Cut the dole to cut higher tax rates

[Sarenco]

It proves that low paid workers are not on a free ride.

How exactly?

The top 1% of earners have roughly half the share of income as the bottom 50% but pay more than 5 times as much tax. That looks like a good deal for the bottom 50% of earners to me.

 

[TheBigShort]

The top 1% of earners have roughly half the share of income as the bottom 50% but pay more than 5 times as much tax. That looks like a good deal for the bottom 50% of earners to me.

Yes, it does look like a good deal.
But ive just spent my evening showing you how such statistics can convey a distorted impression of a heavy burden on one sector over a different sector when the reality is somewhat different.
But to try hammer home the point, using your figures, if 50% of income earners equals 1,000,000 workers then 1% equals 20,000 (1% of 2,000,000).
If the bottom 50% have incomes worth, say, €40bn then, by your reckoning the 1% have somewhere close to €20bn between them.
So the average income of the bottom 50% would be €40,000 per worker (40bn / 1,000,000 workers)
The average income of the 1% would be (€20bn / 20,000) or €1m per worker.
So despite the assertion that the 1% pay fives times the tax of the bottom 50%, it can be shown that on average each worker in the 1% has 25 times the income of the average worker in the bottom 50%.

So if the average bottom 50% worker pays €2,000, thats €2bn in total. And if the 1% pay 5 times that, that is €10bn between 20,000. That is, on average, each €1m worker pays on average €500,000 leaving a disposable income of €500,000.

I dont know about you but I would still rather be the €1m earner than the €40,000 earner.
The proposal is to shift some of tax burden for the higher earners onto the lower earners. Do you think that is fair?

 

[Sarenco]

The proposal is to shift some of tax burden for the higher earners onto the lower earners. Do you think that is fair?

I'm just trying to understand your position.

It seems to amount to nothing more than higher earners earn a lot more than lower earners and therefore should pay a disproportionately larger amount of tax.

You keep implying that there is some distortion at play in simply presenting the distribution of the effective rates at which different cohorts of earners pay taxes. There really isn't.

You also don't seem to accept or understand that at some point higher earners will choose not to contribute (or continue to contribute) such high levels to our tax system - either by deliberately earning less or by taking themselves out of the tax net entirely. The disposable income of such a taxpayer has absolutely nothing to do with it.

 

[Purple]

Purple you must be my next door neighbour; there can't be two people that fit that description

You must be my Landlord so as he lives next door. Lovely man.

 

[Purple]

Yes, it does look like a good deal.
But ive just spent my evening showing you how such statistics can convey a distorted impression of a heavy burden on one sector over a different sector when the reality is somewhat different.
But to try hammer home the point, using your figures, if 50% of income earners equals 1,000,000 workers then 1% equals 20,000 (1% of 2,000,000).
If the bottom 50% have incomes worth, say, €40bn then, by your reckoning the 1% have somewhere close to €20bn between them.
So the average income of the bottom 50% would be €40,000 per worker (40bn / 1,000,000 workers)
The average income of the 1% would be (€20bn / 20,000) or €1m per worker.
So despite the assertion that the 1% pay fives times the tax of the bottom 50%, it can be shown that on average each worker in the 1% has 25 times the income of the average worker in the bottom 50%.

So if the average bottom 50% worker pays €2,000, thats €2bn in total. And if the 1% pay 5 times that, that is €10bn between 20,000. That is, on average, each €1m worker pays on average €500,000 leaving a disposable income of €500,000.

I dont know about you but I would still rather be the €1m earner than the €40,000 earner.
The proposal is to shift some of tax burden for the higher earners onto the lower earners. Do you think that is fair?

You can't just pull figures out of your... out of the sky and use them to make a point. What is the real income distribution?

 

[seamless]

Right, which is what I effectively did. A marginal direct tax rate of ~50% along with indirect taxes of ~10% seemed like a waste of my time so instead I'm a contractor taking a salary of €33,800, making the maximum company pension contributions and taking plenty of time off.

This is exactly what I have done for exactly the same reasons.

 

[TheBigShort]

It seems to amount to nothing more than higher earners earn a lot more than lower earners and therefore should pay a disproportionately larger amount of tax.

In a nutshell. Do you think that is unfair?

You keep implying that there is some distortion at play in simply presenting the distribution of the effective rates at which different cohorts of earners pay taxes. There really isn't.

Here is another stat. The top 99% of income earners contribute between them 100% of tax - cant say much fairer than that can you?
Here is another, the bottom 99% of earners contribute 81%.

Why are we even having this discussion when its clear now from the stats that any disparity between the top and bottom is relatively small?

