Portugal still has the crazy tax system where deductions are applied over the whole salary, not the bands? That was one thing that never made any sense to me - effectively removing motivations for salary increases, as you could end up with less even with a raise.

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.

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?

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.

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.

>"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.

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

>"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?

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.

Except the phrase was not "investing", it was "investing money and earning a return on it." Maybe you should reread the thread.

In the context of a government or any other large institution this is most certainly understood to mean the financial markets. That is not "opinion" but rather common understanding in English language business parlance.

You have resorted to cherry picking words and trying to play semantic games. You have added exactly nothing to the conversation. In fact it's worse as resorting to "that's just your opinion" type remarks just degrades the level discourse. It's just slightly above name calling.

It is sensible. First, deductibles are applied to the bands, like everywhere else. This calculation is done over your yearly salary, in March of the following year. You then pay income tax in August.

However, in order to minimize the amount due in August, the government captures an estimate of your income tax every month (before you get paid).

It is this estimate that is designed to be simple, and applies deductibles to the whole salary. There's no harm: If it happens to capture too much, you'll see your money back next August.

I still don’t understand the benefit over a progressive system.

Under the progressive system, there are no surprises or delays, what I paid that month is exactly what I owe.

Like another poster said, effectively an interest free loan to the government from taxpayers.

What am I missing?

> I still don’t understand the benefit over a progressive system.

Simplicity and personal data protection. In order to capture tax in advance with perfect estimates, employers would need to know your total income and deductible expenses. With the simplistic system, they just need to know how much they're paying you.

Wait, what? Are you saying that the top rate in their graduated income tax system is applied to someone's entire income, not just the amount above the lower cutoff point for the highest band?

If so, that seems literally insane to me. Why wouldn't Portugal fix this?

An approximation of the taxes are deducted from the monthly pay, and the adjustment to the final tax is done annually, taking in account all deductions. Yearly final taxes are not applied to the entire income, only to the amount in the band as you mentioned. The approximate monthly taxes are applied to the whole monthly income.

Because being reasonable and rational won't take you far in Portugal. Trust me, I'm Portuguese.

Exactly my thoughts... this is complete fake news and complete propaganda from the Government Coalition (all Left Wing).

Health system is completely broken the public Hospitals don't have enough resources or money to threat the patients with dignity, people still live with very low salaries and high prices of goods, The industry is still very weak unlike its mentioned in the article etc.. etc...

Honestly seeing these articles makes me really sad.

>Health system is completely broken

No need to be so dramatic. Compared with countries with a similar economy, our system is objectively very good. Independent reports will back me up.

There are plenty of reasons to be dramatic. The portuguese national health service debt blew up since the current government entered office due to their expenditure captivation push in a stark contrast with the debt reduction push enforced by the austerity program. Consequently some health services fail even to keep skeleton crews of medical teams to remain operational. Medical suppliers are complaining about the goverent's increased payment delays and nurse unions are on months-long strike demanding additional staff to mitigate their overwork problem and also that the current government actually puts to practice the salary increases he announced some months ago.