Comment by Radim | Hacker News Reader

Comment by Radim | Hacker News Reader

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Whether foreigners are income-taxed at 20% or 48% cannot be the answer¹. Clearly Portugal's problems are much deeper than that, going back to 1974 and beyond.

To name one, Portugal's bureaucracy is legendary. The Portuguese are not called "Honorary East Europeans" for nothing.

The red tape creates a complex system of inefficiency and corruption. It's like a cauldron – you (the government) plug one obvious hole, only to find the pressure found another, "unexpectedly".

And yes, young people run away in droves from Portugal, leaving entire industries back home chronically understaffed. Construction & health being two prominent examples that need foreigners to keep the lights on. This shortage of labour drives commercial prices up higher still, contributing to the death spiral.

¹ Leaving aside that both numbers are high to begin with; 48% ridiculously so (for anyone above €82k/year). That's no way to treat your productive population. And that's just income; there's additional health and social taxes, some masquarading as "insurance" or "employer contribution". Would you blame the young for leaving?

> That's no way to treat your productive population.

Seeing a single number and coming to that conclusion is very reductive, imo. What I believe matters is if the population feels like they are getting value for money. Income tax is higher than that here in Austria but we are broadly satisfied with what is done with that tax. Very much so in Vienna. Income tax is lower than that in Ireland, where I originally come from, and people are broadly unhappy with how tax is spent and don’t trust the government to tax more to implement the services they say they want.

You’re right about Vienna - it’s clean and wonderful.

Some governments do offer much better value for money than others.

But I think high taxes are a very risky bet on the idea that the government will stay competent long-term: bureaucracies are almost never cut down when they grow too large; thus taxes almost never come down significantly over the long term.

That’s certainly a more nuanced take than “48% tax rate on income over well above median is wrong”.

I too prefer public policy debates that focus on competency and efficiency instead of a variable parameter that doesn’t capture much information.

> Seeing a single number and coming to that conclusion is very reductive, imo.

That's not what the parent post was about, at all. Or did you only read its footnote?

Whether the Portuguese population "feels like they are getting value" is best observed in how they vote. Both during elections (Chega), and most directly and loudly, in how they vote with their feet. Opinions of Irishmen in Vienna notwithstanding.

I only objected to the fixation on taxation levels and assumption that a particular rate is morally bad as if they capture much about anything. If I wasn’t clear enough I hope I am now.

> If I wasn’t clear enough I hope I am now.

I'm afraid "much about anything." is still too vague to tell :)

No need to bring out the "immoral" card – yes, there definitely exist gvt policies (incl. tax) that tip a critical number of that country's skilled workers over into emigration. We're not talking Depardieu or "laptop tourists", we're talking local construction workers FFS.

Observing the tug-of-war HN votes on my post, some people must have taken that footnote as a cue for their ideological warfare du jour. Poor-vs-rich! Pitchforks now!

- "Fixation on taxation levels"… from my "whether [tax is] 20% or 48% cannot be the answer"? How?

- "loves to see low income taxes fore them as an universal band aid for the entire economy"… from my "Clearly Portugal's problems are much deeper than that, going back to 1974 […] Portugal's bureaucracy is legendary"? How?

With all due respect I think the fixation is yours. I have lived in Austria (my sister still lives there) and I have lived in Portugal. There are a lot of issues under the surface in both. Different histories, different trajectories. No need to attack strawmen.

If you have specific insights on the situation in Portugal (beyond Rinzler89's "just create jobs and spend existing taxes more wisely" :eyeroll:), I'd love to hear them. This is a topic close to my heart, I still love Portugal.

>we're talking local construction workers FFS.

But you don't fix that by offering tax breaks to well off laptop tourists from abroad. You fix that by investing in those construction workers and giving them tax breaks.

>Observing the tug-of-war HN votes on my post, some people must have taken that footnote as a cue for their ideological warfare du jour. Poor-vs-rich! Pitchforks now!

You seem to be victimizing yourself over nothing as people are allowed to have diverging options. It's not due to poor vs rich ideology as you imagine, is that those rich people you root for and the ones Portugal attracts don't contribute much to Portugal's economy or success but on the contrary help cause gentrification.

Investing in those construction workers that left might be better than investing in some foreign web devs who are here just for the partying and tax breaks.

>¹ Leaving aside that both numbers are high to begin with; 48% for anyone above €82k ridiculously so. That's no way to treat your productive population.

Most EU countries (where Portuguese also happen to emigrate to) also tax their high earners equally high: France, Belgium, Austria, Germany, Sweden, even Romania lol. and people there aren't rioting because of it. Only few countries have low-ish taxes or offer tax breaks to immigrants: Luxembourg, Netherlands are the ones that come to mind.

I doubt lowering the taxes for high earners is the solution that will fix all of Portugal's problems, as much as HN loves to see low income taxes fore them as an universal band aid for the entire economy, as if the entire economy is just tech workers and nothing else.

Maybe Portugal should first make itself more attractive to investors to come and create jobs, and spend its existing taxes more wisely at making life bearable for local low earners to stay and work there especially healthcare workers, before trying to become a tax heaven for high earning laptop tourists who will only spend money on nice rent and expensive cocktails but will fuck off the moment the gravy train stops.

Exactly. Corruption and efficiency of government are much more important as far as I can see. But they can’t be expressed easily in single numbers like tax or gdp so few seem to be great at campaigning on changing them and then actually changing them.

Taxes for rich are never any significant contribution to economy, not for places we talk about. They please poorer voters though, some sort of schaden freude that keeps the focus away from corruption, inefficiencies and massive structural problems in economies and lack of will or skill to tackle them by politicians (and lets be honest, 4-year election cycle ain't enough to fix big problems anywhere even for the best ones, especially if next voted government wipes it clean).

But what taxing rich accomplishes is that all those investors and high flying managers who are very smart and well educated in tax systems avoid such place as much as they can. Thats why Depardieu run off to Russia from France and its draconic system. And so did many others, ie to Switzerland, one of most famous is Alain Delon. And thousands of other, less known or unknown yet rich names.

It may be un-intuitive for unaware, but really don't punish your wealthy too much, they can leave almost anywhere and they often do to protect their wealth. Punish them just enough that masses are happy and rich don't leave. Its a fine balance that is unique for each nation and changes over time.

I don't have simple easy recipe for this, nobody has. But seeing a lot how rich actually think and behave, simple knee-jerk reactions almost never achieve intended effects down the line, state fights uphill battle with often smarter and better equipped folks.

>Taxes for rich are never any significant contribution to economy, not for places we talk about

Where was I talking about taxes for the rich?

>Thats why Depardieu run off to Russia from France and its draconic system.

Yeah, I'm sure the average French working class citizen suffered a lot from loosing Dépardieu to Russia, let them play you the world's smallest violin for that tragic loss.

Pretty sure the French citizen cares way more about retaining and attracting the likes of Datadog, Airbus and Renault who actually create skilled well paying jobs, than a entitled fat cats like Dépardieu who don't create any jobs.

Depardieu is an important investor, he created and owns multiple companies in France.

https://www.20minutes.fr/societe/1073815-20130104-gerard-dep...

Is the number of sallaried employees smaller than the number of companies? I bet it is.

Every film is technically a company, it's easier to account for expenses that way.

> Most EU countries (where Portuguese also happen to emigrate to) also tax their high earners equally high: France, Belgium, Austria, Germany, Sweden, even Romania

Until about €10 to 25mm, at which point the tax shenanigans the EU affords would make the Congress blush. (I’ve seen exemptions that couldn’t apply to more than one family, and that was in Sverige.)

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