Different Slants

Seeing the World from a New Angle

Letters from Europe – Paying Taxes

Filed under: Travel — Rick at 3:15 am on Monday, January 25, 2021

Everybody pays taxes. It is one of the two sure things in life. In general, Europeans pay higher rates than Americans but complain less. Why is that?

One reason is that they get more back from the government. Europeans get healthcare, unemployment, schools, good roads, and some get child care and college tuition. Social safety nets are in general more generous.

But another reason is that paying taxes is less annoying in Europe than in the US. For example, lets look at sales tax. Goods and services tend to be taxed at a much higher rate in Europe. VAT, the European version of sales tax is usually around 23%. However, if you are not paying attention, you might not even notice it. When you go into a store here, you see prices on the merchandise as you do in the US. But when you pay for those items at the cash register, you pay exactly the price they were marked. It is not until you read the register receipt, if you bother, that you see how much of those prices were the included tax. You never get surprised by needing to pay more than you were expecting.

My pet peeve is income tax. Now that I am retired and living overseas, my federal tax return is down to 12 pages and I have no state return. It only takes a few hours to collect the information (once I receive it) and fill out the forms. Of course, I still make the occasional mistake which the IRS reliably finds and tells me about. When I was working and living in California, it would take days to figure it all out.

I asked a self-employed friend here in Portugal to show me his tax return. He brought it up on his computer for me. It was 23 pages. I asked how long it took to file and he responded “about 10 minutes”. In Portugal, when you get your tax forms, they are already filled out. All you need to do is look them over and, in most cases, approve them.

We all hate long check-out lines. I believe any well run business will make paying as painless as possible. Regardless of how much tax you pay, paying should not require hiring professional services.

My travel photos are at: https://www.flickr.com/photos/rick-pic/


Comment by William Parkhurst

January 25, 2021 @ 7:13 pm

Hey Bob, when did you move to Portugal?

Comment by William Parkhurst

January 25, 2021 @ 7:14 pm

Sorry, I didn’t realize you did not write this, Bob.!

Comment by Neal Horwitz

February 22, 2021 @ 2:27 am

I’ve lived overseas for decades, still work, and it is double taxation for Americans, always has been. Try grappling with the[recent] 5471 from the IRS. It is increasingly impossible for Americans to live and work abroad,esp as an entrepreneur.
My last (joint} filing was 124 pages. I could not do it without professional help, well worth the investment so I don’t jump off the ledge. The IRS’ creaky process is so far beyond sclerotic, it’s ineffable. Other countries absolutely take care of their own far far better than the US. It is morally reprehensible for America to have tens of millions with no healthcare. No other way to put it..

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