Well, the countdown until Brexit D-day is on. With it, is my race to see if I can escape Malta before the borders close. Of course, I could stay. However, staying will be a huge mistake from a financial standpoint. To sum up why:
- Rents in Malta are increasing exponentially (They shouldn’t be but that’s another story.)
- Tax and social security here are way too high and I get nothing for it. I have to pay double SS but I’m not entitled to any benefits if I ever need them and at the rate things are going, I might one day end up working just to pay tax
- It’s boring and angry. If you are a tourist, you will probably love Malta. However, really the place is just an ever busier building site. No trees, no mountains, no rivers, no wildlife, just a few pretty cliffs
As it is, I’m focusing solely on tax, social security, and the stability of rental prices when planning my (hopeful) escape. Cyprus comes in at the top in this regard, as if I play my cards right and earn less than $20K (Euros) per year, I would pay zero tax.
Now, I realize that this is not a wild figure. However, looking at places like Spain, Portugal, and Greece (I like the sunshine, you see) flat rates of self-employment income tax and social security, would equate to approximately 40-50% of my overall income. Why on Earth, in this case, would I try to earn $30K to $40K there, only to have 50% swiped away by the taxman?
To me, it makes perfect sense to try and earn less and pay less tax, even if this means going on OOO for a couple of months every year.
As a second option, there is The Republic of Georgia. Tax is minimal, there is no social security system, and rents are super cheap. There is also tons of culture and the visa system allows almost anyone to enter for up to 1-year, during which time they can choose to stay longer by investing, setting up a business, or simply by working as a freelancer.
As it is, I’m keeping Georgia as my backup plan.
Locations aside, though, I find myself increasingly upset about the very idea of tax. Of course, you say that and people immediately jump on the bandwagon and shout “but everyone has to pay tax!” - But why?
As I get older, I just see it as a huge scam. In the U.S. and every EU country aside from Bulgaria and Iceland, the tax you pay doesn’t go into building roads, infrastructure, or even paying for the military. Governments take out loans to pay for the next years’ government spending via the IMF. Meanwhile, tax collected goes to pay the IMF for the last years loans, but there is always a shortfall because of overspending and the interest loans have accrued. This is why every country affected by the crash of 2008 is actually in a lot more debt now than it was in 2008.
As for social security, no one can afford to live on a state pension when they retire. In this case, they need to pay into a private pension also. In theory, though, I could live very comfortably in a low tax, zero SS place like Georgia, not have to cap how much I earn and save 50% of what I earn to pay for my eventual retirement and/or any rainy days which might come along in the meantime. (Can you see why Georgia is on my radar.)
Now imagine if everyone could choose whether or not to pay social security. My guess is that people who float between jobs and/or who are financially irresponsible would pay. Namely, because they know they need the perks. Conversely, people who save for rainy days and their future wouldn’t. This would then no doubt lead to the implosion of social security systems as we know them. However, as someone who has to pay but can’t rely on a social security safety net anyway, I think this is a good thing. (And trust me I’ve been beyond poor).
Tax I can live with, providing the people I pay tax to are accountable for how they manage the revenue they collect. In a perfect world, you wouldn’t have 44% tax rates in places like Greece, if past government officials could be put on trial and made accountable for financial mismanagement of the economy. As soon as you do that, after all, you can be assured that future politicians will be a bit more careful.
In fact, on that note, why do we even live in a world where politicians aren’t also held accountable to the pledges they make in their manifesto before getting elected?
And I suppose this is where I’m going with this. This world is a ripoff. Why? Because if I don’t do what my job description says I should, I get fired. If I don’t pay tax, I get arrested. If I get in debt, I get hunted down by debt collectors. Conversely, the authorities which hold me to account for all of the above, are immune to any semblance of the same accountability. - And that’s just wrong. Isn’t it?