That foreign money mostly goes to a handful of landlords/Airbnbs and tourist-friendly businesses (which are often foreign owned themselves). That in turn drives up prices of everything for locals – who are seeing no increase in income and moreover have to pay income tax and a ton of other taxes on it, something that digital nomads conveniently skip.
An influx of foreigners and foreign money isn't automatically welcome in a local economy.
Take a random tourist town: Say, in the southern coast of Spain. Then tell them that finally, they had managed to get rid of all the tourists, forever. Is that good or bad for the town? It's not as if there are no externalities, but in general, tourism is going to be good for your economy, and the amount of extra taxes the tourist pays on lodging is pretty low. Which Caribbean islands do better, those that have a lot of tourists, or those that don't take any external money?
Also consider what happens in the opposite side of the remote worker, where what you get is the equivalent of a foreign worker who comes in, pays taxes, but spends basically nothing, and spends all their salary in remittances, to be spent abroad by their family. The worker is competing with you for the job, but then doesn't spend it locally! You will not find many municipalities that are all that happy of having a lot of jobs formerly done by locals in offices suddenly done by someone that is far away.
Not all these foreigners are living in tourist towns. They aren't staying for a week or two, but months at a time. They aren't staying in hotels meant for tourists, but rather competing with locals for apartments (a lot of them having turned into Airbnbs because of it).
Competing over housing i quite significant if you ask me.
While OP is right in that these people are a net good for the economy at large there's a reason a LOT of countries do not allow foreigners to own property. The US is one of the few places where you can without much trouble. You can see the problem this causes with states adjacent to California, like Nevada, where the average house is now over 10x the average income thanks to the tech emigration.
Edit: No, more potential careers as an underpaid waiter or touristic guide is not an upside.
And as OP explained in the comment you're replying to, tourism is not necessarily a positive for the locals:
> That foreign money mostly goes to a handful of landlords/Airbnbs and tourist-friendly businesses (which are often foreign owned themselves). That in turn drives up prices of everything for locals – who are seeing no increase in income and moreover have to pay income tax and a ton of other taxes on it, something that digital nomads conveniently skip.
It doesn't really matter if you're a digital nomad or a classic tourist, the same downsides apply, but in the case of digital nomads they're even working while being on a tourist visa. They should pay taxes to the local administration but they don't, so that makes them a double problem.
It is very hard to collect personal income tax in developing countries. OP's tax revenue claim just doesn't match the data. On the other hand, corporate tax and VAT are very easy to collect. Digital nomads are very good for these revenue streams.
It is true these digital nomads don't contribute to social security benefits. But they also rarely take from it. So it is a mixed bag.
I, a lowly middle class worker buy a house in Cheapville. I can afford it, and the property tax, so I am happy. 20 years later I own my house and hundreds of thousands of immigrants from TechVille come buy up all the property. Great! There's no houses really on the market so the value sky rockets! Problem... my house value goes up, but so does my property tax. In fact, it's so expensive now I can no longer afford to live in the house. I have to sell MY PROPERTY because the STATE has imposed a tax specifically designed to destroy the idea of property as an owned right. In some circles this would be considered theft-by-taxation which is probably the only correct interpretation of this scenario. My house has to be sold because I can't afford it, it's bought (read: stolen) by some rich tech bozo with more money than sense, and I have to move. Probably to a different state where then I contribute to the very same problem there. The problem is the regressive property tax enabled this. The only solution is to not have them for residential non-commercial property. If property is not producing tangible value it should not be taxed. Taxes are collected at the sale of the home - this is enough. If it isn't, congress needs to tighten the purse strings.
Property taxes are regressive, prevent you from ever truly owning your own plot, and disproportionately reduce the wealth of the people who spend most of their lives creating it for other people. They are probably the most distilled form of evil the financiers of a state or country can create because they are totally unavoidable and because of the way percentages and property value are calculated can very quickly go way out of hand. The only people that benefit are the rich house flippers and people with so much money their property taxes are a rounding error. It puts property in only the hands of the wealthiest. How is this a good thing?
