I’m not a PhD, just an engineer and I moved out of The Netherlands. It was no longer economical feasible to live there. I am very pessimistic about the future Western Europe. Right now it offers the one of the best QoL in the world for the average worker but who knows for how long. With the current brain and wealth drain there will no longer be enough people to support the social system.
Right now I'm not sure there is a country where young people are generally satisfied and optimistic about their future. America is a mess, Europe is generally a mess, China is struggling with too many grads who aren't able to find jobs matching their qualifications... From what I've heard things aren't exactly great in India either.
Australians will complain a lot but honestly the future is very bright. Higher exports than imports, government debt isn’t completely out of line and it’s not going exponential like some regions, it has European like public services, a median wealth 2.5x that of the USA, good employment figures.
It’s not perfect but i still think it’s pretty good.
But how much of the Australian economy is extraction for the Chinese economy? My brief understanding of the Aussie economy is that a large part of it is iron, hydrocarbons, copper, etc. going abroad, largely going to feed the Chinese economic machine. So economic performance is heavily tied into Chinese performance.
And the median wealth number is another way of saying "house prices are insane" right?
For the median wealth somewhat house price driven although there’s also the reality that median and mean wealth in Australia is remarkably close together. You can’t have median wealth driven by home equity if no one has a house yet in australia the median and say top 25% have remarkably similar houses.
So yes they are high but it’s not like the disparity in the USA where the median is well below Australia (lot’s of people in the USA lost wealth in 2008 and never recovered) while the mean is well above (driven by the few that are extremely wealthy living a lifestyle unattainable to the commoners).
Yeah, I was chatting with a friend living in Spain once, and ascending the ladder in responsibility didn't make sense, as whatever salary increase he got would be heavily taxed, and it didn't make sense to bear much more responsibility for just a little bit of extra money a year.
As you say, avg workers are "fine" there, but for anyone trying to standout or grow in their career, they will hit an income ceiling very fast due to the high taxation, so it doesn't make sense to keep on growing as you are not properly rewarded for it.
Where did you move? I understand you're retired: that changes the situation somewhat.
When I lived in Amsterdam, we were renting a flat. The gentleman we were renting from told us our rent easily covers all his expenses in South East Asia.
Spain. And I have to apologise, I call myself retired but in reality I'm just unemployed. It's more of a year long sabbatical, but I jokingly call it retirement since I moved to Spain and many Dutch people do so for retirement. I'm planning on setting up a company here.
Spain isn't great for being employed or freelance (autonomo) but if you set up a limited liability company (SL) and work from there it is not that bad. Tax on investments are averagely taxed compared to other countries.
>>Tax on investments are averagely taxed compared to other countries.
That is only if you haven't accumulated wealth yet.
The combination of quite high capital gain tax with sky high wealth tax, pretty high income tax isn't very attractive if your plan is to accumulate some wealth.
If you just want to make enough every year to live there I guess it's reasonable though.
I future-proofed myself by moving to a region with a €3M exception. So that I have a long way to go before paying wealth tax.
CGT is progressive and around 20%, compared to other European countries that is fairly average. Some Eastern European countries are at 15%, Belgian is going to 10%, Switzerland differs per canton.
Also, no CGT for fresh immigrants if you are able to use the Beckham law.
Is the exception still valid? I thought the new central regulation in effect removed those (if the region has exceptions then you pay federal "solidarity" tax). They introduced it to fight Madrid's and Andalusia's exemptions.
I investigated it some time ago though when I was considering moving to Andalusia so maybe something changed.
The Netherlands is taking action against the brain drain by rapidly importing highly skilled migrants through various tax lowering schemes in the first five years of living here.
However plenty of those people leave after that period. Especially with the upcoming 36% unrealized capital gains tax on all your savings and investments.
Feels a bit like ISPs giving discounts to new customers only.
This sounds like the Netherlands speed running their way out of investments. If a country I was living in proposed this, I would be leaving ASAP, or getting some heavy financial engineering done.
This is misleading. It's actually taxing 36% of _assumed gains_ of say 5% on all assets. So if you have $1M in savings, you'll end up paying 1.8% or $18K/annum, regardless of the actual investment return. I can see it would be painful during down years, but most of the time it would be ok.
Many years ago, a friend of mine in the Netherlands had the same job as another guy, earning the same money, my friend being extremely thrifty, the other guy splurging. When they both found themselves out of a job at the same time, my friend got no support from the government as he had savings, while the other guy started getting a very generous allowance.
This goes directly against all that is reasonable. This is directly discouraging financial responsibility. My friend is thrifty just for the sake of it, he knows it's not in his interest. But he gets the short end.
