Portugal seeks to become low-tax haven for young people

https://www.ft.com/content/41dd7994-3b1f-4562-a59f-11879b5e3f68

by alephnerd • 2 years ago

111 261 2 years ago

ft.com

ExoticPearTree• 2 years ago

https://archive.ph/jfRjL

smackay• 2 years ago

The prices for housing, in any form, in the major metropolitan areas suggest this will not be successful.

libertine• 2 years ago

This looks like is going to help increase the prices even more.

Nifty39292• 2 years ago

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.

laweijfmvo2• 2 years ago

  > 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.

ouch

FaridIO• 2 years ago

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.

baal80spam• 2 years ago

This is correct.

Here's a handy table: https://en.wikipedia.org/wiki/Tax_rates_in_Europe

laweijfmvo2• 2 years ago

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.

benopal64• 2 years ago

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.

spookie3• 2 years ago

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)

ryandvm• 2 years ago

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.

HarHarVeryFunny7• 2 years ago

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.

lucw• 2 years ago

Can you explain your use of "nominal" in "Pretty nominal for Europe" ? What does it mean ?

xutopia• 2 years ago

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.

matt-p• 2 years ago

Pretty similar to anywhere else in Western Europe. Includes health care and a state pension and things like that.

stuaxo• 2 years ago

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/

AdrianB1• 2 years ago

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).

profeatur2• 2 years ago

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.

johngladtj2• 2 years ago

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%

refurb• 2 years ago

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)

Me000• 2 years ago

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?

ativzzz• 2 years ago

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...

wil421• 2 years ago

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.

victorbjorklund• 2 years ago

laughs in swedish.

32.75% taxes. That is so low.

speeder3• 2 years ago

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)

jcmfernandes2• 2 years ago

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.

Muromec2• 2 years ago

Cries in throat sounds and having tax discount expiring at the end of this month

radicalbyte• 2 years ago

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.

JetSpiegel• 2 years ago

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.

whatshisface7• 2 years ago

Going by elementary macroeconomic principles, currency unification will always result in "dead zones," because their exchange rates can't stabilize the balance of trade.

MichaelZuo8• 2 years ago

What does ‘ exchange rates can't stabilize the balance of trade’ mean?

AnimalMuppet• 2 years ago

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.

eschulz• 2 years ago

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?

alephnerd22• 2 years ago

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.

bobthepanda• 2 years ago

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.

whatshisface7• 2 years ago

You could have more currencies than states. That is how it used to work in the US.

marcosdumay5• 2 years ago

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.)

whatshisface7• 2 years ago

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.

s1artibartfast21• 2 years ago

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.

chaosprint2• 2 years ago

meanwhile Norway has started a controversial exit tax that can kill many tech startups:

https://www.forbes.com/sites/danieladelorenzo/2024/04/09/nor...

diggan6• 2 years ago

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.

chaosprint2• 2 years ago

well. but these two countries are very different, so can't just copy paste policies.

CalRobert7• 2 years ago

I think the difference is that the US is where you'd want to found your startup anyway.

HarHarVeryFunny7• 2 years ago

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.

shtopointo• 2 years ago

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.

blackhawkC17• 2 years ago

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.

ninalanyon2• 2 years ago

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...

dosinga• 2 years ago

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.

joelwilsson• 2 years ago

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.

olieidel• 2 years ago

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.

lostmsu3• 2 years ago

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.

robocat• 2 years ago

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.

InDubioProRubio2• 2 years ago

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.

JumpCrisscross10• 2 years ago

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.

s1artibartfast21• 2 years ago

Different analogies, but both are true.

Young, educated, [and motivated] workers are a desired and contested resource.

Producing them is also important.

jcmfernandes2• 2 years ago

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.

bluecalm3• 2 years ago

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.

alephnerd22• 2 years ago

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.

rsynnott6• 2 years ago

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).

bluecalm3• 2 years ago

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.

EasyMark• 2 years ago

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.

seydor• 2 years ago

More than a million greeks have emigrated since the debt crisis. Life is enjoyable for tourists

gnwn24• 2 years ago

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

randomNumber72• 2 years ago

This is exactly what I think as a young and educated person.

insane_dreamer2• 2 years ago

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.

bluecalm3• 2 years ago

"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.

intellectronica5• 2 years ago

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.

alephnerd22• 2 years ago

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.

intellectronica5• 2 years ago

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.

Moldoteck• 2 years ago

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

outworlder• 2 years ago

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.

aleph_minus_one• 2 years ago

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. :-(

intellectronica5• 2 years ago

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.

more_corn• 2 years ago

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.

newaccount74• 2 years ago

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.

itake• 2 years ago

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...

steveBK12310• 2 years ago

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.

klipt2• 2 years ago

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.

alephnerd22• 2 years ago

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

steveBK12310• 2 years ago

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.

namaria3• 2 years ago

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.

brm• 2 years ago

I mean you've also accurately described Pennsylvania...

steveBK12310• 2 years ago

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.

alephnerd22• 2 years ago

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...

chgs• 2 years ago

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.

steveBK12310• 2 years ago

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.

BobbyTables2• 2 years ago

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.

forinti2• 2 years ago

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.

chipdart• 2 years ago

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.

nickip• 2 years ago

What does "young people" entail? What age group?

jasode• 2 years ago

Excerpt from the article: >The current proposal would apply to everyone under 35.

gnwn24• 2 years ago

This is not true, everyone under 35 who hasn't worked 10 years yet, which will exclude most of > 32

pjmlp• 2 years ago

As Portuguese I have my doubts about this actually being successful.

lostmsu3• 2 years ago

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.

Nifty39292• 2 years ago

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.

speeder3• 2 years ago

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.

gnwn24• 2 years ago

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

jokethrowaway3• 2 years ago

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.

Portugal seeks to become low-tax haven for young people

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