Property taxes are a form of wealth tax. The more wealth you own in the form of property, the more you pay in tax. Many people who work for a living don't own any property at all - about 35% of households in the US are renters. They don't have this problem of "wow my house is worth $1.2 million so I've got to sell it and move" - they've got bigger problems.
200 years from now, your descendants can pay their annual peppercorn to the state each year (after inflation and the statutory maximum annual increase have their expected effect) while the plebs toil in labor to pay you rent.
It really is such a shame that the founders of our country were so short-sighted that they explicitly prohibited that in the constitution. Maybe we should think about amending that.
I suspect that will be a net negative for anyone who needs to rent because they cannot afford a mortgage, maintenance cost, insurance, contribution to shared infrastructure like plumbing and electrical, and taxes together.
I considered renting an apartment in two different commune-owned buildings (I was a student, not looking to own). Both were just as expensive and in significantly worse condition than all of the neighboring housing options. I found w nice place, but would have been better off with a slumlord rent-seeker than either of those places.
Yes people will build more medium density housing instead of having zucchini gardens in one of the most expensive regions of the world. Higher density would be good for renters in the local area.
This, taken to it's "extreme": https://en.wikipedia.org/wiki/Land_value_tax
Pretty well studied, and has a lot of support across ideological viewpoints.
I do wish that land value tax would replace other forms of taxation in many jurisdictions.
Taxes are completely justifiable to allow you to have these means to enforce your ownership rights.
Where you and I would agree is on the assessment methodology which is in most jurisdictions a money grab since it's usually always based on the market value of the property and not on the costs to provide necessary gov services.
100% true that a physical property is not exactly going anywhere, and so it's extremely convenient to use as a stand-in for wealth / ability to pay taxes. That said, this could be worked around if governments were incented to do so, given that finance is almost entirely electronic at this point; offshore banking could be reined in, for example. There will always be loopholes and ways to avoid a tax burden, but if the (financial) penalties are commensurate to the dodge, then there's a reasonable disincentive.
If there is zoning (and well managed conservation), I don't have a problem with it. I've lived near areas with no zooning at all, and that's a race to the bottom.
You could have 99 year leases or similar instead of ownership (Japan does this?), but that is unfair to e.g. grandchildren who inherit a farm which they've worked hard at all their lives (where land is essentially their means of income.)
Yes there is less land to go around, but that problem is ultimately overpopulation, and that's an _entirely_ different topic.
You are forgetting the tax income from the money all those "tourists" spend in that country. Who do you think benefits from those taxes?
I do agree with you that it can befome a problem if those "tourists" start buying properties in those places. That should not be alowed without permanent residence (of, at least, a few years).
"That in turn drives up prices of everything for locals "===> Are you serious? Do you realise how many of these "tourists" (% wise) are needed to affect the market in a city? Even 1% is nothing more than a blip(IMHO).
No, because when your are on holiday it is not your place of employment.
All they want is if you are using somewhere as your place of employment, that you pay taxes that are due on earning that money in the country, the same as if your are employed locally. It's not unreasonable.
> Who do you think benefits from those taxes?
You can't pick and choose which taxes you want to pay and then say there is some 'benefit' for deigning to pay any at all.
Next time you stay in a hotel, try saying "I've shouldn't have to pay my bill, you should be grateful enough for the 'benefit' of the money I spent in the bar because I was staying here", and see how that works out.
If one or two digital nomads move in, the locals won't care much and the nomads will just become one of the types of people they have.
But if a town becomes infested with them, it can cause all sorts of issues (the nomads won't care about food prices because they can afford US prices, which are 10-100x what the locals have been paying, so prices can suddenly skyrocket).
Hell, you have it inside the country: https://www.mercurynews.com/2017/07/03/go-back-to-california...
And it's not always where you think it would be.
Tourism has done similar things to cities around the world; turning what used to be actual functioning cities into amusement parks for adults. Venice might be a good example, some say.
