[Gimpei]

Economic stagnation and population decline is bad too. Highly skilled immigrants are especially good for the economy and for the tax base, which pays for social services. Rising housing costs are indeed a problem. Is there a part of town that can accommodate sky-scrapers?

[A_D_E_P_T]

> Highly skilled immigrants are especially good for the economy and for the tax base

I don't think that this is especially true of the digital nomad laptop tribe. It is, perhaps, true of traditional skilled immigration that's tied to opening a business or working in a target profession.

Portugal, however, is going to get a lot of the former and probably rather little of the latter.

[Rinzler89]

>Highly skilled immigrants are especially good for the economy and for the tax base, which pays for social services.

Except they're getting tax breaks, it's in the title of the article. The only winners from this will be landlords and property owners.

This bullshit trickle down from well-off tourists with laptops we keep getting parroted is a scam, that doesn't benefit the average joe there who now has to deal with even more expensive housing.

Why do you think all countries whose economies profit the most from tourists and "digital nomads" (most of Southern Europe), also have the highest wealth inequality, crappiest wages and most unaffordable housing for the locals causing all their youth to emigrate? Where are all those benefits for them you keep talking about? Their economies should be booming by now, and yet they aren't.

If you wanna improve your economy you want to attract companies and investors who fund companies and create well paying jobs in the country for the locals, not techbros who can outspend the locals, as that's just economic colonialism that only benefits the asset owning class. Turning your country into a coworking space for remote workers to party, won't fix your economy or benefit the average locals.

[Radim]

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?

[jahnu]

> 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.

[FredPret]

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.

[jahnu]

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.

[Radim]

> 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.

[jahnu]

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.

[Radim]

> 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.

[Rinzler89]

>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.

[jahnu]

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.

[jajko]

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.

[Rinzler89]

>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.

[Saline9515]

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

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

[JumpCrisscross]

> 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.)

[Barrin92]

>Except they're getting tax breaks,

the median salary in Portugal is about 30k per year. Given that the tax break only applies to skilled workers that still has to bring in a ton of money. What's the average salary of an American software engineer working remotely from Portugal, 150k+?

How does the quote go, fifty percent of something is better than 100% of nothing? I don't see the harm in this, these people easily bring more in than they cost

[Rinzler89]

>How does the quote go, fifty percent of something is better than 100% of nothing? I don't see the harm in this, these people easily bring more in than they cost

That's incredibly simplistic and reductionist way of thinking. That would mean that the most touristic places in Europe should see the most benefits because tourists leave a lot of money and 50% of that is better than 100% of nothing according to you, but the result is the opposite: those places have the crappiest jobs and wages and the most overpriced housing, resulting in the biggest wealth gaps nation wide.

If average workers gets nothing from that 50% of that something, as it all goes in the pockets of landlords, then they're better off with 100% of nothing as at least that will not cause their rent prices to spike. Because doing what you're advocating for, all you'll have is a large pool of wealthy foreigners spending their money raising property prices and the only jobs they create are low income ones like bartenders, maids and pool cleaners, not something you can improve an economy on. Welcome to places like Greece.

Like I said, you want to attract investors who create jobs for the locals, not more tourists who just raise living costs and only enrich a few asset owners while the locals stay even poorer as they don't benefit from that 50% of that something.

Politically and socially, you're better off doing something that increases the upwards mobility and quality of life of the bottom 20%, than boosting the wealth of the top 20% hoping for some trickle down from that to eventually reach the bottom 20% as well because that mostly never happens.

[FredPret]

Money is more like mercury and less like gold: dynamic and quick rather than solid and permanent.

It doesn’t “land” anywhere. Landlords spend it and invest it. When they invest it it goes to some business who then spends it.

If the landlords are rich enough, they may consider wildly risky invesments like tech startups.

If there’s enough rich people investing in businesses - not just tech startups - you end up with a thick ecosystem of companies and thus US-level wages.

[Rinzler89]

That's nice theory from someone working in the tech sector, but that rubber never hits the road in practice in the real world, where the higher rents we're paying here don't magically translate into more tech investments.

You need some high quality hopium to actually believe that would happen. Making my landlords wealthier hasn't resulted in any benefits to any society I know.

[FredPret]

You don't seem open to being persuaded by facts contrary to your current framework so I'll stop here.

But if you study the economic history of the richest places on your own time, you'll see that private capital formation always played a critical role.

[alephnerd]

> If you wanna improve your economy you want to attract companies and investors who fund companies and create well paying jobs

That takes effort, and within the EU all the major regional consultancies like KPMG, PWC, McKinsey, etc have already been hired by Czechia, Romania, Poland, Bulgaria, Estonia, Hungary, etc to build and manage a mixture of Tax Holidays and FTZs/SEZs for tech companies.

