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A European Citizens Initiative wants to introduce a Wealth Tax (and they need your help)
(www.tax-the-rich.eu)
this post was submitted on 20 Jul 2024
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You don't understand how progressive taxes work. No one is punished for earning more. Even if you reach he maximum rate, the maximum rate is only coming out of your disposable income (unless you are a complete idiot living no only above your means but well above what's reasonable).
In practice that’s doesn’t work out. Govts don’t care about properly defining what constitutes as “disposable income” and in the EU we don’t get all the nice tax benefits people get in the US. It’s just rape to tax someone at 15% and then someone else who makes 2x that at 45% or something like that.
Furthermore why should I be taxed for “disposable income”? I should be able to save and invest some money (stuff that ins’t deductible in most of Europe). I don’t live paycheck to paycheck and have to get a loan and live of credit cards like most of the US does.
So, yes, my country does tax me for earning more, the money comes straight out of my monthly paychecks, I don’t even see it. Only if I’ve healthcare, education and a few other expenses I may see a small fraction of that money coming back to me, but up to some limit. If I decide to buy a car, a house or invest in stocks I won’t be ever see that money back.
That's not how it works. The 45% doesn't apply to your entire income, only to the part above the threshold. For example, if you work in Germany, you only pay 45% on what you earn above €227k, and you'll always pay 0 taxes for the first €11k.
I believe I’m not explaining myself clearly here. I’m aware of what you’re saying but using your example I still don’t see why I should be taxed 45% on income over 227k. I do understand that my first 11k will be tax free, the from 11k to some other value I’ll pay 10% and so on. I just don’t agree with taxing people that way.
If you look at countries like Portugal, Spain a few others you’ll see that people are getting squeezed by their governments with a combination of progressive taxes paired with recent inflation. The cost of living in those countries right now requires people to have wages that are taxed to absurd values because “they’re rich” and when if you boil it down you’ve people that can barely afford to rent a single bedroom flat and don’t even own a car.
I doubt people earning over €227,000 a year have any issues paying for rent, why shouldn't they get taxed more to bring earnings more in line? That way more money can go to support the lower earning demographics.
Well and they are… consider an hypothetical country that runs a flat tax of 15%, if you make 20k/year you’ll be paying 3k, if you make 300k you’ll be paying 45k. In this scenario those rich people are paying more and the system is fair - after all the cost of building a road, school, hospital or helping people with a disability doesn’t suddenly increase if someone is making 300k on that country.
Saying that someone who makes 20k should pay 15% and than someone who makes 300k should pay 50% (even if that’s on a fraction) that’s just unfair and pushing people into not wanting to do better.
No, that is not how it works.
There's a certain cost of living. Housing, food, transport. There's a certain "floor" you have to earn or you'll have a miserable time in the world as it is.
Once you get above that earnings floor wealth suddenly starts to accumulate. You can get a nicer house, a fancier car, go out to eat and vacation more often. Which is all nice and good, people should be able to do such things, but those are secondary luxuries on top of what you need to live.
So instead of taxing everything, say, 50%, the lower brackets are given some slack with reduced taxes.
Look, I’m well aware of Engel's law. I just don’t agree with you, nor I agree with what most countries do, just become someone is above the line and has the ability to accumulate it doesn’t mean that person should pay an higher percentage. I believe the system should be fair, everyone should be taxed at the same flat rate such as 15% and that everyone can live comfortably with that tax.
If, as you say, we find that the percentage to be unbearable for some people we then fix what’s wrong there, not by changing the percentage but, by making sure those people earn more and are on a better position.
To someone broke; €1000 is invaluable.
To a millionaire; €1000 is another drop in the bucket.
The first €1000 is so much more valuable than the 1000th. A flat rate across all earnings isn't fair to the vast majority of those who can barely, or cannot make ends meet.
The wealth gap is already growing, if anything millionaires aren't being taxed enough. Singular persons do not need to have enough wealth to begin a small nation, I thought we left such fiefdoms behind with the middle ages.
