers did.
A major issue was the ascension of then poorer CEE states in the 1990s and 2000s.
This meant the bulk of EU Development Funds which used to go to Southern European countries like Portugal and Greece ended up getting diverted to countries like Hungary, Poland, Romania, Bulgaria, Slovakia, etc.
Unlike the CEE countries, Portugal's pre-EU era rulers (eg. Salazar, post-Revolution military junta, trade unions) did not invest in human capital to the same degree that CEE's pre-EU rulers did.
In 2021, USA federal government spent $113.3 billion in Tennessee according to
https://www.usaspending.gov/state/tennessee/2021
Including $72.6 billion in direct payments.
https://www.usaspending.gov/state/tennessee/2021
Including $72.6 billion in direct payments.
Indeed - TN budget shows individual departments like DOT getting $1B+ of federal money alone.
https://www.tn.gov/content/dam/tn/finance/budget/documents/2...
https://www.tn.gov/content/dam/tn/finance/budget/documents/2...
This misses the component of interstate distribution. Depending on how much federal taxes Tennessee paid, that 113 B could become positive or negative.
It looks like in 2023, the IRS collected ~96 billion from TN
https://www.irs.gov/statistics/soi-tax-stats-gross-collectio...
It looks like in 2023, the IRS collected ~96 billion from TN
https://www.irs.gov/statistics/soi-tax-stats-gross-collectio...
> This puts poor states like Portugal into a bad position
The only reason Portugal (and Ireland, Spain, Greece, etc) is counted as a "Developed Country" today is because of the EU.
These countries received the lion's share of EU Development Funds until EU expansion in the 1990s-2000s.
If Portugal didn't join the EU, it would have been similar to Argentina - it's economic peer until EU ascension in 1986
The only reason Portugal (and Ireland, Spain, Greece, etc) is counted as a "Developed Country" today is because of the EU.
These countries received the lion's share of EU Development Funds until EU expansion in the 1990s-2000s.
If Portugal didn't join the EU, it would have been similar to Argentina - it's economic peer until EU ascension in 1986
Spain is x3 the nominal GDP of Ireland and x6 Greece and the 15th economy in the world and the three together are of the size of Canada.
Maybe your comment about what defines a developed country might be overly simplified...
Maybe your comment about what defines a developed country might be overly simplified...
> developed country
Developmental indicators, nominal GDP per Capita, and median household income.
Before Spain, Ireland, Greece, and Portugal ascended into the EU in the 1970s-80s, their developmental indicators largely mirrored those of developing countries from that era (Malaysia, Turkey, Argentina, Iran).
It was EU developmental funds that helped these countries not fall into the middle income trap.
The only developing countries that were able to escape the middle income trap without EU Development Funds or oil were South Korea, Taiwan, Singapore, and Israel.
Also, having a large GDP does not mean a country is developed. China and India have the 2nd and 5th largest GDP in the world, yet their median household incomes are less than that of Thailand, Mexico, or Malaysia - let alone countries defined as developed by the IMF.
Developmental indicators, nominal GDP per Capita, and median household income.
Before Spain, Ireland, Greece, and Portugal ascended into the EU in the 1970s-80s, their developmental indicators largely mirrored those of developing countries from that era (Malaysia, Turkey, Argentina, Iran).
It was EU developmental funds that helped these countries not fall into the middle income trap.
The only developing countries that were able to escape the middle income trap without EU Development Funds or oil were South Korea, Taiwan, Singapore, and Israel.
Also, having a large GDP does not mean a country is developed. China and India have the 2nd and 5th largest GDP in the world, yet their median household incomes are less than that of Thailand, Mexico, or Malaysia - let alone countries defined as developed by the IMF.
Portugal, like Spain and Argentina, faced significant historical challenges in the 20th century. Portugal's fascist regime, which lasted until 1974, limited investment in infrastructure and economic development. Spain, under Franco's dictatorship, also faced political and economic constraints. Argentina, too, experienced political instability and economic turmoil, particularly during the 1970s military dictatorship.
Also were mentioned Malaysia, Turkey, and Iran, which have their own unique historical contexts that I'm not as familiar with.
Also were mentioned Malaysia, Turkey, and Iran, which have their own unique historical contexts that I'm not as familiar with.
Absolutely.
And that doesn't have anything to do with my point that Spain was a developing country well into the 1990s, and that most of the post-Franco era development was subsidized by EEC and EU Developmental Funds
Read this, it's a good overview of the process - https://www.elibrary.imf.org/display/book/9781557753199/ch02...
And that doesn't have anything to do with my point that Spain was a developing country well into the 1990s, and that most of the post-Franco era development was subsidized by EEC and EU Developmental Funds
Read this, it's a good overview of the process - https://www.elibrary.imf.org/display/book/9781557753199/ch02...
Yep, Spain was a dictatorship until about 50 years ago, well within many people's living memory. Even worse, why is it a democratic nation (sorta--they still have a king after all) now? Because they got tired of living in a dicatorship? No. It's because the dictator got old and died, and I guess they couldn't find a new dictator to replace him.
It shouldn't be any surprise that a nation and culture so tolerant of living in a dictatorship isn't exactly leading the world.
It shouldn't be any surprise that a nation and culture so tolerant of living in a dictatorship isn't exactly leading the world.
Franco designated his successor. It was supposed to be the previous king Juan Carlos. He reinstated the monarchy and became king instead.
In terms of getting rid of dictators, you also have to realize that since the Spanish civil war (1936-1939) there was a dictatorship until 1975. That is a lot of time to purge any opposition. Your last sentence is uncharitable and overly simplistic.
In terms of getting rid of dictators, you also have to realize that since the Spanish civil war (1936-1939) there was a dictatorship until 1975. That is a lot of time to purge any opposition. Your last sentence is uncharitable and overly simplistic.
"Historical challenges" are a lame excuse for poverty. Singapore faced equally severe challenges but they seem to be doing well economically. Portugal could do just as well if they cared enough to make it a priority.
Somewhere in the 16th and 17th century economic power shifted from the South to the North.
Venice became Amsterdam.
Singapore has it's location- a politically stable enclave in South East Asia. Portugal is competing with the likes of Denmark and Germany.
Singapore has it's location- a politically stable enclave in South East Asia. Portugal is competing with the likes of Denmark and Germany.
None of that about Portugal is true.
What's wrong about that? Salazar absolutely did a massive number on Portugal, with a horrible economic policy, and spending ungodly amounts on colonial wars in Angola, Mozambique, Guinea, East Timor, and Goa.
Portugal to this day has fairly weak human capital compared to it's peers.
Portugal to this day has fairly weak human capital compared to it's peers.
From where I understood Salazar got power in first place because he improved an even shittier economy, and this was his early source of popular support.
His economic reign was bunk even compared to neighboring Spain
On the eve of the Carnation Revolution, Portugal had one of the lowest literacy rates in Europe, one of the lowest GDP per Capitas in Europe, one of the lowest electrification rates in Europe, etc [0]
In the early 1970s, it was unimaginable for Portugal to become a developed country, and if it wasn't for its ascension into the EC, it would have stagnated.
[0] - https://www.cia.gov/readingroom/docs/CIA-RDP85T00875R0017000...
On the eve of the Carnation Revolution, Portugal had one of the lowest literacy rates in Europe, one of the lowest GDP per Capitas in Europe, one of the lowest electrification rates in Europe, etc [0]
In the early 1970s, it was unimaginable for Portugal to become a developed country, and if it wasn't for its ascension into the EC, it would have stagnated.
[0] - https://www.cia.gov/readingroom/docs/CIA-RDP85T00875R0017000...
The U.K. has the same problem. Remove London from the equation and the U.K. is poorer than the poorest US state.
And like the EU there’s very little investment from London out to the regions
This leads to increased demand for housing in London (and to a lesser extent Manchester and a couple other big cities) and a vicious cycle.
Even worse, an ambitious young person can’t go anywhere else other than London thanks to Brexit.
In the U.K. the median wage outside London is about 20% above the minimum wage. There’s basically no point in doing anything other than the lowest shittest job you can find. Hell a masters degree will only net you about 30% more than minimum wage in many sectors.
I’ve just spent 2 weeks in the US, including being in Florida since Sunday. A young colleague has been working in our DC office for much of the last 2 years on a non immigrant visa. He went for a h1b and has got it, he’ll be leaving for a local employer by the end of the year.
For the first time ever I’m actually thinking the problems of the US are now less than those of the U.K., and even potentially Europe, and were I 20 again I’d be looking at the US as a target.
And like the EU there’s very little investment from London out to the regions
This leads to increased demand for housing in London (and to a lesser extent Manchester and a couple other big cities) and a vicious cycle.
Even worse, an ambitious young person can’t go anywhere else other than London thanks to Brexit.
In the U.K. the median wage outside London is about 20% above the minimum wage. There’s basically no point in doing anything other than the lowest shittest job you can find. Hell a masters degree will only net you about 30% more than minimum wage in many sectors.
I’ve just spent 2 weeks in the US, including being in Florida since Sunday. A young colleague has been working in our DC office for much of the last 2 years on a non immigrant visa. He went for a h1b and has got it, he’ll be leaving for a local employer by the end of the year.
For the first time ever I’m actually thinking the problems of the US are now less than those of the U.K., and even potentially Europe, and were I 20 again I’d be looking at the US as a target.
Yes I've worked nearly 20 years with teammates in London and watched how much even London & NYC have diverged in that time.
There was a brief period post GFC where it seemed like the US had lost its way and Europe had the right idea. Europe leaned hard into austerity and self immolated while the US just grew our way out of it and into the future.
As an American, I've always sort of held the stereotype of Europe as being a fun place to vacation. Nice lifestyle if you've made your money already, probably elsewhere.
Unintentionally or not, Eurocrats seem to have done everything they can to perpetuate this further and further. Between austerity, regulation, bureaucracy, etc it just seems like the whole continent is encased in amber, focussed on how to slice up a static/shrinking pie.
There was a brief period post GFC where it seemed like the US had lost its way and Europe had the right idea. Europe leaned hard into austerity and self immolated while the US just grew our way out of it and into the future.
As an American, I've always sort of held the stereotype of Europe as being a fun place to vacation. Nice lifestyle if you've made your money already, probably elsewhere.
Unintentionally or not, Eurocrats seem to have done everything they can to perpetuate this further and further. Between austerity, regulation, bureaucracy, etc it just seems like the whole continent is encased in amber, focussed on how to slice up a static/shrinking pie.
It’s a nice lifestyle even if you haven’t made your money as long as you have a full time position.
The work-life balance is so tilted towards life that it’s already semi retirement for people with full time jobs because job security is so high.
Best is getting a job in the European Union (in Belgium ) , United Nations, or other multi country agency.
The work-life balance is so tilted towards life that it’s already semi retirement for people with full time jobs because job security is so high.
Best is getting a job in the European Union (in Belgium ) , United Nations, or other multi country agency.
