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> 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,

> 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 2y 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 2y ago
  This is correct. Here's a handy table: https://en.wikipedia.org/wiki/Tax_rates_in_Europe https://en.wikipedia.org/wiki/Tax_rates_in_Europe
  - rsynnott 2y ago
    Top rates are kind of useless; some countries have many more brackets than others. The US used to have a 90% tax bracket, but that didn’t make it a particularly high-tax country; effectively no-one paid it. Comparisons, are in practice, inherently difficult, because the curves caused by the tax brackets and credits can be very different. It really depends an awful lot on income.
- laweijfmvo 2y 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.
  - titanomachy 2y ago
    $20k is technically above the US federal poverty line for a single person. I live in a state where anyone under $30k is considered low-income and qualifies for full benefits.
  - gnwn2 2y ago
    Well, houses where I live, not Porto or Lisbon, are at 400k now. It is not cheap, getting worst every year
- benopal64 2y 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.
  - InDubioProRubio 2y ago
    Death and disease are not real, my mind zones them out. I never remember when i was the last time at the dentist, so why include that part in my lifes plan? That is just a blindspot of everyones mental model. They parked a whole scaming theme park in that in the us.
  - sickofparadox 2y ago
    This is a misconception. Even in the poorest state here in the US, the median income is far more than most countries in Europe, pre tax[1,2]. And unlike what the internet says, we do have government programs that provide healthcare for those that cannot afford it or are out of work. [1] https://www.statista.com/statistics/205960/median-household-income-in-mississippi/ https://www.statista.com/statistics/205960/median-household-... [2] https://www.euronews.com/business/2024/07/08/european-average-salary-rankings-where-does-your-country-stand https://www.euronews.com/business/2024/07/08/european-averag...
    - hollerith 2y ago
      Agreed. There are many reasons to prefer living in Europe to the US, but "more money in their bank accounts" of non-wealthy people is certainly not one of them even though the American must sometimes use the bank account to pay for things that are provided by the government in Europe.
      - jajko 2y ago
        Unless we talk about Switzerland. But that's like 2% of the continent so what you say is valid. And given too left-leaning and fanatical green-deal-at-all-costs push from Brussels economical situation won't get better, in contrary. They could be pouring money into defense, its not like in 20 years russia will stop wanting to subjugate/murder us all. Or they could try not killing their own automobile industry so quickly. Or... EU started a slow but steady decline given changes in global economies, it will take probably a long time due to various factors but trend is clear.
- spookie 2y 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)
  - alephnerd 2y ago
    > The government has no reason, in the medium to long term, to have such high taxes It does - Debt. Portugal's debt as percent of GDP skyrocketed during the GFC and Eurozone crisis from 75.8% in 2008 to 129% by 2012. Unlike economies with a similar debt-to-GDP ratio like Italy, Portugal's economy is a relative minnow, and doesn't have a significant domestic capital market which can at least help stem some of the issues, nor can Portugal attract FDI at the same level as much more business friendly Spain, which made income taxes their only lever. That said, the Portuguese debt-to-GDP ratio has gotten much better (99.10% in 2023), but that was because of how much of the Portuguese budget was spent on servicing debt.
    - rsynnott 2y ago
      It’s presumably very _cheap_ debt, though? Ireland’s in a somewhat similar situation (don’t be fooled by the headline debt to GDP figure; Ireland’s GDP is distorted to the point that the government has had to make up its own adjusted metrics), though it’s currently running big budget surpluses, and from time to time someone will ask “why, instead of lowering taxes and investing in infrastructure, are we not using this surplus to pay down debt?” And the answer is that the average cost of the debt is 1.5% (the expensive stuff from the financial crisis has largely refinanced). It makes little sense to aggressively pay down debt at those sorts of rates.
      - s1artibartfast 2y ago
- ryandvm 2y 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.
- deleted 2y ago
  [deleted]
- HarHarVeryFunny 2y 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.
  - CalRobert 2y ago
    ..... really? I'd take $200k in the US over 40k GBP any day of the week. And in the US I'd have bug screens in my windows. And air conditioning. And food I can taste.
    - HarHarVeryFunny 2y ago
      Depends where in the US of course. $200K isn't going to go very far if you have to pay $1M for a house, 20K for r/e taxes, etc... One or two kids in college and you are f'd. I don't know exact salary figure, but my sisters family in UK have medium income (1.5 jobs) new BMW, two kids in college, foreign vacations every year, kids got latest Apple phones/watch/laptop growing up ... A bit like 1950's America living the dream on a single income with foreign holidays and iPhones added.
      - CalRobert 2y ago
        When did they buy their house (or flat)?
        HarHarVeryFunny 2y ago
        House bought a while back before prices shot up, so maybe mortgage paid off ... I don't know. OTOH college costs alone make the US ruinously expensive.. $200K/kid perhaps... That's the point really - you need to look at full financial picture in the US - especially costs. Looking at income tells you nothing.
- lucw 2y ago
  Can you explain your use of "nominal" in "Pretty nominal for Europe" ? What does it mean ?
  - esperent 2y ago
    I guess it's a typo for "normal".
xutopia 2y 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 2y ago
Pretty similar to anywhere else in Western Europe. Includes health care and a state pension and things like that.
stuaxo 2y 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/ https://www.beportugal.com/health-insurance-in-portugal/
- AdrianB1 2y 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).
- profeatur 2y 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.
  - insane_dreamer 2y ago
    Dental is also typically not covered by medical insurance in the US (dental insurance is separate and works differently).
- johngladtj 2y 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%
  - Aerroon 2y ago
    That's only true if you take into account VAT as well though. But you're right, the big taxation items in Europe are not the income tax, but the "social tax" and VAT. The first is added as a payroll tax (>30% in some places) and the second is basically a sales tax on every purchase (>20%). These two tax items alone add up to a crazy percentage of your income.
Me000 2y 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?
- wil421 2y 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.
  - ramses0 2y ago
    Plus mandatory insurance (minimally: health, arguably: car due to extremely poor public transit)
- deleted 2y ago
  [deleted]
- ativzzz 2y 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-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac...
  - codezero 2y ago
    Most people working in tech are making much more than that as are anyone considering moving to Portugal for a tax break. It’s a lot closer to 24-32% for that demographic.
  - lostmsu 2y ago
    Both calculations should include VAT btw
  - s1artibartfast 2y ago
victorbjorklund 2y ago
laughs in swedish. 32.75% taxes. That is so low.
- speeder 2y 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)
- jcmfernandes 2y 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.
- Muromec 2y ago
  Cries in throat sounds and having tax discount expiring at the end of this month
- radicalbyte 2y 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.
  - rad_gruchalski 2y ago
    > I just wish that those who have 10x and more than our income also had to pay a 50% tax rate I'd imagine that those who earn 10x what you earn hit the €75518 faster than you so they pay their fair share faster. No? Define "fair".
JetSpiegel 2y 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.