You also don't seem to accept or understand that at some point higher earners will choose not to contribute (or continue to contribute) such high levels to our tax system - either by deliberately earning less or by taking themselves out of the tax net entirely. The disposable income of such a taxpayer has absolutely nothing to do with it.

I do accept the point, but it applies to an individuals tax liability, not as part of a cohort of income tax payers. The is where you fail to understand your own point.
If the bottom 20% had a minimum €2,000 (on average) tax liability applied, this would significantly increase their % proportion of their tax contribution. In turn, it would reduce the % proportion of what higher income earners pay. I think you could manage to figure that much?
But what it wouldn't do is decrease the monetary value of what high earners pay. They would still be paying, in monetary terms, the same income tax, prsi, usc etc. All that would be happening is that additional revenue would be collected. And its what is done with this additional revenue that is the problem.
I would prefer to see thar revenue used to provide additional supports, SNA, childcare costs, reduced classrooms sizes etc.
What is being proposed here is that such additional revenue be used to provide a tax break to overtaxed high earners.
The anomaly in all of this is, that due to the way our tax is structured, any additional tax applied to low earners will also be applied to high earners. For example if personal tax credits are reduced bringing more lower earners into the tax net, the net effect will be to increase a high earners tax liability - for sure it will reduce the % proportion of what they pay, but actually increase the monetary liability. Ditto if we raise the 20% rate to say 22% in an effort to have low earners pay a greater % proportion of the total tax take, high earners will inadvertently be asked to fork out more, but can sleep easy at night knowing that their collective % proportion of the total tax take has reduced.

 

[TheBigShort]

You can't just pull figures out of your... out of the sky and use them to make a point. What is the real income distribution?

The figures were provided by Sarenco.

The proposition has been made that higher earners pay more than their fair share and lower earners get a free ride. But as is typical with these declarations, there are no concrete proposals as what to actually do about it.
So lets have some.

 

[Purple]

But as is typical with these declarations, there are no concrete proposals as what to actually do about it.
So lets have some.

All reductions in tax should be, at the very least, equally spread as a proportion of the rate across all tax bands while at the same time bringing everyone back into the USC net until such time as it is phased out for everyone.
That means that if there is a 1% reduction in the lower rate there is a 2% reduction in the higher rate. Don't increase the thresholds at which different rates kick in, just reduce the rates. Over time that will balance things out and give a fairer and broader spread.

 

[Deiseblue]

After watching the Clair Byrne show last night it occurred to me that arguing one's point from the audience is fraught with difficulties as the extremely erudite Eoin O ' Broin disputed Brendan's arguments and was then simply able to override that position as the reality is that there is no comprehensive right of reply afforded to the audience member.
The debate then ensued along the lines as to which of FG , FF , SF & the AAA PBP were minded to see more of the oft mentioned " cake " distributed to OAP's , the unemployed & the low paid.
I don't really have a problem with this as I'm broadly supportive of our progressive tax system & the relatively good social welfare net it provides , although I do have a problem with the assistance provided to unemployed under 25's .
I don't really see how the level of social welfare facilitates people not availing of job opportunities as the current unemployment rate has fallen sharply to 8.4 % & with the Government stating that we will have full employment when that rate falls to 6 % the suggestion surely is that as jobs arise people are taking them.
To be honest I really cannot see a concerted effort by the higher paid or at least those amongst them that do have a problem with the amount of tax they are paying to rally support to the cause of cutting social welfare in order to mitigate their tax liabilities , is it too strong to suggest that this would be regarded as poisonous both politically and socially ?

 

[TheBigShort]

All reductions in tax should be, at the very least, equally spread as a proportion of the rate across all tax bands while at the same time bringing everyone back into the USC net until such time as it is phased out for everyone.
That means that if there is a 1% reduction in the lower rate there is a 2% reduction in the higher rate. Don't increase the thresholds at which different rates kick in, just reduce the rates. Over time that will balance things out and give a fairer and broader spread.

I asked for concrete proposals and I get this.
Can you actually offer one concrete proposal to apply that will be in line with the overall topic.
No more "if there is a tax reduction", or "bring everyone back into USC" without stating the applicable rate or the actual intent.
What do you propose to remedy this issue.

 

[Gerry Canning]

You seem blissfully aware that Ireland (unlike the UK for example) has had stringent general anti-tax avoidance legislation for donkey's years. As for land "hoarders", thankfully property ownership is a constitutional right in this country, so arbitary confiscation is off the cards.

The idea that tackling white collar crime, tax avoidance and land "hoarding" could raise enough money to dramatically cut Income Tax rates is laughable.