Yes but I do wonder how sustainable that WLB is in the EU for someone in say their 20s or even 30s now.
At some point the declining demographic situation means your taxes will go up, and the percent of budget going towards retirees will go up.
Meanwhile the retirement age for current workers like you will increase, but future benefits you will receive when you eventually retire get cut.
It's basic math of any shrinking & aging country as the worker:retiree ratio shrinks.
At some point the declining demographic situation means your taxes will go up, and the percent of budget going towards retirees will go up.
Meanwhile the retirement age for current workers like you will increase, but future benefits you will receive when you eventually retire get cut.
It's basic math of any shrinking & aging country as the worker:retiree ratio shrinks.
Noticed odd things in Spain - there is no suburb.
Cities there transition instantly from high-rise apartments to rural farms.
And prices in cities seem far above what the locals could possibly earn.
Cities there transition instantly from high-rise apartments to rural farms.
And prices in cities seem far above what the locals could possibly earn.
My grandparents' village has been growing, but only because it has become a sleeper town for Aveiro (and maybe Porto - there's a train station nearby).
Portugal is such a great place to live, it just lacks reasonably paying jobs.
Portugal is such a great place to live, it just lacks reasonably paying jobs.
> So housing affordability in the major cities remains poor. The youth therefore get squeezed out and emigrate, leaving an increasing tax burden problem paying for all the benefits given to the increasingly aging population.
At a risk of going off on a tangent, it should be said that this is a direct consequence of the 2007-2008 financial crisis and the resulting 2010–2014 Portuguese financial crisis.
https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_f...
A series of banks went bankrupt, the construction sector was ravaged, the real estate sector plummeted due to a market where neither consumers not producers could have access to credit. With the drop in supply and a constant demand, housing costs skyrocketed even though salaries stagnated. The youth is then faced with the problem of either facing a lifetime of earning salaries that don't allow them to buy or even rent a home or emigrating to places where it's possible to earn a modest living.
Taxes aren't the problem. The bulk of the income of those who can afford a home is already syphoned to service the costs of buying a home.
If housing becomes affordable, people stay and will have disposable income.
At a risk of going off on a tangent, it should be said that this is a direct consequence of the 2007-2008 financial crisis and the resulting 2010–2014 Portuguese financial crisis.
https://en.wikipedia.org/wiki/2010%E2%80%932014_Portuguese_f...
A series of banks went bankrupt, the construction sector was ravaged, the real estate sector plummeted due to a market where neither consumers not producers could have access to credit. With the drop in supply and a constant demand, housing costs skyrocketed even though salaries stagnated. The youth is then faced with the problem of either facing a lifetime of earning salaries that don't allow them to buy or even rent a home or emigrating to places where it's possible to earn a modest living.
Taxes aren't the problem. The bulk of the income of those who can afford a home is already syphoned to service the costs of buying a home.
If housing becomes affordable, people stay and will have disposable income.
I mean you've also accurately described Pennsylvania...
Pennsylvania has an HDI of 0.928 [0] (comparable to the United Kingdom and Luxembourg). Portugal has an HDI of 0.876 [1]
Median household income in Pennsylvania is approx $73,000 [2], but median household income of Portugal is below $20,000 [3]
Sure the US has plenty of problems, but it is absolutely one of the most developed large countries in the world.
The only other large (greater than 50 million population) countries with higher developmental indicators are the UK (barely) and Germany.
[0] - https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_terr...
[1] - https://en.m.wikipedia.org/wiki/List_of_countries_by_Human_D...
[2] - https://www.census.gov/quickfacts/fact/table/PA/INC110222
[3] - https://eco.sapo.pt/2023/01/13/rendimento-medio-das-familias...
Median household income in Pennsylvania is approx $73,000 [2], but median household income of Portugal is below $20,000 [3]
Sure the US has plenty of problems, but it is absolutely one of the most developed large countries in the world.
The only other large (greater than 50 million population) countries with higher developmental indicators are the UK (barely) and Germany.
[0] - https://en.m.wikipedia.org/wiki/List_of_U.S._states_and_terr...
[1] - https://en.m.wikipedia.org/wiki/List_of_countries_by_Human_D...
[2] - https://www.census.gov/quickfacts/fact/table/PA/INC110222
[3] - https://eco.sapo.pt/2023/01/13/rendimento-medio-das-familias...
American doomers generally underestimate how much better we have it than the rest of the developed world on just about every economic measure - income, wealth, employment, etc.
Like sure the EU, healthcare & education is cheap/free, but your taxes at the low end will are double to pay for that. And they pay nurses similar to what we pay fry cooks. Even higher pay places like London, UK pay 1/3 to 1/2 what you can make in NYC or SF for similar jobs.
Like sure the EU, healthcare & education is cheap/free, but your taxes at the low end will are double to pay for that. And they pay nurses similar to what we pay fry cooks. Even higher pay places like London, UK pay 1/3 to 1/2 what you can make in NYC or SF for similar jobs.
Policies lead to results.
If Portugal wants to keep the young people from leaving, why don't they look at where those people are going - and why - and emulate the policies of those destination countries?
If you don't want to adopt the policies that lead to the results that you want, then you don't really want those results.
Maybe most of the voters and politicians in Portugal don't want to change those things that the young people don't like.
If Portugal wants to keep the young people from leaving, why don't they look at where those people are going - and why - and emulate the policies of those destination countries?
If you don't want to adopt the policies that lead to the results that you want, then you don't really want those results.
Maybe most of the voters and politicians in Portugal don't want to change those things that the young people don't like.
They do not care about young people, if they did they would not have opened the country to receive millions of immigrants in a few years which has massively increased rents and property prices, taxes are high as hell, they even lowered the tax bracket where you start paying 43%, and this lower tax for "everyone under 35" is not for everyone under 35
Did I forgot to mention that if you come here you're capped at 20% IRS
Did I forgot to mention that if you come here you're capped at 20% IRS
In this case the problem is literally democracy. Portugal has more old people than young people, and those old people are perfectly fine screwing the younger generation. Specially because lots of older people don't have many descendants anyway so they don't care what will happen after they die.
The prices for housing, in any form, in the major metropolitan areas suggest this will not be successful.
This looks like is going to help increase the prices even more.
Indeed - people cannot live in money. Giving them more money will not help them get a place if there are not more places available to get. It would only drive up the price as the same people compete for the same housing with more money. Or, if they have some form of rent control - simply greater frustration all around.
Another possible consequence is greater inter-generational friction as young people with more money out-compete existing, older tenants/owners for those homes.
Another possible consequence is greater inter-generational friction as young people with more money out-compete existing, older tenants/owners for those homes.
meanwhile Norway has started a controversial exit tax that can kill many tech startups:
https://www.forbes.com/sites/danieladelorenzo/2024/04/09/nor...
https://www.forbes.com/sites/danieladelorenzo/2024/04/09/nor...
Why would anybody do unpaid sweat equity in founding a risky startup? A gamble that can only pay off if you were to win the startup lottery.
The same issue in New Zealand. Anyone with a professional job invests $100k/year in lost wages founding their high risk venture. Lose taxes if you win. Lose 100% of your time if you lose. Hardly economically worth being a founder given expected return is so poor (worse than the standard figure of 90% businesses fail after 5 years). We don't have a capital gains tax yet in NZ but CGT means nobody sensible should found a startup by "investing" their time.
The same issue in New Zealand. Anyone with a professional job invests $100k/year in lost wages founding their high risk venture. Lose taxes if you win. Lose 100% of your time if you lose. Hardly economically worth being a founder given expected return is so poor (worse than the standard figure of 90% businesses fail after 5 years). We don't have a capital gains tax yet in NZ but CGT means nobody sensible should found a startup by "investing" their time.
> When the natural interest for start-ups is to scale up and expand in foreign markets, or to leave the country to seek better deals, the proposed 37.8% exit tax on unrealized assets over $46.5 thousand that have been accumulated in Norway, seems to be the last drop for any foreigner or Norwegian with big dreams to set a business in the Nordic country.
As prior art, doesn't the US have something similar where if you want to leave your residency/citizenship, you have to pay up, even for unrealized gains and such? Seems like Norway is modelling something similar to what the US already has, and the US seems to still have tech startups coming out of it.
As prior art, doesn't the US have something similar where if you want to leave your residency/citizenship, you have to pay up, even for unrealized gains and such? Seems like Norway is modelling something similar to what the US already has, and the US seems to still have tech startups coming out of it.
The US exit tax isn't a fixed penalty for leaving, but rather a way to wring "pending taxes" out of citizens renouncing their citizenship. Per the exit tax you pay taxes as if all your assets had been sold, thereby forcing security gains to be "recognized" at that point.
How is that different from the thing Norway might implement? Besides the obvious difference of the US exit tax seems to be about citizenship while the Norwegian one seems to be about residency of the company itself.
> Besides the obvious difference of the US exit tax seems to be about citizenship while the Norwegian one seems to be about residency of the company
That’s a big difference. (Also, is it company or personal residence?)
That’s a big difference. (Also, is it company or personal residence?)
Sure, but also the least interesting because that difference is very obvious, that's why I'm asking for other differences...
> that's why I'm asking for other differences
If the obvious difference explains the gap, this is unnecessary. Switch American taxation to a territorial system and you’d see a similar flourishing of start-ups and founders in Canada and Mexico.
If the obvious difference explains the gap, this is unnecessary. Switch American taxation to a territorial system and you’d see a similar flourishing of start-ups and founders in Canada and Mexico.
You're right - maybe it is the same - I don't read closely enough, but the Norwegian tax is on "unrealized assets" which may be the same thing.
The big difference is that the US will sting you for tax wherever you are in the world, whereas most will only tax residents (complexities in terms of tax treaties notwithstanding).
Hence in both cases they are both looking to realise gains at the point where they no longer have control over the taxes being charged. A `penalty` for leaving their tax jurisdiction, notionally for the tax they are 'owed'.
Hence in both cases they are both looking to realise gains at the point where they no longer have control over the taxes being charged. A `penalty` for leaving their tax jurisdiction, notionally for the tax they are 'owed'.
I think the difference is that the US is where you'd want to found your startup anyway.
If I imagine being Norwegian, I bet the answer to that question is "Nope" more than "Yes".
I dunno, even Norwegians like money.
I think a major difference between people from the US and people like me from the Nordics is that we don't prioritize money above everything else. Good work/life balance for example, is commonly more important for us, just like everyone having access to good healthcare is also more important. But of course, not everyone shares that view :)
Sure, but people who found startups probably do care about money, and for them, the US offers more opportunity. Funding is easier, the market is bigger and unified, etc.
The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc.
For what it's worth a good few of my friends are software engineers and now that we're in our 40's it's the Americans who have better work life balance, not me (the American who moved to Europe chasing better WLB but instead just making a ton less money)
The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc.