FaridIO 2y 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 2y ago
This is correct. Here's a handy table: https://en.wikipedia.org/wiki/Tax_rates_in_Europe https://en.wikipedia.org/wiki/Tax_rates_in_Europe
- rsynnott 2y ago
  Top rates are kind of useless; some countries have many more brackets than others. The US used to have a 90% tax bracket, but that didn’t make it a particularly high-tax country; effectively no-one paid it. Comparisons, are in practice, inherently difficult, because the curves caused by the tax brackets and credits can be very different. It really depends an awful lot on income.
laweijfmvo 2y 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.
- titanomachy 2y ago
  $20k is technically above the US federal poverty line for a single person. I live in a state where anyone under $30k is considered low-income and qualifies for full benefits.
- gnwn2 2y ago
  Well, houses where I live, not Porto or Lisbon, are at 400k now. It is not cheap, getting worst every year
benopal64 2y 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.
- InDubioProRubio 2y ago
  Death and disease are not real, my mind zones them out. I never remember when i was the last time at the dentist, so why include that part in my lifes plan? That is just a blindspot of everyones mental model. They parked a whole scaming theme park in that in the us.
- sickofparadox 2y ago
  This is a misconception. Even in the poorest state here in the US, the median income is far more than most countries in Europe, pre tax[1,2]. And unlike what the internet says, we do have government programs that provide healthcare for those that cannot afford it or are out of work. [1] https://www.statista.com/statistics/205960/median-household-income-in-mississippi/ https://www.statista.com/statistics/205960/median-household-... [2] https://www.euronews.com/business/2024/07/08/european-average-salary-rankings-where-does-your-country-stand https://www.euronews.com/business/2024/07/08/european-averag...
  - hollerith 2y ago
    Agreed. There are many reasons to prefer living in Europe to the US, but "more money in their bank accounts" of non-wealthy people is certainly not one of them even though the American must sometimes use the bank account to pay for things that are provided by the government in Europe.
    - jajko 2y ago
      Unless we talk about Switzerland. But that's like 2% of the continent so what you say is valid. And given too left-leaning and fanatical green-deal-at-all-costs push from Brussels economical situation won't get better, in contrary. They could be pouring money into defense, its not like in 20 years russia will stop wanting to subjugate/murder us all. Or they could try not killing their own automobile industry so quickly. Or... EU started a slow but steady decline given changes in global economies, it will take probably a long time due to various factors but trend is clear.
spookie 2y 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)
- alephnerd 2y ago
  > The government has no reason, in the medium to long term, to have such high taxes It does - Debt. Portugal's debt as percent of GDP skyrocketed during the GFC and Eurozone crisis from 75.8% in 2008 to 129% by 2012. Unlike economies with a similar debt-to-GDP ratio like Italy, Portugal's economy is a relative minnow, and doesn't have a significant domestic capital market which can at least help stem some of the issues, nor can Portugal attract FDI at the same level as much more business friendly Spain, which made income taxes their only lever. That said, the Portuguese debt-to-GDP ratio has gotten much better (99.10% in 2023), but that was because of how much of the Portuguese budget was spent on servicing debt.
  - rsynnott 2y ago
    It’s presumably very _cheap_ debt, though? Ireland’s in a somewhat similar situation (don’t be fooled by the headline debt to GDP figure; Ireland’s GDP is distorted to the point that the government has had to make up its own adjusted metrics), though it’s currently running big budget surpluses, and from time to time someone will ask “why, instead of lowering taxes and investing in infrastructure, are we not using this surplus to pay down debt?” And the answer is that the average cost of the debt is 1.5% (the expensive stuff from the financial crisis has largely refinanced). It makes little sense to aggressively pay down debt at those sorts of rates.
    - s1artibartfast 2y ago
ryandvm 2y 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.
deleted 2y ago
[deleted]
HarHarVeryFunny 2y 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.
- CalRobert 2y ago
  ..... really? I'd take $200k in the US over 40k GBP any day of the week. And in the US I'd have bug screens in my windows. And air conditioning. And food I can taste.
  - HarHarVeryFunny 2y ago
    Depends where in the US of course. $200K isn't going to go very far if you have to pay $1M for a house, 20K for r/e taxes, etc... One or two kids in college and you are f'd. I don't know exact salary figure, but my sisters family in UK have medium income (1.5 jobs) new BMW, two kids in college, foreign vacations every year, kids got latest Apple phones/watch/laptop growing up ... A bit like 1950's America living the dream on a single income with foreign holidays and iPhones added.
    - CalRobert 2y ago
      When did they buy their house (or flat)?
      - HarHarVeryFunny 2y ago
        House bought a while back before prices shot up, so maybe mortgage paid off ... I don't know. OTOH college costs alone make the US ruinously expensive.. $200K/kid perhaps... That's the point really - you need to look at full financial picture in the US - especially costs. Looking at income tells you nothing.
lucw 2y ago
Can you explain your use of "nominal" in "Pretty nominal for Europe" ? What does it mean ?
- esperent 2y ago
  I guess it's a typo for "normal".