For example, if I as a foreign tech company open a tech hub in Prague that hires at least 10 employees and spends $200k on assets, the Czech govt gives me a $8k per employee and gives me a 10 year corporate income tax holiday (so I end up saving an additional $8-10k per employee).

Romania, Poland, Estonia, Bulgaria, Hungary, etc all have similar programs as well.

Eastern Europe also benefited from immigration from Russia, Belarus, and Ukraine - ime at least 30-40% of headcount in these EU CEE offices are from those 3 countries.

Portugal is too late in the game. It isn't attractive enough for white collar immigrants in the Lusaphone (they can always immigrate to higher paying Boston) nor can it compete with Spain's support for industrial and pharma manufacturing and R&D. Nor can they compete with the Eastern European programs above which are already extremely generous because they are trying to compete with similar Israeli and Indian programs from 20-30 years ago.

[jajko]

Yes but in Prague tech salaries are on par or sometimes even higher than most of western Europe. And they are still rising, faster than western Europe.

Don't get me wrong, folks there are smart and know how to work hard for Europeans (at least those I've worked with), but low cost paradise it isn't, by quite huge margin. Prices of properties often equal to smaller places in ie Switzerland (live/lived in both so easy to compare). If you move out of Prague (and second biggest city Brno) salaries drop significantly, but so does availability and often also quality of the talent.

[alephnerd]

When I'm making a decision, it's not UK vs Czechia - it's America vs Abroad.

Salary doesn't play a major role when I decide where to build a foreign office.

Developer Salaries at the 70th percentile and above have mostly converged all over Europe (the countries I listed), Asia (Israel, India, China, Singapore), and the Americas (Costa Rica) and that anyhow gets offset by around $20-30k in tax credits, as all the countries above will give 10-15 year tax holidays, subsidizes, free land, etc depending on the size of FDI.

The choice to open a foreign office is simply because it makes it easier for me to ship more features and products in parallel.

This isn't old school outsourcing anymore where you'd ship off back office - now mid-level management and product decisions are made at those offices abroad.

This means all I care about when deciding on a foreign location is good tax incentives, a large software talent base, and local administration that is extremely responsive.

[JumpCrisscross]

> Salary doesn't play a major role when I decide to build a foreign office

Seconding this. A side effect of sky-high Bay Area developer salaries and tech’s gross margins is the difference between Prague, Portugal and Hyderabad cheap is not super relevant for the highest-calibre companies.

[IG_Semmelweiss]

Wait a second.

I can agree with the basic premise of rising housing costs, but still call out BS with colonialism or inequality.

First. This same effect is already happening in 1st class cities like NYC, Sf, Miami or Toronto. Chinese, Saudi, Latin and Russian oligarchs come and buy up the entire housing inventory, making locals feel the squeeze. Is that colonialism? No. That's just very poor local policy.

Second, inequality. Take the exact same situation. Inequality is extreme in these cities and they are mostly progressive bastions. Why? Could it be that rich cities ineviably end up unequal? But then why youbhave unskilled very poor undocumented migrants flowing in?

Could it be that inequality is not itself repugnant, but instead lack of dynamism in economic opportunity, the real problem, one which the US does not have (for now)? Unlike EU royalty, who seem able to hold on tontitles and riches inherited from a millennia ago?

Third , if there are no benefits, why is this allowed in cities anyway?

I posit thwt There are benefits, but the majority of benefits do not flow to the right parties (middle class) and instead flow to the elites, who pay themselves salaries off the permits, real estate and VAT taxes skilled migrants generate.

So you have a problem originated from the ruling class. Not with skill migrants. Open up urban development, completely. Then make tax flow downstream. Problem goes away. Yet the elite class is not going to let go their golden goose and fire themselves in the process.

So therein lies the real problem.

[Rinzler89]

>So you have a problem originated from the ruling class. Not with skill migrants.

Like I said also, the ruling class is at fault, but please don't gaslight me like I have something against skilled workers because I don't. I only said that due to Portugals problems, importing remote workers from abroad on tax breaks doesn't fix the issues created by their elite, it only makes life worse for the average workers who now see raising property prices due to increased wealthy competition.

That kinds of skilled workers they would need most would be those actually useful for society like health workers, teachers, construction workers, not laptop workers for foreign companies on tax breaks who contribute next to nothing to the host countries but increase prices for everyone. You're not saving their economy buying two lattes and a cocktail per day on their beach front while you build a next tech giant for the US/Swiss/Swedish economy.