For what it's worth a good few of my friends are software engineers and now that we're in our 40's it's the Americans who have better work life balance, not me (the American who moved to Europe chasing better WLB but instead just making a ton less money)
> Sure, but people who found startups probably do care about money, and for them, the US offers more opportunity. Funding is easier, the market is bigger and unified, etc.
Heh, funny that you just exemplified my "Americans care mostly about money" by only thinking about money/funding :) The startup/company culture might be a bit different in the Nordics compared to what you're used to. Many people just want to create a business that earns "well enough", then they're happy with that, rather than a "takeover the world" approach that is common in the US.
> The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc.
You do you! Personally I wouldn't feel ethically OK with that approach, as the country that raised you loses out until when/if you come back, and you're only moving to the US to make money, then leave with it, rather than retiring there.
But, everyone has a different approach to life, there is no right or wrong, correct or incorrect, only what we feel is the right approach for us :) In the end I hope you live the life you want, just like me.
Heh, funny that you just exemplified my "Americans care mostly about money" by only thinking about money/funding :) The startup/company culture might be a bit different in the Nordics compared to what you're used to. Many people just want to create a business that earns "well enough", then they're happy with that, rather than a "takeover the world" approach that is common in the US.
> The real trick is to be European and then go to the US, make a ton of money, then fall back on the European social safety net when you want to start a family, etc.
You do you! Personally I wouldn't feel ethically OK with that approach, as the country that raised you loses out until when/if you come back, and you're only moving to the US to make money, then leave with it, rather than retiring there.
But, everyone has a different approach to life, there is no right or wrong, correct or incorrect, only what we feel is the right approach for us :) In the end I hope you live the life you want, just like me.
well. but these two countries are very different, so can't just copy paste policies.
A typical bit of Forbes scaremongering.
According to the local the threshold for share gains is 3 million kr, about 300 thousand USD. You only pay the exit tax on amounts above that.
"Those subject to the tax will have to address their tax obligations related to gains exceeding 3 million kroner on shares acquired during their time in Norway.
They will have several options to fulfil this obligation, including immediate payment, interest-free instalments spread over 12 years, or deferred payment with accrued interest.
The changes are part of the government's efforts to counter the recent outflow of wealth from Norway, with Switzerland being a popular destination for tax exiles."
https://www.thelocal.no/20241007/whats-the-latest-on-norways...
According to the local the threshold for share gains is 3 million kr, about 300 thousand USD. You only pay the exit tax on amounts above that.
"Those subject to the tax will have to address their tax obligations related to gains exceeding 3 million kroner on shares acquired during their time in Norway.
They will have several options to fulfil this obligation, including immediate payment, interest-free instalments spread over 12 years, or deferred payment with accrued interest.
The changes are part of the government's efforts to counter the recent outflow of wealth from Norway, with Switzerland being a popular destination for tax exiles."
https://www.thelocal.no/20241007/whats-the-latest-on-norways...
Yeah, but I think the point is that this applicable on unrealized capital gains too. So if I start a company in Norway, raise a bunch of money and then move to the US because the company wants to have a presence there, I now have to pay the tax on the basis of the money raised; It's quite common for a reasonable successful founder to be worth millions on paper while having no cash.
On the other hand, not taxing unrealized capital gains on exit would effectively create a loophole by which it would be possible to avoid taxation simply by moving to a tax haven for a while and realize the gains there.
It is and the effect is immediate and destructive to any value creation in startups. It basically forces companies to leave before raising any serious money or founders will end up with tax bills that have to be paid out of investment money
Or just staying in the country, thereby bolstering their economy. Which is almost certainly the end goal. I mean, it kind of sucks if these countries provide the tools to create successful businesses and then those businesses just move to cheaper countries. You're kind of getting screwed over.
Countries invest too. In their economy. Providing high quality education at a low price is a huge investment, for example. It's not a good deal if citizens take that and you don't get a return on your investment, i.e. they're not creating innovative companies in your country.
Countries invest too. In their economy. Providing high quality education at a low price is a huge investment, for example. It's not a good deal if citizens take that and you don't get a return on your investment, i.e. they're not creating innovative companies in your country.
The Forbes article is from April, while The Local article you're quoting is from October. Back in April, the proposal was different, as The Local explains.
And the biggest problem for startup founders remains: you're taxed, on leaving the country, on unrealized gains. Being taxed on 5 millions of profit sounds fair, being taxed on 5 millions (or 30 millions) of valuation used for raising capital, in a startup that then fails and is worth nothing after a few years, maybe not so much. Neighboring countries do not have this kind of taxation.
And the biggest problem for startup founders remains: you're taxed, on leaving the country, on unrealized gains. Being taxed on 5 millions of profit sounds fair, being taxed on 5 millions (or 30 millions) of valuation used for raising capital, in a startup that then fails and is worth nothing after a few years, maybe not so much. Neighboring countries do not have this kind of taxation.
Not at all. As soon as you get VC money, your valuation likely is in the millions, and then you're already way beyond the threshold. Good luck with the exit tax then.
Many sub-aspects of this are debatable, of course: Is VC money good? Are high startup valuations good? Also: Sure, you can defer the payment, you can pay it later with interest, etc., etc. But that's besides the point.
The problem here is: Once your startup reaches a high valuation, exiting the country, for whatever reason, will become difficult. And this might happen for rather innocuous reasons: Temporarily moving to the US to open up a subsidiary, staying there > 180 days / year? --> Exit tax. Etc. The number of second-order consequences is high, and I'd wager most of them are not good if your goal, as a country, is to foster a startup ecosystem.
Many sub-aspects of this are debatable, of course: Is VC money good? Are high startup valuations good? Also: Sure, you can defer the payment, you can pay it later with interest, etc., etc. But that's besides the point.
The problem here is: Once your startup reaches a high valuation, exiting the country, for whatever reason, will become difficult. And this might happen for rather innocuous reasons: Temporarily moving to the US to open up a subsidiary, staying there > 180 days / year? --> Exit tax. Etc. The number of second-order consequences is high, and I'd wager most of them are not good if your goal, as a country, is to foster a startup ecosystem.
Weird that they would even consider that – Norway is so rich from oil and gas, it may be able to keep going without collecting any taxes.
Taxes make a government accountable to citizens. While not paying taxes because of oil wealth might seem enticing in the short term, it'll lead to disaster in the long term if a government becomes accountable mainly to the resource industry and neglects to invest in a diversified, productive economy.
Norway has high tax rates despite having oil wealth-- this ensures citizens remain productive and don't get too complacent by depending on a fluctuating commodity.
Norway has high tax rates despite having oil wealth-- this ensures citizens remain productive and don't get too complacent by depending on a fluctuating commodity.
The vast majority of oil tax revenue never enters the Norwegian domestic economy but is instead funnelled into the State Pension Fund (The Oil Fund) which invests outside the country. This means that the oil has little effect on inflation in the country. There is also a rule that only 3% or less of the fund can be used by the state in any one year. 3% is the expected real return so the fund should never shrink thus preserving the value for the future.
Norway has successfully avoided the Dutch Disease. But whether we will be able to successfully negotiate the decline of oil in the long run remains uncertain.
Norway has successfully avoided the Dutch Disease. But whether we will be able to successfully negotiate the decline of oil in the long run remains uncertain.
This is exactly the reason why we crossed out Austria as destination. Not only they have an exit tax, they want to tax the unrealized gains since the purchase of the asset instead of since entry to Austria. I wish they'd fix that weirdness.
Or just let people move between there and US without forcing asset sales at bad times to cover tax payments on unrealized gains.
Or just let people move between there and US without forcing asset sales at bad times to cover tax payments on unrealized gains.
> A worker in Portugal earning the average annual wage of about €20,000 currently pays a top income tax rate of 26 per cent. Anyone earning between roughly €21,000 and €27,000 pays a top rate of 32.75 per cent.
Pretty nominal for Europe to be honest. Most Americans don't realize a) how much money they make and b) how little taxes they pay. Apples and oranges with all the social safety nets and such of course, but still most (healthy) Americans get much more money in their bank accounts after all is said and done than they would in Europe.
Portugal is in a weird situation where it has high taxes and at the same time the median salary is too close to the minimum wage. This is difficult to overcome, and thus salaries are stagnated.
The government has no reason, in the medium to long term, to have such high taxes. Since, by keeping high taxation the state retrieves less money in absolute terms than they would if they let wages increase and steer away from the minimum wage.
I don't think you could say that about most EU countries. Portugal really is in a bad place.
(Edit: just clarifying that the situation is different, yes taxation is high as most others but in the case of Portugal its much worse)
The government has no reason, in the medium to long term, to have such high taxes. Since, by keeping high taxation the state retrieves less money in absolute terms than they would if they let wages increase and steer away from the minimum wage.
I don't think you could say that about most EU countries. Portugal really is in a bad place.
(Edit: just clarifying that the situation is different, yes taxation is high as most others but in the case of Portugal its much worse)
It's not that weird, France is in the same situation.
It's similar, in relative terms. In France the minimum wage is currently at 75.5% of the median, in Portugal it is 73.1%.
However, the issue lies in the absolute amounts. In France, the median (monthy) is 2340€, but in Portugal it is 1039€.
When you are taxed in relative terms this amounts to quite a big difference when comparing what both government get from their citizens.
I concur that France's cost of living is higher and that I'm wayyyy oversimplifying it.
However, the issue lies in the absolute amounts. In France, the median (monthy) is 2340€, but in Portugal it is 1039€.
When you are taxed in relative terms this amounts to quite a big difference when comparing what both government get from their citizens.
I concur that France's cost of living is higher and that I'm wayyyy oversimplifying it.
> The government has no reason, in the medium to long term, to have such high taxes
It does - Debt.
Portugal's debt as percent of GDP skyrocketed during the GFC and Eurozone crisis from 75.8% in 2008 to 129% by 2012.
Unlike economies with a similar debt-to-GDP ratio like Italy, Portugal's economy is a relative minnow, and doesn't have a significant domestic capital market which can at least help stem some of the issues, nor can Portugal attract FDI at the same level as much more business friendly Spain, which made income taxes their only lever.
That said, the Portuguese debt-to-GDP ratio has gotten much better (99.10% in 2023), but that was because of how much of the Portuguese budget was spent on servicing debt.
It does - Debt.
Portugal's debt as percent of GDP skyrocketed during the GFC and Eurozone crisis from 75.8% in 2008 to 129% by 2012.
Unlike economies with a similar debt-to-GDP ratio like Italy, Portugal's economy is a relative minnow, and doesn't have a significant domestic capital market which can at least help stem some of the issues, nor can Portugal attract FDI at the same level as much more business friendly Spain, which made income taxes their only lever.
That said, the Portuguese debt-to-GDP ratio has gotten much better (99.10% in 2023), but that was because of how much of the Portuguese budget was spent on servicing debt.