xutopia 2y 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 2y ago

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

stuaxo 2y 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/ https://www.beportugal.com/health-insurance-in-portugal/

AdrianB1 2y 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).
profeatur 2y 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.
- insane_dreamer 2y ago
  Dental is also typically not covered by medical insurance in the US (dental insurance is separate and works differently).
johngladtj 2y 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%
- Aerroon 2y ago
  That's only true if you take into account VAT as well though. But you're right, the big taxation items in Europe are not the income tax, but the "social tax" and VAT. The first is added as a payroll tax (>30% in some places) and the second is basically a sales tax on every purchase (>20%). These two tax items alone add up to a crazy percentage of your income.

Me000 2y 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?

wil421 2y 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.
- ramses0 2y ago
  Plus mandatory insurance (minimally: health, arguably: car due to extremely poor public transit)
deleted 2y ago
[deleted]
ativzzz 2y 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-brackets https://www.irs.gov/filing/federal-income-tax-rates-and-brac...
- codezero 2y ago
  Most people working in tech are making much more than that as are anyone considering moving to Portugal for a tax break. It’s a lot closer to 24-32% for that demographic.
- lostmsu 2y ago
  Both calculations should include VAT btw
- s1artibartfast 2y ago

victorbjorklund 2y ago

laughs in swedish. 32.75% taxes. That is so low.

speeder 2y 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)
jcmfernandes 2y 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.
Muromec 2y ago
Cries in throat sounds and having tax discount expiring at the end of this month
radicalbyte 2y 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.
- rad_gruchalski 2y ago
  > I just wish that those who have 10x and more than our income also had to pay a 50% tax rate I'd imagine that those who earn 10x what you earn hit the €75518 faster than you so they pay their fair share faster. No? Define "fair".

JetSpiegel 2y 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.