Also being from far away can lead to not knowing the area as well as you should and being disappointed.
I used to make the same argument, but it's just so convenient when it's easy to forget that there is a reason why income tax exists on top of VAT in the first place. And that's because VAT doesn't cover all of the budget expenses.
So you pay your hefty income tax back home, and only pay VAT on the products and services provided by (private) entities. The proportion of the budget not covered by VAT is covered by the locals and their income tax. That's not OK.
Same reason why the most touristy places impose additional tourist tax.
Though in my opinion this financial arbitrage is simply inevitable due to the housing market in Western countries being overinflated by investors.
You can't simply unilaterally declare that sales tax compensates for everything you do, and think laws don't apply.
and who is receiving these 10-100x'd prices? The locals who are providing value to the purchaser. Higher selling prices are profits in some locals' pocket/bank account. Why does this side of the equation never get talked about?
Yes I may make the price of a taco go up 20c, but that's 20c more profit for every taco sold at that price. The workers, the business, the real estate value, the whole supply chain can all now command a better price because of my "wasteful" spending relative to the context.
And yet, for some reason, a lot of people really dislike[1] H1Bs...
[1] Last election cycle, I've received a beautiful election pamphlet from a frothing-at-the-mouth state politician-want-to-be who spent most of his 250 words assuring me that H1Bs are robbing the country by mooching all of its services while not paying any taxes. He, uh, got 40% of the vote.
Yes he is. If the firm's willing to employ someone in Costa Rica, there's no reason it couldn't be employing a local.
Even if you're right that they're not a burden, which I disagree with since they do actually do enjoy services like police, fire department, mass transit subsidies, national defence, roads, clean air enforcement, etc, this is still not something you can unilaterally decide.
The laws are there whether you think they should be or not.
The country's state budget and its rules are not up to the individual to opt in and out of.
One of the biggest examples would be in real estate, where foreigners could be comparatively very wealthy compared to locals, and can thus out compete locals and dramatically raise the price of real estate.
This is why some jurisdictions that found that the amount of properties being purchased by foreigners was becoming startling have brought in foreign buyer taxes to try to even out the distortions in the economy and make it more fair for those who earn their incomes in the local economy.
(using Vancouver as an example, after the foreign buyer tax the city still has an incredibly low near 0% rental vacancy, which makes secondary home investment enormously profitable and continues to keep prices lofty)
This doesn't mean that it wasn't a good idea to address the foreign buyer problem, but it was clear that the system instantly shifted to compensate for the lack of foreign buyers, and new buyers appeared. There was plenty of local buyers, many of which had existing properties with inflated land values they could borrow against and the ultra low interest rates from the pandemic that aided them in bidding up properties to buy. Good for local buyers to have less foreign competition, no real change for local renters.
The most real direct outcome of the foreign buyer tax was the nature of the housing product that was made changed. Previously there were companies that were building "luxury" condos explicitly marketed as pied a terres to a foreign audience (largely from major cities in asia). Overnight this sort of thing went away and the same companies that were previously pushing these products instantly pivoted into building purpose built rental buildings for locals.
Ultimately I think the foreign buyer tax is good for local renters, but further work needs to be done.
It's not unusual for someone to use their HELOC to buy and 2nd or 3rd property and rent it out.
Of course with rising interest rates (and mostly variable mortgages) that's all coming home to roost now, al la USA in 2008.
The fact that there was significant amounts of foreign buying is not in contention. You can google Globe and Mail articles from ~2016 that cite these figures.
Not quite. They do bring money by buying things and paying sales/VAT tax. However, they don't pay income taxes because in 99/100 times they are not allowed to work, so they are illegal immigrants essentially.
They also come with their LA salaries and make renting/buying harder for locals.
I know people who do that in Thailand on tourist visa, and just have a short vacation every 90 days to qualify for new tourist visa.
Wait, aren't digital nomads literally bringing money in from another country? They pay taxes on everything they consume, yet they don't take the money from inside the country, they bring it in from the outside.
Why exactly would they be pissed?