Comment by estebank | Hacker News Reader

Comment by estebank | Hacker News Reader

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I moved away from Argentina 5 years ago (wow, time flies) and I agree with all the points above.

Many people in the First World assume that Buenos Aires is a cheap place because it is in South America, but many places in South America have actually higher costs of living than Europe/North America, with lower incomes. An apartment in a nice neighborhood with a reasonable size is ~USD1000[1], while local income for a Sr Software Engineer is around ~USD27K[2] (sounds low even for BsAs standards, but not outrageously so) and taxes are outrageously high (over 50%[3] for an individual, 137.4%(!) of the profits for companies[4]).

[1]: http://inmuebles.mercadolibre.com.ar/departamentos/alquiler/...

[2]: http://www.lanacion.com.ar/2003950-cuanto-ganaba-un-programa...

[3]: https://es.panampost.com/antonella-marty/2017/06/21/en-argen...

[4]: http://www.infobae.com/economia/2017/03/07/argentina-continu...

> 137.4%(!) of the profits for companies

How on Earth does that work? Companies have to pay all of their profit + more in taxes? Or is it some misleading figure which compares expenses like employment taxes to the profits?

It's a great question. It seems like at least since 2005[1] the amount taxes owed after deductions have been >100% of profits, which might partly explain the prevalence of off-the-books earnings in the country. It seems to be the second highest tax rate of commercial profits in the world, at 106% for 2016[2].

From the breakdown of that rate[3] it seems the three highest contributors to that rate are

- Turnover tax by City of Buenos Aires of 3% (Total tax rate (% of profit) 53.21%)

- Employer paid - Social security contributions of 23% (Total tax rate (% of profit) 25.94%)

- Tax on financial (check) transactions of 0.6% (Total tax rate (% of profit) 17.25%)

Keep in mind that the last one affects every transaction, so you can _easily_ pay more tax than what you earn just by moving money back and forth.

[1]: https://tradingeconomics.com/argentina/total-tax-rate-percen...

[2]: http://data.worldbank.org/indicator/IC.TAX.TOTL.CP.ZS?year_h...

[3]: http://www.doingbusiness.org/data/exploreeconomies/argentina...

For every 10 pesos they make, they pay 14 pesos to the state (thats how to read that %).

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