Portugal $81,199 eur you pay $29,940 in tax. That makes $52,059 take home pay or $4,338 a month average cost of monthly expenses(not including rent)is $ 2572 leaving $1765 leftover over a month. 3br apartment in city is $1,666. Seems doable without even having a second worker in the house. Especially on the higher end of the tax bracket https://www.numbeo.com/cost-of-living/country_result.jsp?country=Portugal#:~:text=A%20family%20of%20four%20estimated,lower%20than%20in%20United%20States.
I am more concerned with Portugal average salary of $33k eur and median being $31k that just isn't doable
All the progressive tax systems are fine it sounds like your wages/cost of living sucks. That is the true problem.
Your numbers about median income are correct, however the ones about the housing market aren’t.
Almost nobody makes 81k/year in Portugal, if so must be working for some company abroad or in some scheme. Anyways, a 3 bedroom apartment in a major city in Portugal doesn’t cost 1,6k/month, not even close, those are prices from a decade ago or so. Right now 1.6k/month will get you an 1 bedroom apartment or a very small and old 2 bedroom one.
In order to get to those 33k/year incomes you’ll be forced into living in a city and at that point you’re already taxed to death and you’ll be living paycheck to paycheck, can’t save any money etc. Consider this example: after taxes (lets say 25%) if you spend 1.2k/month in your 1 bedroom flat you’ve 860€/month left for food, health, car, other taxes, expenses etc. you may not be (very) hungry but you won’t be saving any money either.
To make things considerably worse it’s not a good ideia to rent / buy in any place over 50KM from major cities because 1) you don’t have decent public transportation, 2) getting a car on that wage is hard, 3) gas prices and parking fees are crazy right now.
I’m assuming you’re American so driving 100KM/day to get to and back from work may look reasonable, but in Portugal that’s 100KM on broken roads / expensive tolls, expensive gas and about 2h-3h of your day depending on traffic and parking.
Median mean 50% of the country make more or less. So 31k is still rough.
You said the richer people in the tax bracket was struggling because taxes(at least how I took or understood what you said)
I can't argue your lived experience but this is also how it is in America. Everyone who wants a decent job has to be close to a major city or be related to the rich people in the small towns and things are expensive. I commuted 150 miles a day (241 km) just so I could afford rent with 4 other people in my house. I spent 4 hours on commuting so my days were 12 hours it was exhausting.
Either way it isn't taxes it is businesses paying poorly, bad production or manufacturing for cost of living necessities, and ownership class being ridiculous. Not sure what your politics are but taxes help the poor with health care, roads, and infrastructure. Also keeps the rich from controlling more.
If we look at recent data here it's actually worse than what we were discussing. According to official statistics average wage is 1,463€/month in 2023... so that makes up to about 20k/year.
Also, looking at the actual numbers, in Portugal you hit the 37% tax bracket at just €27,000 and 45% at around €50,000. These salaries definitely do not make you rich, but they make you owe a ton of taxes.
Additionally, as stated on the article, the rich already pay an extra:
......
What I'm actually saying is that there are a lot of middle class people here that get fucked over every time the "tax the rich" dialog comes along because the govt considers people making 33k+/year to be rich.
Bottom line is: whenever the radical left here starts bitching and pushing for legal changes on taxes then the barely surviving 33k/year middle class gets squeezed again and nothing else changes.
This "taxing the rich" stuff is kind of a lie people like to throw around because if you're making 300k/year you'll always have ways around the income tax and you won't be paying anyways.
Average salary is a broken metric always look for median. 31k that is median just plain fucked sure the tax doesn't help but 31k isn't a livable salary in the country by my metrics that being said. I am sure a 2 income house hold for a 3br is more accurate of a situation since globally single income households are just not realistic. Even if you made 31k with 0 tax I don't see how that would be livable still not worth breaking tax system because idk what other welfare you all have but losing free health care would make your country worse off
Yeah it isn't.
Probably not, but you're still assuming that the "free healthcare" works while in fact it doesn't.
You pay an extra 11% of your income for social security that will give you a retirement pension (assuming the fund doesn't go bankrupt), unemployment protection (around minimum wage for a period of time) and that's about it.
Why we have progressive rates. A flat tax will still make a 31k persons life more miserable in this country the lower tax ranges need to be adjusted. In America if you don't make enough money we send you money. Almost like a ubi. 100k people won't be hurt if more money they make is taxed.