It’s presumably very _cheap_ debt, though? Ireland’s in a somewhat similar situation (don’t be fooled by the headline debt to GDP figure; Ireland’s GDP is distorted to the point that the government has had to make up its own adjusted metrics), though it’s currently running big budget surpluses, and from time to time someone will ask “why, instead of lowering taxes and investing in infrastructure, are we not using this surplus to pay down debt?” And the answer is that the average cost of the debt is 1.5% (the expensive stuff from the financial crisis has largely refinanced). It makes little sense to aggressively pay down debt at those sorts of rates.
A quick google search indicated debt interest is about 5% of the national budget.
This does seem low in comparison to the US, where ~17% of the national budget is spent servicing debt interest. For context, this is approximate 1.5X what we spend on national defense. [1]
https://www.investopedia.com/why-interest-payments-are-blowi...
This does seem low in comparison to the US, where ~17% of the national budget is spent servicing debt interest. For context, this is approximate 1.5X what we spend on national defense. [1]
https://www.investopedia.com/why-interest-payments-are-blowi...
Huh. Ireland’s is about 2.5% (3.1bn on 119bn budget next year). Slightly puzzled at what’s going on with the US debt; that does seem very expensive. Though it’s not _entirely_ comparing like for like, in that states have their own separate budgets in the US (local authorities in Ireland do too, but their own revenue raising capabilities are very limited and most of the money comes from central government).
Looks like the US’s cost of servicing works out to about 3.4%, which definitely seems rather high (though, probably still not high enough that you’d necessarily want to aggressively pay it down; 3.4% isn’t a _great_ return). Actually, I’d wonder how much of this is related to the debt ceiling stuff; I would assume that makes refinancing when debt is cheap more difficult.
Looks like the US’s cost of servicing works out to about 3.4%, which definitely seems rather high (though, probably still not high enough that you’d necessarily want to aggressively pay it down; 3.4% isn’t a _great_ return). Actually, I’d wonder how much of this is related to the debt ceiling stuff; I would assume that makes refinancing when debt is cheap more difficult.
for Ireland, are you talking about % GDP or %governmental budget.
I don't know how or if the debt ceiling has any impact on refinancing.
I don't know how or if the debt ceiling has any impact on refinancing.
% budget. Debt servicing is about 0.5% GDP, but Ireland’s GDP is so massively distorted that it’s not really worth paying attention to.
OK, I think we were using different units when comparing.
My concern is that the US GDP is also fluffed up, and the situation is more dire.
My concern is that the US GDP is also fluffed up, and the situation is more dire.
I'm aware, but we have been in that situation for almost a decade now. I'm portuguese.
I just think we would've gotten through this sooner by making use of the invisible hand and lead businesses to be able to prosper more and as a result, higher wages. This would lead to more modest taxes having a higher wield to the state.
As it stands, they are taxing people for a very low absolute amount in the end. Not to mention that taxes go way lower the closer you are to minimum wage (a good thing, but it also shows how little they gain from this strategy). In the meantime they strangle any small to medium sized company, which are the ones driving the wages for most.
I just think we would've gotten through this sooner by making use of the invisible hand and lead businesses to be able to prosper more and as a result, higher wages. This would lead to more modest taxes having a higher wield to the state.
As it stands, they are taxing people for a very low absolute amount in the end. Not to mention that taxes go way lower the closer you are to minimum wage (a good thing, but it also shows how little they gain from this strategy). In the meantime they strangle any small to medium sized company, which are the ones driving the wages for most.
What happens to the unhealthy Americans? What happens to the Americans who are too poor they cannot pay health insurance and the cost of medicine/surgery.
I think only the wealthiest Americans have much more money in their bank accounts than they would in Europe.
Medicaid expansion has fixed this for the poorest Americans unless you live in a few red states, and ACA subsidies cap private plans at 8.5% of your income (+ cost sharing on top of that obviously, but there is a maximum per year) for the rest.
Death and disease are not real, my mind zones them out. I never remember when i was the last time at the dentist, so why include that part in my lifes plan? That is just a blindspot of everyones mental model. They parked a whole scaming theme park in that in the us.
This is a misconception. Even in the poorest state here in the US, the median income is far more than most countries in Europe, pre tax[1,2]. And unlike what the internet says, we do have government programs that provide healthcare for those that cannot afford it or are out of work.
[1] https://www.statista.com/statistics/205960/median-household-... [2] https://www.euronews.com/business/2024/07/08/european-averag...
[1] https://www.statista.com/statistics/205960/median-household-... [2] https://www.euronews.com/business/2024/07/08/european-averag...
Agreed. There are many reasons to prefer living in Europe to the US, but "more money in their bank accounts" of non-wealthy people is certainly not one of them even though the American must sometimes use the bank account to pay for things that are provided by the government in Europe.
Unless we talk about Switzerland. But that's like 2% of the continent so what you say is valid.
And given too left-leaning and fanatical green-deal-at-all-costs push from Brussels economical situation won't get better, in contrary. They could be pouring money into defense, its not like in 20 years russia will stop wanting to subjugate/murder us all. Or they could try not killing their own automobile industry so quickly. Or...
EU started a slow but steady decline given changes in global economies, it will take probably a long time due to various factors but trend is clear.
And given too left-leaning and fanatical green-deal-at-all-costs push from Brussels economical situation won't get better, in contrary. They could be pouring money into defense, its not like in 20 years russia will stop wanting to subjugate/murder us all. Or they could try not killing their own automobile industry so quickly. Or...
EU started a slow but steady decline given changes in global economies, it will take probably a long time due to various factors but trend is clear.
> And given too left-leaning and fanatical green-deal-at-all-costs push
Investing heavily in renewable technology and R&D doesn't mean spending less on military or industrial capacity - in fact it's fairly dual use.
Furthermore, US, China, SK, JP, and others manage to balance both.
The issue is most EU members stopped funding their militaries following the fall of the Berlin Wall and redeployed that capital elsewhere - especially during the European Recession+Currency Crisis (1990-95), GFC (2008-11), and Eurozone Crisis (2008-2014).
Investing heavily in renewable technology and R&D doesn't mean spending less on military or industrial capacity - in fact it's fairly dual use.
Furthermore, US, China, SK, JP, and others manage to balance both.
The issue is most EU members stopped funding their militaries following the fall of the Berlin Wall and redeployed that capital elsewhere - especially during the European Recession+Currency Crisis (1990-95), GFC (2008-11), and Eurozone Crisis (2008-2014).
And Switzerland is most like the US out of European countries, albeit an idealized version of the US.
It has private healthcare mandated by the government, and an economy favorable to capital. It has a federal system where most of the power and spending resides with the cantons(states), and much closer to the voters.
The Swiss constitution was actually modeled after that of the US.
It has private healthcare mandated by the government, and an economy favorable to capital. It has a federal system where most of the power and spending resides with the cantons(states), and much closer to the voters.
The Swiss constitution was actually modeled after that of the US.
> Swiss constitution was actually modeled after that of the US
“The Amercian national constitution, the Articles of Confederation, was constructed on the Swiss model of a confederacy of some over sovereign states. Then, Americans repudiated confederal government in 1787 as impotent and unworkable and adapted a new federal constitution. The opponents of the new charter, the Anti Federalists argued that a Swiss style government was still a viable model which offered the best hope for the preservation of American liberty. The Swiss themselves repudiated confederate government in 1848 using many of the same arguments Americans had marshalled against it in 1787 and adapted a Federal constitution modelled after the American constitution of 1787. After the Civil War many American state and local governments adapted constitutional reforms borrowed from the Swiss. The initiative and referendum – which continues to this hour to give the politics of California and other influential states their distinctive tone.”
https://www.legalanthology.ch/hutson_swiss-and-american-stat...
“The Amercian national constitution, the Articles of Confederation, was constructed on the Swiss model of a confederacy of some over sovereign states. Then, Americans repudiated confederal government in 1787 as impotent and unworkable and adapted a new federal constitution. The opponents of the new charter, the Anti Federalists argued that a Swiss style government was still a viable model which offered the best hope for the preservation of American liberty. The Swiss themselves repudiated confederate government in 1848 using many of the same arguments Americans had marshalled against it in 1787 and adapted a Federal constitution modelled after the American constitution of 1787. After the Civil War many American state and local governments adapted constitutional reforms borrowed from the Swiss. The initiative and referendum – which continues to this hour to give the politics of California and other influential states their distinctive tone.”
https://www.legalanthology.ch/hutson_swiss-and-american-stat...
I think that supports what I said, but I love the added detail. There was more back and forth exchange than I remembered.
Another fun fact about the Swiss government that I think is superior to the US is that the effectively have seven presidents which form an executive council. The executive council debates behind closed doors and presents a unified public front. Internal debates of the executive counsel are sealed for 20 years before release to the public.
That said, my favorite thing about Switzerland is still that the vast majority of tax collection and public spending occurs at the local level. Federal spending revenue is approximately 30% with the rest being the local cantons. Swiss Cantons are smaller by population then a typical California county.
I think this emphasis on local government results in Civic engagement, oversight, and empowerment while reducing political strife.
Another fun fact about the Swiss government that I think is superior to the US is that the effectively have seven presidents which form an executive council. The executive council debates behind closed doors and presents a unified public front. Internal debates of the executive counsel are sealed for 20 years before release to the public.
That said, my favorite thing about Switzerland is still that the vast majority of tax collection and public spending occurs at the local level. Federal spending revenue is approximately 30% with the rest being the local cantons. Swiss Cantons are smaller by population then a typical California county.
I think this emphasis on local government results in Civic engagement, oversight, and empowerment while reducing political strife.
> seven presidents which former executive council. The executive council debates behind closed doors and presents a unified public front
This resembles the Athenian executive. It works in peacetime but less so in war. It’s also bad if you polarise because it blamelessly deadlocks.
This resembles the Athenian executive. It works in peacetime but less so in war. It’s also bad if you polarise because it blamelessly deadlocks.
You said "A was modeled on B", the answer said "B was modeled on A".
No, the Swiss federal constitution is based on America’s federal constitution. The American Article of Confederation, our previous Constitution, was based on our Helvetic Confederation constitution. Strictly speaking our constitution is based on the American Constitution.
> cannot pay health insurance and the cost of medicine/surgery
https://www.medicaid.gov/
https://www.healthcare.gov/health-coverage-exemptions/forms-...
> I think only the wealthiest Americans have much more money in their bank accounts than they would in Europe
Well, you thunk wrong.
Median household income in the US is $80,000 [0] and taxes like VAT are nonexistent.
Throw on top of that access to subsidized plans like Medicaid or ACA plans for households that earn below the median, and most Americans come out ahead.
The big issue with the US is the de facto inability to commit mental health patients to involuntary mental health holds unlike much of Europe due to the current interpretation of the 14th amendment, which has caused the mental health crisis to become a homelessness and drug crisis.
