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.
>"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?
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.
