Irish Times editorial: "Broaden the tax base"

[Boyd]

I dont necessarily disagree with any of the above, but they simply identify areas where you would prefer to see the extra spend go.
Your initial post implied that you were against increased spending.
I think welfare rates should not be touched, cut nor increased. I think their is scope to apply the 1% USC to all income earners in the interests of fairness. And definitely, the elephant in the room, effective corporate tax rates! There is surely a lot of room to impose increases there without unduly effecting inward investment.

Watch out, we're getting close to agreeing on something!
I meant i was against spending where people don't back it up with where the money will come from.
I also am against FTB grant (or whatever they're calling it), even though I may be a FTB in future. I'm against this as again it's the taxpayer subsidising my choice to buy a house, plus I think it will drive up prices.

 

[TheBigShort]

I meant i was against spending where people don't back it up with where the money will come from.

Agreed. Unfortunately this thread, as are others, tend to be full of headlines of what should be done, but short on substance on how it can be done.
So credit to you for correctly identifying, in my opinion, corporate tax as an option for raising significant revenue. Even a 1-2% increase in the effective rate will yield a substantial amount.
An increase in the pre-school subsidy, will I have no doubt, be more than offset by increased participation in the workforce and subsequently reduced unemployment benefits.

 

[Gordon Gekko]

€500K lump sum, €1.5M fund left to the estate plus 30 years income of €100K p.a. Actually a pensioner needs somewhat more than €100K income to be paying €30K tax.

The €60k per annum of income comes from the €1.5m. The pensioner is forced to withdraw 4% per annum (€60k). And in my experience, people with that sort of pension fund have other income.

 

[Duke of Marmalade]

Gordon you said the capital value of the fund was preserved, I took that to mean that the €1.5M was still intact at death.

Of course, if the relief on the way in is 40% and the income is fully taxed at 50% on the way out then the punter would have been most ill advised to take out a pension, the only tax benefit being on the lump sum and this is swamped by the aforementioned differential.

You have chosen a rather rare punter to illustrate your point, one for whom her pension is a mere top up to already substantial income. Even so, the State has got less than its 40% share of the €3.8M pot accumulated.

 

[Gordon Gekko]

There's no €3.8m pot!

The punter puts in €800k, €320k of which is tax relief.

That grows to €2m.

The punter takes out €500k and pays €60k of tax.

The punter then has an ARF/AMRF worth €1.5m. 4% a year comes out (€60k) and the punter asks his investment manager to deliver 5% return per annum on average (i.e. preserve the nominal value).

 

[Duke of Marmalade]

Gordon, I know you are not stupid so I hope you are not deliberately misinterpreting me. No, there is never an actual pot of €3.8M as the punter is withdrawing money.

So very slowly then:

Punter in: €800K
Punter out: €500K lump sum, €1.8M in annual withdrawals plus €1.5M left in estate = €3.8M in total.

The €800K has been converted to €3.8M by fund managers of one sort or another, the State's share in this is 40% or €1.52M but because of the various tax rules the State only gets €1.4M.

 

[Gordon Gekko]

Whichever way you look at it, the State gets more than its fair share, especially given the fact that no relief from USC and PRSI arises, whereas USC arises on the ARF withdrawals (and pre age 66 withdrawals).

 

[Purple]

It's called society.

On that basis, why am I supporting anyone? Why do I have to subsidise people who are either too stupid or too lazy to support themselves?

Being a member of society means supporting others.

Nobody has a problem supporting people who need it. They have a problem supporting people who don't need it or can and should be providing for themselves.

 

[Gordon Gekko]

Nobody has a problem supporting people who need it. They have a problem supporting people who don't need it or can and should be providing for themselves.

I agree wholeheartedly.

 

[Purple]

I agree wholeheartedly.

My point can also apply to the vast subsidies the state provides to children. It is utterly crazy that high earners with 4 kids are getting €6720 a year in social welfare payments. That's like a €14'000 a year pay rise.
I have 4 kids.

 

[demoivre]

My point can also apply to the vast subsidies the state provides to children. It is utterly crazy that high earners with 4 kids are getting €6720 a year in social welfare payments. That's like a €14'000 a year pay rise.
I have 4 kids.

So have I and the money goes/went on the kid's education. I'll happily give up the children's allowance when they stop giving it to the wasters that you referred to above. No once a month bender in the pub for me courtesy of the children's allowance.