Paid health care is way worse. I already 1.4% for old people healthcare(I don't get access to) and I pay around 4.5% weekly to health insurance that I can't use until I spend $6,000 in healthcare services and still have to pay money to see doctors. In America so many people go without insurance or just die because they can't get things taken care of.
Most articles say Portugal healthcare is better or on par with America's system for patient outcomes. But what the article don't mention you have be able to afford to get into the system in America. I haven't visited a doctor in 15 years.
A guaranteed pension is super strong versus a retirement plan that is in the stock market because a crash could wipe out the whole fund.
Lastly why isn't the rich not paying more in salaries and why isn't money more equitable In Portugal?
It may be but at the same time since COVID our healthcare has been a total mess. Waiting lists are crazy, sometimes you can't get simple tetanus vaccines or you can't get healthcare unless it's something really urgent because there aren't any doctor to attend you on a regular basis.
Have a look at this https://www.theportugalnews.com/news/2022-05-03/hospital-waiting-times-concerning-portuguese/66794 and https://www.statista.com/statistics/1477807/portugal-waiting-time-by-medical-specialty/. When you've to wait 120 days for a cardiology consultation you'll most likely die in the meantime. There are a lot of cases of people waiting months or even years for simple surgeries.
Well the thing is that we don't really know how guaranteed it will be and what values we will be talking about in a few years. Maybe minimum wage for everyone independently of the money you payed each month of your working life - it's looking a lot like that and that's not fair at all.
Because it's hard for most companies to pay employees 30k or more. Consider this, for a 30k income the employee will pay 37-43% income tax + 11% social security, then the employer pays another 11% among other useless crap and legal compliance stuff.
To be fair if you look at millionaires in Portugal the biggest majority came from somewhere else. It's really hard to make money in these economic context, people have almost no disposable income it's a race to the bottom in every market, large monopolies rule over sectors backed by corrupt politicians.
The country needs more entrepreneurs and businessman but they can't survive the corporate taxes, crazy interests on loans and all the crazy regulations put in place to gatekeep new companies from the market.
It is the same in the usa for healthcare unless you can spend money. Sometimes people will save for a year so they can take a day or week off for surgery.
Sounds like less of a tax problem and more of a things are to expensive problem. Or government needs to regulate more problem and you have corrupt politicians. All these companies are profitable right? Then they can pay more.
I believe it's both problems... because 40% of your income in taxes it a lot, if that value was around 20% people would be able to live much better.
Yes, a lot of corrupt politicians.
Most of them (at least on energy, transportation, basic utilities, etc.) where public companies that got privatized because they went into debt and the govt couldn't manage the abyss anymore. Those companies may show some profits and usually pay a bit over the average eg. so you may get to the 30k range if you've a masters engineering degree or something higher education but not much else.
Even at that level it's kind of hard, if you pay an employee 2.5k/month gross he will get a net of 1.9k/month. if you scale to 3k/month gross = 2.1k/month net. As you can see it's hard to increase wages because you get run over by taxes. Bigger companies usually get around this by renting cars for employees and giving our a few other benefits that while may be helpful completely hinder the ability for families to grow and save some money.
When you're required to pay an extra 500€/month so the employee gets just an extra 200€ you've to go get that money from somewhere and somewhere is the market... so prices raise and people can't afford the stuff they need etc. etc.
Meanwhile the majority of the population works for small companies that are barely surviving drowning in debt and trying to comply with all the stupid legal requirements in place. People here make way less and work more overtime.
Let me give you an example of how pathetic things are: there aren't many houses however there's a lot of space to build but building is expensive because you've to get a bunch of licenses and fulfill a lot of requirements.
One of those is you've to submit a project for a gas boiler and stove even if you don't plan to install and use those. Even more ridiculous, if the place where you're building doesn't have the public infrastructure to deliver natural gas to you then you're still required to deliver. A project like this may add 10-20k to your total cost for no reason and without it you won't be allowed to build the house.
10k seems small on a house but if you start pilling bullshit requirements like that you'll reach 50k or more in useless stuff. You also have construction permits and whatnot.