Why do we hit the top rate of tax so early, while having such a low effective rate?

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Point taken , I agree that tax credits are for parents , so apologies for mis interprteting Protocols comments.
For clarity I am 100% in agreement that PARENTS only get marriage tax credits.
 
Gerry Canning said:
Point taken , I agree that tax credits are for parents , so apologies for mis interprteting Protocols comments.
For clarity I am 100% in agreement that PARENTS only get marriage tax credits.
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I thought that Protocol was proposing child tax credits not marriage tax credits?
 
A few points:

As far as I can recall, the motive behind McCreevy move towards individualisation was to boost the labour supply, by reducing the MTR faced by the SAHM, who was thinking of entering the lab market.

I take no position on whether we should force/encourage SAHM out of the home and into employment.

I recognise fully the invaluable work done by SAHM in the home.

At the moment, the tax system can mean that if two people marry, their tax bill on their combined income will fall.

Example: Bill 40k married Jane nil income, Bill's SRCOP will rise from 32,800 to 41,800, as some of the tax band is transferable. Result = lower tax compared to single

Example: John on 40k marries Mary on 20k - AFAIK here the tax bill will fall again.

What I suggest is full individualisation, which may be portrayed as anti-SAHM, combined with child tax credits to reflect the valuable work done in the home by the SAHM.

This would mean that on marriage, income tax wouldn't change.

Tricky policy though, my mind isn't totally made up, either.
 
To get back on topic.

If average effective tax rates on people earning 15k-40k have to rise, by a small bit, this could only ever be politically acceptable if the cost of living fell.

Our price levels are still 18% above the European average.

Housing costs in cities are way too high.
 
Protocol said:
To get back on topic.

If average effective tax rates on people earning 15k-40k have to rise, by a small bit, this could only ever be politically acceptable if the cost of living fell.

Our price levels are still 18% above the European average.

Housing costs in cities are way too high.
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As things improve, there will be a clamour for the unpopular USC to be removed, in particular the lower rates of 2% and 4% payable up to 10k and 16k respectively. It would certainly be attractive in an election manifesto.

In fact, the government should take the opportunity this budget of removing them and at the same time reducing the tax credits (standard and PAYE) in such a way that it is revenue neutral, and has little or no impact on the effective rate of tax paid.

I'm not sure exactly what that would equate to figure-wise. If they were both reduced by say €150, this would equate to a single PAYE earner having a TFA of 15,000, which would still be extremely high by international standards. He would now be paying 28% tax and USC on an extra €1500, but no longer paying 2% USC on 10k and 4% on 6k - so back of an envelope he seems slightly better off.

And having a TFA of €15k rather than €16.5k is more sustainable in the long run.
 
Hi, while decluttering came across P60 1999/2000 single person Income £13346 (punts)
Did conversions to euro and then compared same income for 2014

1999/2000
Inc.16950 Tax 2484 Prsi 720. Ded =19% [tax all 6604] Tax band 18030@24% Net Wk 265€

2014
Inc. 16950 Tax 90. Prsi 0 USC 505 =3.5% [Tax Cr 3300] Tax band 32000@20% Net Wk 316€

Today's person takes home just € 50 PW more than 14 yr ago despite no prsi , lower tax rate,
But the tax free all in 1999 were almost double today's tax credits.

On a practical level the 1999 person afforded an apartment share and all utilities etc in a central city location (in Dublin) on 265 pw . I doubt someone on 316 could do similar today.

Even though the tax take is minimal on this example 2014, how could anyone afford further taxes on pay at this level ? And, as a young single find decent accommodation etc and proper personal presentation in their workplace.
 
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