That said, as a whole, most Americans live fairly comparable lives to most Western countries, as HDI shows. In fact, much of Europe has a much lower HDI than the US once you exclude Scandinavia, Germany, the British Isles, and Switzerland.
When you look at a subnational level, it is the Deep South (Alabama, Mississippi, Louisiana, Arkansas) and Appalachia (West Virginia, Kentucky) that continues to lag, but they represent less than 5% of the entire population of the US.
[0] - https://fred.stlouisfed.org/series/MEHOINUSA672N
https://www.medicaid.gov/
https://www.healthcare.gov/health-coverage-exemptions/forms-...
> I think only the wealthiest Americans have much more money in their bank accounts than they would in Europe
Well, you thunk wrong.
Median household income in the US is $80,000 [0] and taxes like VAT are nonexistent.
Throw on top of that access to subsidized plans like Medicaid or ACA plans for households that earn below the median, and most Americans come out ahead.
The big issue with the US is the de facto inability to commit mental health patients to involuntary mental health holds unlike much of Europe due to the current interpretation of the 14th amendment, which has caused the mental health crisis to become a homelessness and drug crisis.
That said, as a whole, most Americans live fairly comparable lives to most Western countries, as HDI shows. In fact, much of Europe has a much lower HDI than the US once you exclude Scandinavia, Germany, the British Isles, and Switzerland.
When you look at a subnational level, it is the Deep South (Alabama, Mississippi, Louisiana, Arkansas) and Appalachia (West Virginia, Kentucky) that continues to lag, but they represent less than 5% of the entire population of the US.
[0] - https://fred.stlouisfed.org/series/MEHOINUSA672N
> The big issue with the US is the de facto inability to commit mental health patients to involuntary mental health holds unlike much of Europe due to the current interpretation of the 14th amendment
… Eh? Large-scale involuntary committal largely ended in Western Europe decades ago. What figures are you basing this on?
… Eh? Large-scale involuntary committal largely ended in Western Europe decades ago. What figures are you basing this on?
The God clearly doesn’t like them so it’s not worth making policy choices that take their problems into account
Unhealthy people get left behind in Europe all the time. I hope as a European you’ll never have to go through the hell of trying to deal with any kind of complex chronic illness. The doctors have no clue how to treat these kinds of problems, and any specialists are very few and far between. Go spend some time on forums for people dealing with chronic health problems and you’ll find many Europeans who’ve had to empty out their savings in order to get treatment.
Honestly health care in Europe isn't great either. My Dutch GP seems to think acetaminophen is the cure for everything. They're decades behind on things like discussing menopause, TRT, etc.
Just looking at salaries and taxes makes for a very distorted view of wealth and affordable lifestyle in the US vs elsewhere. Even if you take into account ALL the major variables such as college costs/loans, housing prices, real estate taxes, cost of healthcare, retirement, etc, it is very difficult to compare.
You can better see the reality by looking at actual examples of families with massively different incomes living in the US vs elsewhere. It takes WAY higher salary (5x?) in the US to enjoy the same lifestyle as someone in the UK, for example.
You can better see the reality by looking at actual examples of families with massively different incomes living in the US vs elsewhere. It takes WAY higher salary (5x?) in the US to enjoy the same lifestyle as someone in the UK, for example.
..... really? I'd take $200k in the US over 40k GBP any day of the week. And in the US I'd have bug screens in my windows. And air conditioning. And food I can taste.
Depends where in the US of course. $200K isn't going to go very far if you have to pay $1M for a house, 20K for r/e taxes, etc... One or two kids in college and you are f'd.
I don't know exact salary figure, but my sisters family in UK have medium income (1.5 jobs) new BMW, two kids in college, foreign vacations every year, kids got latest Apple phones/watch/laptop growing up ... A bit like 1950's America living the dream on a single income with foreign holidays and iPhones added.
I don't know exact salary figure, but my sisters family in UK have medium income (1.5 jobs) new BMW, two kids in college, foreign vacations every year, kids got latest Apple phones/watch/laptop growing up ... A bit like 1950's America living the dream on a single income with foreign holidays and iPhones added.
if you live in a major city in Europe you are going to also be paying $1M for a decent family sized house.
When did they buy their house (or flat)?
House bought a while back before prices shot up, so maybe mortgage paid off ... I don't know. OTOH college costs alone make the US ruinously expensive.. $200K/kid perhaps... That's the point really - you need to look at full financial picture in the US - especially costs. Looking at income tells you nothing.
My alma mater is coming in around $16,000 a year or so for tuition, books, and fees - https://www.calpoly.edu/undergraduate-costs-attendance-2024-... . It's generally considered a not-terrible school. $200k is quite rare.
I'd also take $200k in the US over £40k in the UK, but let's not overdo things: Here in London I have bug screens, air con, and basically any food you could think of (and quite a lot I've never heard of).
It's seriously not difficult.
It's seriously not difficult.
> And food I can taste.
Where do you live?
Where do you live?
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I should look more into cost of living in Portugal, maybe, but one of the other commenters mentioned housing prices being… high. In US, making ~$20,000 you’d be considered poor (maybe not “officially”) and probably pay zero federal tax and receive quite a bit of assistance.
Well, houses where I live, not Porto or Lisbon, are at 400k now. It is not cheap, getting worst every year
$20k is technically above the US federal poverty line for a single person. I live in a state where anyone under $30k is considered low-income and qualifies for full benefits.
This is correct.
Here's a handy table: https://en.wikipedia.org/wiki/Tax_rates_in_Europe
Here's a handy table: https://en.wikipedia.org/wiki/Tax_rates_in_Europe
Top rates are kind of useless; some countries have many more brackets than others. The US used to have a 90% tax bracket, but that didn’t make it a particularly high-tax country; effectively no-one paid it. Comparisons, are in practice, inherently difficult, because the curves caused by the tax brackets and credits can be very different. It really depends an awful lot on income.
That extra money comes in handy when you're paying $15K/year for health insurance because if you don't a few hours in the hospital would cost you triple that.
When counting your tax in the US add in your health insurance cost to compare to most of Europe.
Or if it's parts of Europe like Portugal where there is health insurance check the cost - looks like 14 euros to 90 euros a month:
https://www.beportugal.com/health-insurance-in-portugal/
Or if it's parts of Europe like Portugal where there is health insurance check the cost - looks like 14 euros to 90 euros a month:
https://www.beportugal.com/health-insurance-in-portugal/
Yes, there is a public health system, but people tend to avoid it when they can. Most opt to go private for their dental, for example. And if they have any kind of systematic (sibo, ibs, autoimmune, etc) problem the public system is useless and they will have to travel to find a private specialist. On the other hand, the private system is really good here, and also pretty cheap.
Dental is also typically not covered by medical insurance in the US (dental insurance is separate and works differently).
It is realistically much more than 14 euros. In Eastern Europe I pay almost 700 Euro per month in mandatory state health tax (it is not an insurance, it is a tax because it is a percentage of income, not related to what you are covered for).
If you're counting that you should add the +30% for social security in Portugal as well.
Straight up if you actually do the math and count every tax paid directly a d indirectly someone making minimum wage has a effective tax rate above 60%
Straight up if you actually do the math and count every tax paid directly a d indirectly someone making minimum wage has a effective tax rate above 60%
That's only true if you take into account VAT as well though.
But you're right, the big taxation items in Europe are not the income tax, but the "social tax" and VAT. The first is added as a payroll tax (>30% in some places) and the second is basically a sales tax on every purchase (>20%). These two tax items alone add up to a crazy percentage of your income.
But you're right, the big taxation items in Europe are not the income tax, but the "social tax" and VAT. The first is added as a payroll tax (>30% in some places) and the second is basically a sales tax on every purchase (>20%). These two tax items alone add up to a crazy percentage of your income.
Employers pay 80%+ of healthcare costs for most Americans so you’d need to add that $20-30k to their wages to get a comparable measure of income.
(Which is why wages haven’t grown that much while total compensation has grown much more)
(Which is why wages haven’t grown that much while total compensation has grown much more)
laughs in swedish.
32.75% taxes. That is so low.
32.75% taxes. That is so low.
I'm paying about 50% tax rate here in NL (we have a very high income), I just wish that those who have 10x and more than our income also had to pay a 50% tax rate. Only our tax rules have been written so that those who are very rich don't pay their fair share.
> I just wish that those who have 10x and more than our income also had to pay a 50% tax rate
I'd imagine that those who earn 10x what you earn hit the €75518 faster than you so they pay their fair share faster. No? Define "fair".
I'd imagine that those who earn 10x what you earn hit the €75518 faster than you so they pay their fair share faster. No? Define "fair".
Portugal taxes are probably higher than Sweden.
Many people ignore portugal mandatory social contribution, it is mandatory even if you earn minimum wage, and the tax there is about 34% (forgot exact number, the way they charge make it clunky to calculate). Most portuguese people think this tax is "only" 11% because the rest of the tax is "paid" by the employer. Average people don't understand that if your salary was supposed to be 1000 and you get only 650 after tax you paid 350 in taxes even if your paycheck says your pretax salary is 800.
Note: the income tax is paid on top of the social contribution, so is easy to end paying 50%+ taxes if you are in tech. Then Portugal gets mad with all recent grads moving to Germany. (By the way, I still live in Portugal but all companies I worked for since moving here were German, Portuguese companies can't compete in wages)
Many people ignore portugal mandatory social contribution, it is mandatory even if you earn minimum wage, and the tax there is about 34% (forgot exact number, the way they charge make it clunky to calculate). Most portuguese people think this tax is "only" 11% because the rest of the tax is "paid" by the employer. Average people don't understand that if your salary was supposed to be 1000 and you get only 650 after tax you paid 350 in taxes even if your paycheck says your pretax salary is 800.
Note: the income tax is paid on top of the social contribution, so is easy to end paying 50%+ taxes if you are in tech. Then Portugal gets mad with all recent grads moving to Germany. (By the way, I still live in Portugal but all companies I worked for since moving here were German, Portuguese companies can't compete in wages)
It can go up to 48%. But as in most countries, it's progressive: you pay X% over the first A€, then Y% over the next B€, etc.
Then you have Social Security (mandatory): 11% on the employee and 23,75% on the employer, or 21,4% for independent workers.
Then you have Social Security (mandatory): 11% on the employee and 23,75% on the employer, or 21,4% for independent workers.
Cries in throat sounds and having tax discount expiring at the end of this month
Pretty similar to anywhere else in Western Europe. Includes health care and a state pension and things like that.
They actually get healthcare and other services with that. It's not like it's just taken away in some black hole. They get value from the taxes they pay.
Once again even professional people that write about money do not understand how marginal tax rates work, or more likely, are ideologically driven to lie.
No, if you earn 20k€ you don't pay 26% of taxes, that's the start of the bracket.
No, if you earn 20k€ you don't pay 26% of taxes, that's the start of the bracket.
