[fddr]

It is not quite that bad. Tax withholding rates are not marginal, they do apply to the whole salary. But the actual tax rates at the end of the year are marginal. So it is possible a pay raise means you get less money after witholding on a monthly basis, but on an yearly basis, after taxes paid/refunded, a pay raise is always net positive.

Still silly, but not insane.

[bogomipz]

But that's essentially a big no-interest loan people are giving to the government no? The money returned at the end of the year is money people could have been investing and earning a return on no? That seems closer to "insane" than "silly." Or am I missing something?

[fddr]

You are not wrong, except it's not usually a big loan. The witholding rates are chosen so that in most cases what is withheld is close to your final tax bill.

In all countries I know of, tax withholding is not a perfect match to final tax bill, and that could amount to a no-interest loan to government like you say. Not sure if in practice that loan is unusually large in Portugal, could be.

[fyfy18]

From the other side of the table, that is money the government is investing and earning a return on. If they did it the other way they'd have to raise the tax rates to compensate, which wouldn't go down for the politicians doing it, even if the net result is the same.

[bogomipz]

>"From the other side of the table, that is money the government is investing and earning a return on."

With the exception of a few notable oil economy countries that have sovereign wealth funds, federal governments most certaily do not invest tax revenue in the market. Taxes are used to finance the running of the country. If governments are lucky something is left over paying its' bills and the government runs a surplus.

Please provide a citation that Portugal invest its' citizen's tax revenues in the financial markets and makes a profit from those.

>"If they did it the other way they'd have to raise the tax rates to compensate, which wouldn't go down for the politicians doing it, even if the net result is the same."

Umm no if they did it the other way around the government could additionally tax people's gains from investments, and people could save for things like their retirement at the same time.

[brohee]

He never said in the market. They do invest in infrastructure tho, which actually helps the taxpayers.

[bogomipz]

>"He never said in the market."

What "they" said was:

>"that is money the government is investing and earning a return on."

"Investing money and earning a return on it" is universally understood to mean putting your money to work in the financial markets. Your comment is disingenuous at best.

Further governments don't earn a "return" when they spend money on a stoplight or a bridge. Infrastructure requires upkeep, maintenance and eventual replacement.

It's a coast center not a profit center. If it was the latter governments would be building infrastructure like crazy and running a budget surplus. And that clearly isn't the case is it?

[brohee]

Investing money is certainly not universally understood as investing it in financial markets... (Per Oxford dictionary: https://en.oxforddictionaries.com/definition/investment)

You have the right to your opinion, but changing words meaning is taking it a bit far.