7 ms·
The thing (in many European countries) is that government doesn't 'steal' your money, but that out of every salary you have to pay for many different things. In
by jan_g 15y ago
The thing (in many European countries) is that government doesn't 'steal' your money, but that out of every salary you have to pay for many different things. Income tax is only one aspect.
For those interested, this is the reality in my country, Slovenia, which borders Hungary (I may have botched some numbers regarding taxation, but the principle behind calculations stands):
1. Out of every monthly salary you pay: income tax, state/public pension fund, health insurance and also a small tax (<1%) called parental security.
2. A woman or a man may take up to 12 months of parental leave, which is fully paid by the state. The government uses money from 'parental security' tax to pay for this privilege. It works, because at any given moment there are many,many more employees not on parental leave than those on parental leave.
3. A woman is entitled to sick leave during pregnancy if her doctor makes such decision. So it may well be that she is absent for two years from her job. And it is also true that many women abused this privilege simply by convincing their doctors that they 'cannot perform on the job while pregnant'. A few years ago there's was a sort of clampdown to this practice by tightening the control on the doctors' decisions. So it's not that pervasive anymore.
4. A woman is also entitled to reduced workday (only 4 hours instead of 8) while her child is under 6. Her salary is of course halved, but state covers her pension fund as if she worked 8 hours. Many women don't decide to use this option, simply because a halved salary puts a lot of strain to majority of families' incomes.
5. Regarding firing workers: similarly to Hungary it's very difficult to fire someone and almost impossible to fire pregnant women or old people. Therefore, majority of people under 35 don't have regular contracts, but they work via independent contracts or the so-called self-employment companies (you establish a company in which you are a sole employee and then go work to another company which pays you via your small company). Needless to say, job security is practically non-existant if you aren't on regular contract.
6. Progressive income tax is also here, however it's not as brutal as in Hungary. Lower salaries (<1k euros) are actually not taxed that much. The problem is only that the highest tax bracket (41%) comes already at 2k euros and that hits middle class the most. We, skilled professionals, are usually complaining the most about this fact. There are discussions to change this taxation in order to stem the brain-drain. It's also important to know that progressive taxation is applied on 'past-the-post' principle: e.g. you are taxed 41% only for your income that goes over a certain amount. This means that if your salary is 2k euros, you'll be taxed 41% only on income past 1.5k euros, that is 500 euros will be taxed 41%, 1.5k euros 27%.
7. Grey economy/tax evasion is certainly a problem, however the tax bureau is becoming more and more powerful and it's connected with banks. It's actually not that easy to cheat anymore. That goes for majority of people/businesses, richest top 5% still game the system by moving the money to Cyprus/Luxemburg shell companies and so on, but this can't really be helped unless it's solved on EU level.
Ok, I'll stop now :-). If you have any further questions, then do ask.
- wisty 15y agoAustralia will tax residents for offshore assets. Most countries don't. Of course, it's easier to cheat (as the banks overseas may not co-operate), but that might change with more international co-operation.
- bobds 15y agoI remember reading a story about a wealthy Australian that went to court regarding his offshore assets. The assets were under a trust that locked him out of making any decisions, automatically triggered when he became a defendant in such a court case.
- wisty 15y agoTrust structures in Australia are a big loophole, that's true.
- liquidityprov 15y agoSounds like Kerry Fucking Packer, the goanna.
- Retric 15y agoThat's still far lower taxes than I pay in the USA. SS, Medicare, State, Federal really adds up. Federal 25%(over 34k), Medicare 15.3% (below ~120k cutoff), Medicare 2.9%, Virginia 5.75% (over 17k /year). Now many people get tax breaks for various things but 50% income tax rate is fairly common for the upper middle class without much in the way of a safety net or public heath care.
- tptacek 15y agoIt's not quite that straightforward, is it? State taxes are federally deductible. And virtually everyone in the upper middle class owns a home and takes a whopping deduction on mortgage interest, and property taxes are also deductible. I'd also push back on "not much in the way of a safety net". I'd like universal single-payer health care, but in the meantime it's worth remembering (a) once you hit retirement age, you very much do get public health care, and (b) retirement age is when you're most likely to incur medical expenses.