Same situation in the UK. Even a modest amount of savings (a few months of your salary) is enough to disqualify you from the majority of benefits, childcare etc.
Correct. If you go over €38.478 in savings, you immediately lose your renters benefit. No taper, just a hard drop-off. You can lose up to €5.000 in renters benefit a year.
A legal tax avoidance is to just buy a €1000 TV if you are near the limit. Yes that is as crazy as it sounds but people do it.
This is true in the US too. I know people who are disabled here who can not find a job because if they start making minimum wage they loose all their benefits.
You can write it off against future capital gains, but not against income tax from employment. So if the market is down a few years, you gain a lot of tax credits and you pray that the government doesn't get rid of those credits in the mean time.
Why is this shocking? Surely if you hadn’t grown up with the very technical idea of unrealized gains, this would seem totally normal. The surprising thing is that we let ourselves be convinced in the past that making money with money should be tax advantaged compared to making money with labor.
Do you have to pay tax on unrealized gains with realized money? A classic problem with exercising employee stock options and holding the stock is that you have a tax event on the unrealized gain, but if the stock drops substantially, you still owe the tax money on the unrealized gain, but you cannot sell the stock for enough to pay for it. This happened to a lot of people around 2001.
Paying for unrealized gains with realized money is not a situation anyone want to be in.
I was thinking of 'real' holdings rather than options that don't have a liquid value. Not all unrealized gains are the same. Thanks for pointing out the complexity.
Say you have €80k in investments. Markets go up, in one year time your investments are worth €90k. You did not sell.
That means you had €10k in unrealized capital gains. Subtract the €1800 per person threshold. €8200, 36% tax is €2952 tax to be paid at the start of the year.
Losses give you tax credits redeemable against future capital gains (not against income tax from employment)
How does that even work? What does it apply to? Say I own a 100% share in a business, each year does the government appraise it and pretty much require me to divest a portion of it to pay the tax?
Unrealized capital gains taxes are crazy all in an effort to own the rich or something. Meanwhile the people they're perceived as targeting have all the resources to avoid it.
Yes, you are supposed to either sell part of the stocks to cover the yearly tax or you need to dip into your savings account to find money to cover the tax.
I don't know about non-publicly listed companies, I assume you indeed need to appraise yearly.
The rich don't pay these taxes as the unrealised capital gains tax is only for private individuals, not companies. The rich have their assets in companies / shells.
A 36% tax?! Nobody's going to invest in that environment, since the taxes will really sap your effective compounding rate. That's a great way to push all your finance people out of the country.
It's every bit as stupid as it sounds, and IMHO it's probably why we have Donald Trump in the White House today. Harris started talking about taxing unrealized capital gains almost immediately after she was nominated, and that's when the billionaires -- including the ones that own all the media outlets -- started switching sides.
Brought to you by the same party of self-defeating geniuses who thought they could win elections in Texas on a gun-control platform.
Because I was able to get a better QoL elsewhere in the EU.
The average worker in The Netherlands has one of the best QoL compared to average workers in other countries. But the Dutch income leveling and benefit system makes it so a high earner doesn’t have a significantly better QoL. Someone earning €30k has roughly the same spending power as someone earning €50k. (edit: net income after tax and benefits is €42k versus €47k for those two incomes but the person earning €30k has access to cheaper government housing)
In other countries, earning more gives you a better QoL.
I believe OP is saying that while QoL is great in the Netherlands, it has an upper bound. I suppose that he has access to resources that could provide an ever higher QoL in other countries. For example, in the USA, QoL can be good if you're a millionaire and gets better as you acquire more resources.
Unfortunately, there's no QoL lower bound in the USA, either.
I left mainly because of housing prices, the difficulty of being a freelancer, the 49.5% income tax after €78k, the 36% unrealized capital gains tax and just everything in life like supermarkets or public transport being so much more expensive than other European countries.
I took a big pay cut moving to Southern Europe, but post-tax I earn the same and everything is just so much cheaper. I honestly have a significant better life here. Good weather too.
I understand you're not the landlord then. I agree this is a problem: the same(ish) earning you mentioned in another comment makes social mobility difficult. Some people are born with a house, others without. That's super unfair. I'd first tax that rather than income.
In the process of setting up a company to do consultancy services for Dutch companies, but eventually want to shift to local companies once I get to learn the language, culture and business.
Creating classes that bypass productive labor is possible. You then force workers to subsidize them. This maintains "full employment" on paper. The country, however, remains on the brink of collapse.