In America the tax rate is higher? People are reacting like this is a lot haven’t seen a paycheck in the US in there lifetime. US is maybe 5% lower under some circumstances. I thought fake outrage was banned here?
Not even close, the marginal federal tax rate is 12% for income between $11k and $44k [0]. This doesn't take into account state/property taxes, but it's nowhere near
[0]https://www.irs.gov/filing/federal-income-tax-rates-and-brac...
[0]https://www.irs.gov/filing/federal-income-tax-rates-and-brac...
Both calculations should include VAT btw
you have to adjust for median income and PPP. also, state taxes are often substantial.
Most people working in tech are making much more than that as are anyone considering moving to Portugal for a tax break. It’s a lot closer to 24-32% for that demographic.
At the levels OP described I’d be at 17% federal and state taxes rate. I’m at about 42% with state and federal but you need to add and zero and double the amounts to get close to our household income.
Not sure if Portugal uses marginal tax rates or not.
Not sure if Portugal uses marginal tax rates or not.
Plus mandatory insurance (minimally: health, arguably: car due to extremely poor public transit)
[deleted]
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Whenever I read about these schemes I wonder ... did it not occur to the people running the governments of these countries that people are not purely economic maximisers, and that they can attract and retain people by having a country that is fun and comfortable and safe to live in? People in Denmark pay a lot in taxes, but I haven't seen many of them rushing to leave.
> People in Denmark pay a lot in taxes, but I haven't seen many of them rushing to leave.
The issue is salaries in Portugal are VERY VERY low - they are comparable to Poland, Romania, and Greece - yet their tax burden and cost of living is comparable to Denmark.
A 25 year old Portuguese college graduate can immigrate visa free to Denmark and double-to-triple their salary almost overnight.
The same can't be said for a Dane unless they immigrate to the US, but they're in the H1B queue like everyone else so it just isn't worth the hassle unless it's a high paying white collar job.
The EEC has a massive disparity in incomes, with average monthly wages ranging from €700 to €5,000 depending on the country, and as EEC members tend to have fairly simplified immigration policies between each other, this causes a brain drain in the countries with lower wages.
The issue is salaries in Portugal are VERY VERY low - they are comparable to Poland, Romania, and Greece - yet their tax burden and cost of living is comparable to Denmark.
A 25 year old Portuguese college graduate can immigrate visa free to Denmark and double-to-triple their salary almost overnight.
The same can't be said for a Dane unless they immigrate to the US, but they're in the H1B queue like everyone else so it just isn't worth the hassle unless it's a high paying white collar job.
The EEC has a massive disparity in incomes, with average monthly wages ranging from €700 to €5,000 depending on the country, and as EEC members tend to have fairly simplified immigration policies between each other, this causes a brain drain in the countries with lower wages.
Right, but there are two variables in that equation. If the economy were stronger and more productive people could earn higher salaries. Don't get me wrong, I don't like taxes either (I live in Switzerland and pay relatively low rates of income tax) but it just seems like a loser move to decide that the solution is to fiddle with the taxes, rather than figure out how to make it a place people can build a great life in, including salaries, services, fun, comfort, safety ... all the different things that are important to people.
PIGS Countries don't have capital available to invest in salaries / services / fun / comfort in the first place, due to historical reasons, the 2010s debt crisis etc.
So the move of bringing people and capital by available means (tax breaks) and be less hostile to startups & companies (they have been very hostile and bureaucratic historically) is one of the few things they can do, and it works.
So the move of bringing people and capital by available means (tax breaks) and be less hostile to startups & companies (they have been very hostile and bureaucratic historically) is one of the few things they can do, and it works.
> If the economy were stronger and more productive people could earn higher salaries
The issue is Portugal is very business unfriendly and human capital is weak.
It's hard to make the case to invest in Portugal when you can invest a similar amount in neighboring Spain and get a much better return.
Nor do local businesses earn enough to pay comparable to higher income countries in the Single Market - especially because Portugal essentially penalizes large employers
This means the only way to make up the salary differnce that is the cause of the brain drain is to decrease taxes for early career Portuguese.
Denmark and Portugal are nowhere near the same level of development, and what works for Denmark does not work for Portugal.
The issue is Portugal is very business unfriendly and human capital is weak.
It's hard to make the case to invest in Portugal when you can invest a similar amount in neighboring Spain and get a much better return.
Nor do local businesses earn enough to pay comparable to higher income countries in the Single Market - especially because Portugal essentially penalizes large employers
This means the only way to make up the salary differnce that is the cause of the brain drain is to decrease taxes for early career Portuguese.
Denmark and Portugal are nowhere near the same level of development, and what works for Denmark does not work for Portugal.
> business unfriendly and human capital is weak
Exactly. So I would focus on improving that, rather than try a quick and desperate trick of tax cuts. Why not collect the taxes and then invest them wisely in great modernised services, for example?
Exactly. So I would focus on improving that, rather than try a quick and desperate trick of tax cuts. Why not collect the taxes and then invest them wisely in great modernised services, for example?
Becuase such changes are extremely difficult and take a generation.
Easing hiring means pissing off unions, which means you piss off voters and donors.
Simplifying entry of foreign businesses and competitors means pissing off small and medium businesses, which means you piss off voters and donors.
Shrinking Portugal's notorious bloated public sector will save money, but means firing a significant number of Portuguese, which means you piss off voters.
Shrinking Portugal's notoriously large spending on social programs will save money, but means you piss off voters.
You can't just "modernize services" overnight. It requires a generation, a lot of capital, and strategy to invest in building a High Tech industry.
> Why not collect the taxes and then invest them wisely in great modernised services, for example?
Because Portugal has had an elevated debt-to-GDP ratio for almost 20 years now, which makes it extremely difficult to get the capital to do any of the above, which means a significant amount of Portugal's tax revenue is spent on servicing those debts.
The average Portuguese gets paid too little, the average Portuguese business is too small to generate significant business taxes, and every individual Portuguese person who has hireable skills has no incentive to be paid a fraction of what they would earn in London, Frankfurt, or Madrid.
Lowering taxes for early career Portuguese in order to entice them to stay until they become mid-career is the least bad option of the multiple bad options Portugal has.
Easing hiring means pissing off unions, which means you piss off voters and donors.
Simplifying entry of foreign businesses and competitors means pissing off small and medium businesses, which means you piss off voters and donors.
Shrinking Portugal's notorious bloated public sector will save money, but means firing a significant number of Portuguese, which means you piss off voters.
Shrinking Portugal's notoriously large spending on social programs will save money, but means you piss off voters.
You can't just "modernize services" overnight. It requires a generation, a lot of capital, and strategy to invest in building a High Tech industry.
> Why not collect the taxes and then invest them wisely in great modernised services, for example?
Because Portugal has had an elevated debt-to-GDP ratio for almost 20 years now, which makes it extremely difficult to get the capital to do any of the above, which means a significant amount of Portugal's tax revenue is spent on servicing those debts.
The average Portuguese gets paid too little, the average Portuguese business is too small to generate significant business taxes, and every individual Portuguese person who has hireable skills has no incentive to be paid a fraction of what they would earn in London, Frankfurt, or Madrid.
Lowering taxes for early career Portuguese in order to entice them to stay until they become mid-career is the least bad option of the multiple bad options Portugal has.
Thanks for describing the complexity clearly. I think I agree now. It's a disappointing solution that is quite possibly better than other options.
Romania total taxes are quite high, because we don't have tax ladders, it's one size fits all solution and it's a lot. It's that cost of living here is smaller and as result it's not that bad
Yep, but realistically, Romania (as well as Poland and the rest of Eastern Europe) will end up in the same kind of middle income trap just like Portugal within the next 10-20 years.
Indeed. Portugal got by in Europe while it could advertise its services as significantly cheaper (Italy and Greece did the same). Romania, Poland and all will live to see another nation take its place, and if not finding a way to produce high value add products and processes, face the same kind of stagnation as Portugal.
It's already started happening.
For example, in Hungary, a lot of Orban's political consolidation was itself due lagging economic growth in the aftermath of the GFC and Eurozone crisis, as well as FDI moving towards cheaper Romania, Bulgaria, and Serbia.
Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose.
For example, in Hungary, a lot of Orban's political consolidation was itself due lagging economic growth in the aftermath of the GFC and Eurozone crisis, as well as FDI moving towards cheaper Romania, Bulgaria, and Serbia.
Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose.
>Hungary's HDI and GDP growth began stagnating around 2014-15, which was around the time mass dissatisfaction against Orban arose.
It's been 10 years, and he's still in power, so I guess the Hungarian people aren't that dissatisfied with him.
It's been 10 years, and he's still in power, so I guess the Hungarian people aren't that dissatisfied with him.
> It's been 10 years, and he's still in power, so I guess the Hungarian people aren't that dissatisfied with him
Gerrymandering, control of all Hungarian language media in a country where most people are monolingual in a unique language, and selective judicial prosecution are the main things keeping Orban afloat.
Gerrymandering, control of all Hungarian language media in a country where most people are monolingual in a unique language, and selective judicial prosecution are the main things keeping Orban afloat.
Is there any place in the world that is "fun and comfortable" that isn't an economic maximiser?
Thailand comes to mind, but its only "fun and comfortable" if you're an economic maximiser, bringing western money in. For locals, it is not fun or comfortable.
Denmark pays the highest wages in the EU [0], so you can't consider there.
[0] - https://nordicbusiness.media/denmark-pays-the-highest-wage-i...
Thailand comes to mind, but its only "fun and comfortable" if you're an economic maximiser, bringing western money in. For locals, it is not fun or comfortable.
Denmark pays the highest wages in the EU [0], so you can't consider there.
[0] - https://nordicbusiness.media/denmark-pays-the-highest-wage-i...
> a country that is fun and comfortable and safe to live in
I think Portugal is fun, comfortable and safe. It is a fantastic place if you want to visit.
Living there can be an issue. One of the problems, as another comment says, is that salaries are really low. That's probably compounded by the amount of bureaucracy one needs to wade through to do anything, and the overall 'old school' thinking of folks.
Generalizing(perhaps unfairly), the Portuguese seem to look fondly at the rear view mirror, but more progressive ideas are not viewed in the same light.
You would probably see more people staying if they had a space for their ideas, and a living wage.
I think Portugal is fun, comfortable and safe. It is a fantastic place if you want to visit.
Living there can be an issue. One of the problems, as another comment says, is that salaries are really low. That's probably compounded by the amount of bureaucracy one needs to wade through to do anything, and the overall 'old school' thinking of folks.
Generalizing(perhaps unfairly), the Portuguese seem to look fondly at the rear view mirror, but more progressive ideas are not viewed in the same light.
You would probably see more people staying if they had a space for their ideas, and a living wage.
> That's probably compounded by the amount of bureaucracy one needs to wade through to do anything
That does not sound like the description of a "fun" or "comfortable" country to live in. :-(
That does not sound like the description of a "fun" or "comfortable" country to live in. :-(
I've been to Portugal and it's lovely. But I don't think earning a low salary and not having enough is fun. Wouldn't be for me, at least.