1. {Stringent anti-tax avoidance legislation} . I am fully aware we have said legislation and am glad we do have .
2. "hoarders" should not (in my opinion) be permitted under a constitution to hold assets without some charge for the common good.
It is not reasonable to land hold without some checks and balances. In no way would I support (arbitary confiscation).
3. I would go further and apply land taxes ,so that those that hold land and avail of services like roads etc contribute whilst of course being permitted proper allowances etc.
4. I don,t think anyone said that widening as per (hoarding) etc would (dramatically) cut Tax.

I do tire of the constitutional right to property being used as a mantra !

 

[Sarenco]

The figures were provided by Sarenco.

Eh, no they weren't - you just took something I wrote and extrapolated wildly from there. Frankly, your figures are a complete fabrication.

 

[TheBigShort]

How exactly?

The top 1% of earners have roughly half the share of income as the bottom 50% but pay more than 5 times as much tax. That looks like a good deal for the bottom 50% of earners to me.

Your figures, to which I agree I extrapolated. If your figures a fabrication then you are wasting everyones time.
Instead, how about you, and others who support the sentiment that high earners are overtaxed and low earners are getting a free ride actually make a concrete proposal to redress the issue?

 

[T McGibney]

1. {Stringent anti-tax avoidance legislation} . I am fully aware we have said legislation and am glad we do have .

Then I don't really understand how you think it can be used to generate sufficient new revenue to finance general tax decreases?

4. I don,t think anyone said that widening as per (hoarding) etc would (dramatically) cut Tax.

Yet you did make this suggestion:

Maybe we could concentrate on the less obvious but serious thieves in the White Collar /Tax avoidance brigade in order to reduce taxes on most taxpayers.

1. {Stringent anti-tax avoidance legislation} . I am fully aware we have said legislation and am glad we do have .
2. "hoarders" should not (in my opinion) be permitted under a constitution to hold assets without some charge for the common good.
It is not reasonable to land hold without some checks and balances. In no way would I support (arbitary confiscation).

I do tire of the constitutional right to property being used as a mantra !

Your constitutional right to property includes the right to own your own home, including the site it sits on. It has been suggested that the State should force empty-nesters to sell up, in order to make space for younger families. No doubt similar proposals are in the offing for others who are deemed not to "need" a big or well-located house or maybe even a house at all. If you are willing to sacrifice your own interests (eg by allowing the State to chuck you out) "for the common good", then you're in a good position to recommend a similar erosion of landowners' rights. But if you're not, I suggest the opposite applies.

3. I would go further and apply land taxes ,so that those that hold land and avail of services like roads etc contribute whilst of course being permitted proper allowances etc.

On top of income tax, LPT, VAT, etc? Good lord.

 

[Gerry Canning]

T Mc Gibney.

I wasn,t nor do I want to appear to be giving solutions and indeed I can agree with a lot of what you post.

It appears that if (as an example)on your point 3.
That because we have LPT ,VAT etc we can,t look at land taxes.
All I am saying is that there are more equitable and more certain taxes to be collected , if we did that , its not too difficult to review VAT etc at the same time.

These arguments seem to end up revolving around excuses for no change, ie leave alone V any change = more taxes ,
Rather than changed Taxes can maybe get more in a fairer way ?


The BIG issue surely is that we don,t trust our short-termism politicians to enact good long term taxes.?

 

[Sarenco]

Your figures, to which I agree I extrapolated. If your figures a fabrication then you are wasting everyones time.

I didn't say my figures were a fabrication. I said the figures you extrapolated from something I wrote were a fabrication.

 

[TheBigShort]

I didn't say my figures were a fabrication. I said the figures you extrapolated from something I wrote were a fabrication.

You say I fabricated, I say you fabricated, who cares?

A concrete proposal please, just even one.

 

[Sarenco]

In a nutshell. Do you think that is unfair?

What is fair or unfair is obviously subjective. I am much more interested in understanding what is effective.

Two contributors to this thread have stated that they have deliberately reduced their incomes because of the high marginal tax rate and the IDA has repeatedly warned that high marginal tax rates are being raised as a concern by prospective investors.

So, I would suggest that our hyper-progressive tax regime (by international standards) is not optimal in terms of raising revenue for the State - revenue that could be used to fund infrastructure programmes, enhance our health service, etc.

 

[Sarenco]

You say I fabricated, I say you fabricated, who cares?

Sorry but what exactly are you suggesting that I fabricated?

Frankly, your posts are becoming increasingly bizarre with figures plucked out of thin air that bear absolutely no relationship to reality.