My friend created a tech company there because salaries are low. He employs a dozen capable smart professionals. He pays them well for the local economy and arbitrage of tech works means he’s able to offer low rates and high quality on the international market.
He’s a rich expat gobbling up a housing unit but also creating jobs. It’s probably a net win for the locals.
A cool policy would be every newcomer has to construct (or cause to be constructed) at least one housing unit. If that was a condition of the golden visa everyone would do it and the benefits would be in injecting significant additional supply into the local rental and real estate market preventing supply and demand from raising housing costs.
A cool policy would be every newcomer has to construct (or cause to be constructed) at least one housing unit. If that was a condition of the golden visa everyone would do it and the benefits would be in injecting significant additional supply into the local rental and real estate market preventing supply and demand from raising housing costs.
The US investor visas get abused by elites building their own apartments as "economic development".
> I think Portugal is fun, comfortable and safe.
Yeah, apart from the pickpockets in Lisboa. They are really the most brazen I have ever seen anywhere. They don't seem dangerous, but constantly having someone trying to pick a wallet from your bag is pretty annoying.
Yeah, apart from the pickpockets in Lisboa. They are really the most brazen I have ever seen anywhere. They don't seem dangerous, but constantly having someone trying to pick a wallet from your bag is pretty annoying.
A expected step. Nobody has a intention, to build a anti-(age)-statistic protection wall.
Young, educated people are the gold of the western world- and the gold must not always flow towards rome as tax.
Young, educated people are the gold of the western world- and the gold must not always flow towards rome as tax.
> Young, educated people are the gold of the western world
No, they (we?) are not. The better analogy is a gold mine. You still need to invest in it to get anything out, and it’ll be a few years before you do. If you fail to do that, all you have is a Superfund site.
No, they (we?) are not. The better analogy is a gold mine. You still need to invest in it to get anything out, and it’ll be a few years before you do. If you fail to do that, all you have is a Superfund site.
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Different analogies, but both are true.
Young, educated, [and motivated] workers are a desired and contested resource.
Producing them is also important.
Young, educated, [and motivated] workers are a desired and contested resource.
Producing them is also important.
> Young, educated, [and motivated] workers are a desired and contested resource
Theoretically, sure. In reality this isn’t reflected in the immigration policy of any large economy. Portugal makes news with this for a reason.
> Producing them is also important
The point is having lots of underutilised young people is a liability. Gold doesn’t join gangs or riots.
Theoretically, sure. In reality this isn’t reflected in the immigration policy of any large economy. Portugal makes news with this for a reason.
> Producing them is also important
The point is having lots of underutilised young people is a liability. Gold doesn’t join gangs or riots.
Agreed. There are also interests that benefit greatly from them them being a highly contested resource with restricted supply.
If you are holding gold, you dont want someone to flood your market with more.
If you are holding gold, you dont want someone to flood your market with more.
> If you are holding gold, you dont want someone to flood your market with more
Right, this is why it’s a stupid analogy. That’s true for gold. But if you’re hiring young, educated people, you do want your country flooded with them.
Right, this is why it’s a stupid analogy. That’s true for gold. But if you’re hiring young, educated people, you do want your country flooded with them.
It sounds like we mostly agree on this. To be honest, I was mostly reacting to how you initially responded with a flat negation, so Im not going to steel man a simple analogy as a universal truth.
I agree that these analogies all depend on which perspective you are framed in. If you are a hiring manager, you want cheap effective candidates. If you are a worker, you want a labor shortage, at least for your role.
Public policy is a whole different mess. It is set by competing self-interested parties and may or may not bear any relation to the aggregate public benefit.
I agree that these analogies all depend on which perspective you are framed in. If you are a hiring manager, you want cheap effective candidates. If you are a worker, you want a labor shortage, at least for your role.
Public policy is a whole different mess. It is set by competing self-interested parties and may or may not bear any relation to the aggregate public benefit.
Going by elementary macroeconomic principles, currency unification will always result in "dead zones," because their exchange rates can't stabilize the balance of trade.
This is broadly true for any division of land with a single currency but it’s not as if going to tiny city states with unique currencies is also a good idea.
You could have more currencies than states. That is how it used to work in the US.
> how it used to work in the US
For a definition of “work” which normalises constant financial crisis.
For a definition of “work” which normalises constant financial crisis.
Frequent financial crises. Constant financial crisis better describes our dying small towns.
> Constant financial crisis better describes our dying small towns
Financial crises are characterised by assets suddenly losing their nominal value. Our dying towns are in structural decline. Not financial crisis.
Financial crises are characterised by assets suddenly losing their nominal value. Our dying towns are in structural decline. Not financial crisis.
The balance of payments is always self-stabilizing. The trade component can only have a non-zero integral when somebody is injecting or removing money from the economy by some other means.
What really means that no, economical dead zones have no relation at all with the balance of trade. And also, the balance of trade predicts almost nothing and is controllable by policy, anybody focusing on it is just throwing a red herring and hopping people don't look at actually important things.
(What doesn't mean that currency unification doesn't cause dead zones. I know that this explanation is wrong, I don't know if it happens or not.)
What really means that no, economical dead zones have no relation at all with the balance of trade. And also, the balance of trade predicts almost nothing and is controllable by policy, anybody focusing on it is just throwing a red herring and hopping people don't look at actually important things.
(What doesn't mean that currency unification doesn't cause dead zones. I know that this explanation is wrong, I don't know if it happens or not.)
>when somebody is injecting or removing money from the economy by some other means.
Which should be considered the normal state for an economy that with growth and production.
The issue is that a negative trade deficits are sustainable, but come directly out of the wealth growth of the importing country.
If you have $2 of value per year, and loose net $1 across the boarder, you never accumulate wealth.
Which should be considered the normal state for an economy that with growth and production.
The issue is that a negative trade deficits are sustainable, but come directly out of the wealth growth of the importing country.
If you have $2 of value per year, and loose net $1 across the boarder, you never accumulate wealth.
Wealth is not money.
No country accumulates money in any significant way. Neither loses it.
No country accumulates money in any significant way. Neither loses it.
What are you talking about? Countries create and change the amount in circulation all the time.
No country accumulates external money. The Eurozone ones surely don't, because people mostly don't accumulate money (your bank doesn't hold a lot of it), and the ones that have their own money don't accumulate any impactful amount of reserves because those are expensive.
Im not sure how this relates to my point.
Im talking about wealth, GDP, capital, and trade. These things are measured in currency, but saying a country is hording a currency.
If country A uses all of its surplus production beyond subsistence to import alcohol from country B, and country B invests all that money on education, infrastructure, and productive capital, you would expect different outcomes.
Country A can humm along with a perpetual trade deficit forever, but there is an opportunity cost.
Im talking about wealth, GDP, capital, and trade. These things are measured in currency, but saying a country is hording a currency.
If country A uses all of its surplus production beyond subsistence to import alcohol from country B, and country B invests all that money on education, infrastructure, and productive capital, you would expect different outcomes.
Country A can humm along with a perpetual trade deficit forever, but there is an opportunity cost.
The entire thread is about currency. From the first post.
If you meant to talk about wealth, real GDP, and real capital, you can... you know... reference those things on your text. Because every single thing upthread is nominal and about money changing hands.
Do you want to know how Portugal can get a positive trade balance (a nominal concept)? They just need to kill tourism and the unbalanced inflow of salary and pensions. Just destroy their natural and cultural attractions and make the place so bad to live that no foreigners will want to go there. Easy.
Now, we can talk about opportunity costs...
If you meant to talk about wealth, real GDP, and real capital, you can... you know... reference those things on your text. Because every single thing upthread is nominal and about money changing hands.
Do you want to know how Portugal can get a positive trade balance (a nominal concept)? They just need to kill tourism and the unbalanced inflow of salary and pensions. Just destroy their natural and cultural attractions and make the place so bad to live that no foreigners will want to go there. Easy.
Now, we can talk about opportunity costs...
I think you are confused by what a trade balance is.
Someone coming to your country and spending money is not a trade deficit.
A trade deficit is buying more goods and services from outside than are sold outside.
I was trying to explain to you how a negative trade balance can be sustained, but it seems like you dont want to hear it.
Take care.
A trade deficit is buying more goods and services from outside than are sold outside.
I was trying to explain to you how a negative trade balance can be sustained, but it seems like you dont want to hear it.
Take care.
That's a little flattened because oftentimes that $1 will go across the border in exchange for ownership of foreign assets.
Yes, but the principle is the same for how a perpetual deficit can be maintained.
A subsistence farmer can grow enough for themselves. It they make extra each year, they can buy something from outside each year, continually running an import deficit.
A subsistence farmer can grow enough for themselves. It they make extra each year, they can buy something from outside each year, continually running an import deficit.
>The trade component can only have a non-zero integral when somebody is injecting or removing money from the economy by some other means.
People late in their careers are buying imports, people early in their careers are leaving the country. That's as clear of a case of the integral going negative as I can imagine.
People late in their careers are buying imports, people early in their careers are leaving the country. That's as clear of a case of the integral going negative as I can imagine.
"By some other means" literally means that how people trade can't impact the balance.
People leaving the country carrying money is an example of those "other means", people buying imports isn't.
Either way, it's a bad number to even look at. It meaningless.
People leaving the country carrying money is an example of those "other means", people buying imports isn't.
Either way, it's a bad number to even look at. It meaningless.
I feel this has also been a challenge for Greece among other places. Can they adapt within the economic zone, say to become tourist havens while the bigger states provide industry and services? Should they leave the Euro?
Greece should have never joined the Eurozone, and are basically a middle income country despite their high GDP per capita (median household incomes are comparable to Mexico and Malaysia).
That said, leaving the Euro would be too economically traumatic for Greece at this point.
That said, leaving the Euro would be too economically traumatic for Greece at this point.
What does ‘ exchange rates can't stabilize the balance of trade’ mean?
If the US is trading with the EU, say, and the US is importing too much and exporting too little, eventually that affects the exchange rate between the dollar and the euro. That adjusts in a way that somewhat counteracts the trade imbalance.
But if Portugal imports too much from France and exports too little, and they're both using the euro, then there is no exchange rate to adjust, and so you're just left with the trade imbalance and no adjustment.
But if Portugal imports too much from France and exports too little, and they're both using the euro, then there is no exchange rate to adjust, and so you're just left with the trade imbalance and no adjustment.
So what, the exchange rate in that case would change so US consumers lose buying power for EU imports as a sort of automatic customs fee and as a result would prefer locally made alternatives?
I would question how well that works outside completely generic goods that you can buy anywhere, since with economies of scale consolidating production there is often hardly any alternative anymore.
Also, feels like there could be a way to manually address the balance without reducing people's standard of living.
I would question how well that works outside completely generic goods that you can buy anywhere, since with economies of scale consolidating production there is often hardly any alternative anymore.
Also, feels like there could be a way to manually address the balance without reducing people's standard of living.
The balance is not maintained for individual goods, but rather for the whole market. If the EU is better than the US at manufacturing everything, the exchange rate will fall until the US can at least do one thing cheaper. Exchange rates don't help raise people's standards of living, but they do prevent countries from becoming economic dead zones.
But there is an adjustment in the total wealth owned in aggregate by those in Portugal vs. France, which is what’s important at the end of the day, right?
Eventually those in Portugal will not have enough wealth to import above their exports, depending on how much stored wealth they have in aggregate.
So it’s still guaranteed to balance out on a century timescale…
Eventually those in Portugal will not have enough wealth to import above their exports, depending on how much stored wealth they have in aggregate.
So it’s still guaranteed to balance out on a century timescale…
[deleted]
The end states are different however.
>So it’s still guaranteed to balance out on a century timescale…
Balance in what sense? In terms of trade, countries can perpetually run a deficit if they share a currency. Wealth isnt zero sum and is continually created. This can be used to pay a perpetual deficit at a cost to growth.
>So it’s still guaranteed to balance out on a century timescale…
Balance in what sense? In terms of trade, countries can perpetually run a deficit if they share a currency. Wealth isnt zero sum and is continually created. This can be used to pay a perpetual deficit at a cost to growth.
Isn’t it the relative level that decides the balance between imports and exports? Not the absolute level of wealth?
relative level of what?
I dont understand your question.
I dont understand your question.
Relative level of wealth available for importing…
I see. Even if you have little wealth, I dont mind taking it all. It just means you cant buy much.
Imagine of two families. Whenever one gets money, it buys food from the other. The 2nd keeps taking the money and investing in their garden, making it bigger and more efficient.
IF they share a currency,
Imagine of two families. Whenever one gets money, it buys food from the other. The 2nd keeps taking the money and investing in their garden, making it bigger and more efficient.
IF they share a currency,
How can their be a ‘perpetual deficit’ in this case? Or in the case of Portugal and France trading?
Eventually one party will exhaust all their available resources, be that money, gold, desirable trade goods, trust, credibility, etc… and won’t be able to run a deficit anymore.
Eventually one party will exhaust all their available resources, be that money, gold, desirable trade goods, trust, credibility, etc… and won’t be able to run a deficit anymore.
Countries continually produce new value.
If one party has a gold mine, or scientists, or workers, or anything that produces net positive value, it generates wealth. If you retain that wealth and reinvest it, it can compound and this is called economic growth.
Lets say you, with your human labor, can use 10 bricks to produce 20 bricks. If you do this every year, your wealth grows. first 10, then 20, then 40, then 80, ect.
In this senario, You can trade with your neighbor and run a 10 brick deficit every year, but you wont exponentially grow your production and wealth. You will have 10 the first year, make 20, trade away 10, then end up where you started. You are sustainable forever, but not growing.
Your house will remain small, and the house of your trading partner will grow ever larger.
Lets say you, with your human labor, can use 10 bricks to produce 20 bricks. If you do this every year, your wealth grows. first 10, then 20, then 40, then 80, ect.
In this senario, You can trade with your neighbor and run a 10 brick deficit every year, but you wont exponentially grow your production and wealth. You will have 10 the first year, make 20, trade away 10, then end up where you started. You are sustainable forever, but not growing.
Your house will remain small, and the house of your trading partner will grow ever larger.
Yes… but these Portugese bricks have to be somehow better, in some aspect, than French bricks, for them to be traded in the first place.
Be that quality, quantity, availability, pricing, etc…
Eventually Portugal will exhaust all it’s bricks, and future brick opportunities, that are better in some aspect, relative to French bricks and French future brick opportunities.
And when that happens with every possible thing and opportunity in Portugal, relative to French things and opportunities, then the trade deficit naturally disappears.
Be that quality, quantity, availability, pricing, etc…
Eventually Portugal will exhaust all it’s bricks, and future brick opportunities, that are better in some aspect, relative to French bricks and French future brick opportunities.
And when that happens with every possible thing and opportunity in Portugal, relative to French things and opportunities, then the trade deficit naturally disappears.
Exchange rates are determined by markets based on supply and demand, with demand being based on things like investment opportunity, as well as structural demand such as for petro-dollar oil payments.
Currency markets are mostly too big for governments to be able to manipulate (e.g. George Soros & GBP).
Currency markets are mostly too big for governments to be able to manipulate (e.g. George Soros & GBP).
The market can adjust the exchange rate between the US and the EU, but not between the Portugal and Spain. This is in a sense the ultimate in government currency control, and if 1:1 is not the exact ratio that the market would have set, one of the two countries will be emptied out.
If the Portuguese economy was booming relative to Spain, then "the market" (investors) can still take advantage of that by investing in other Portuguese assets such stocks and real estate.
If a government wants to address a trade imbalance then import tariffs is one way to do it - or policy changes affecting cost of goods produced for export.
If a government wants to address a trade imbalance then import tariffs is one way to do it - or policy changes affecting cost of goods produced for export.
Nice tax discount from the leviathan and 10 years is just enough time to get some working experience and then move to a country with an upward trajectory to have children.
It's a shame, Portugal is a nice place to live. offer a low flat tax on income and productive people will flock to Portugal, making businesses, families, investing in the territory until they retire.
It's a shame, Portugal is a nice place to live. offer a low flat tax on income and productive people will flock to Portugal, making businesses, families, investing in the territory until they retire.
I'd love to move to Portugal, but I have kids that are about to enter school age, and Portuguese education seems much worse (judging by outcomes) than the rest of EU, especially former eastern block.
I think in general the deal in EU is terrible for young and not so young productive people. Taxes on income are high, real estate is very expensive as the land is already taken by others (who usually pay very little tax on it). There is regulatory capture in many industries so you need to first spend years in school then more years to get various certificates and then often you need to work for basically free until you can jump to to the other side of the barricade and start exploiting newcomers.
Taxes are high in Europe because we fund older generations and have oversized wasteful public sector. It has nothing to do with education (very low % of overall budget), healthcare (you are funding it mainly for old people paying multiple of you fair share if you have any kind of decent job) or "social safety nets". I hope more countries push against that. Portugal has fantastic weather and landscapes, same for Greece. Attract enough productive people who are fed up with being diary cows for pensioners and bureaucrats who never worked an honest day in their lives but are very qualified to spend your money and things will start happening there.
Taxes are high in Europe because we fund older generations and have oversized wasteful public sector. It has nothing to do with education (very low % of overall budget), healthcare (you are funding it mainly for old people paying multiple of you fair share if you have any kind of decent job) or "social safety nets". I hope more countries push against that. Portugal has fantastic weather and landscapes, same for Greece. Attract enough productive people who are fed up with being diary cows for pensioners and bureaucrats who never worked an honest day in their lives but are very qualified to spend your money and things will start happening there.
Could reduce the number of bureaucrats, but supporting the elderly is part of having a stable somewhat equitable society. The post Ww2 boom and the birth rate decreasing has made that a greater burden on the younger generation than it would otherwise be.
"Sorry just because older generation didn't have enough children you will now be forced to give up 50+% of your income to support them".
That will surely encourage young people to have their own children. They will pay even more!
60% is about how much you would pay in Germany on 100k EUR salary - 50% in income tax + social security + healthcare tax and then 19% VAT on most things you buy.
In my view it's just immoral to place this burden on young people.
That will surely encourage young people to have their own children. They will pay even more!
60% is about how much you would pay in Germany on 100k EUR salary - 50% in income tax + social security + healthcare tax and then 19% VAT on most things you buy.
In my view it's just immoral to place this burden on young people.
But life isn’t just about money, it’s about being able to enjoy it, and that is so much easier in countries like Portugal, Spain, Italy, and Germany compared to say the USA. Obviously that’s a stated opinion and everyone wants different things from life.
More than a million greeks have emigrated since the debt crisis. Life is enjoyable for tourists
Yeah, man life isn't enjoyable in the USA, way better to be in Portugal makomg 10k/year with housing at 400k now, really enjoyable.
Meanwhile I got a friend, married an American, moved there, was already making reasonable money here, just causually 4x his salary, is able to take vacations, heat his home, etc etc but yeah life not enjoyable in the USA
Meanwhile I got a friend, married an American, moved there, was already making reasonable money here, just causually 4x his salary, is able to take vacations, heat his home, etc etc but yeah life not enjoyable in the USA
> Taxes are high in Europe because we fund older generations and have oversized wasteful public sector
Everyone seems to forget the Eurozone Crisis from 2008-2014 and how government debt skyrocketed.
A lot of that debt was also at bad terms due to the high risk profile during that time period.
The only easy lever a lot of European countries had to service their budgets was taxes, because a lot of other levels were handed off to the ECB.
Everyone seems to forget the Eurozone Crisis from 2008-2014 and how government debt skyrocketed.
A lot of that debt was also at bad terms due to the high risk profile during that time period.
The only easy lever a lot of European countries had to service their budgets was taxes, because a lot of other levels were handed off to the ECB.
But it's always taxes on productive middle+ class. It's never land value tax so we can free up land and use it more efficiently or higher taxes on polluting businesses as that would hurt their owners or wealth tax so people who actually benefit the most from stable/safe country pay. It must be young generation to pay for mistakes of the previous one.
How much of that is still at high rates? Ireland’s (at one point the second-highest debt to gdp ratio in the eurozone) average cost of debt servicing is ~1.5%; at that rate you don’t _want_ to pay it off. At least in Ireland it was largely refinanced since the crisis; I’d guess it’s similar in the other high-debt nations (except possibly Greece, where refinancing might be difficult).
Portugal is in a similar boat to Greece.
Ireland is very business and FDI friendly, has a fairly decent budget, and worked very hard to resolve it's debt problem in the 2010s.
Ireland now has a ratio similar to that of Germany's, and Ireland has a credit rating of AAA for years now while Portugal only recently made it to BAA in the past year.
Ireland is very business and FDI friendly, has a fairly decent budget, and worked very hard to resolve it's debt problem in the 2010s.
Ireland now has a ratio similar to that of Germany's, and Ireland has a credit rating of AAA for years now while Portugal only recently made it to BAA in the past year.
This is exactly what I think as a young and educated person.
As Portuguese I have my doubts about this actually being successful.
Portugal already has tax breaks for the youth (aka IRS Jovem), but the new right-wing government is seeking to extend what the previous left-wing government introduced. That includes loosening requirements and extending the duration of the tax breaks.
Now, while in Portugal people talk about these as measures to retain the Portuguese youth in the country, no political party has framed it as a measure to capture foreign youth. Puzzling to me.
Now, while in Portugal people talk about these as measures to retain the Portuguese youth in the country, no political party has framed it as a measure to capture foreign youth. Puzzling to me.