# Varadkar: "We need to cut tax but increase social insurance to get a fair society"



## Brendan Burgess (19 Apr 2017)

I missed this article by Leo Varadkar when it was published in the Indo last month. 

*We need to cut taxes but increase social insurance to get a fair society*


The USC is associated with the financial crisis and you get nothing for it. It's Fine Gael policy to abolish it. It is very different to PRSI for which you get clearly defined benefits. Perhaps it would make more sense to simplify the system and replace the USC and PRSI with a new PRSI-style charge: Social Insurance.

We could go further in years to come by restoring the linkage between earnings and benefits and extending treatment benefit to give people more refunds for medical expenses. It would also underline the contributory principle according to which everyone who can pay, should pay something into the system, knowing that they will get something out of it.


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## Brendan Burgess (19 Apr 2017)

I would generally agree. 

But there needs to be a clear link between what you pay in social insurance and what you get out. If you contribute for years you should get a lot more than someone who makes no contribution at all.

The tax system should be used to improve fairness, not the social insurance system. 

Brendan


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## Protocol (19 Apr 2017)

I would also agree.

Merge USC with PRSI.

[However, try to maintain a broad base]

Build a stronger link between PRSI conts and benefits.

Make SI benefits substantially higher than social assistance [SA].

Establish in popular culture that SI is something good, people should be happy to pay PRSI, they should see the benefits.

They should see that SA is less generous.


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## dereko1969 (19 Apr 2017)

There needs to be a much bigger differentiation set out between the contributory and non-contributory pension rates. With introduction flagged 10 years in advance or something long-term like that.


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## jjm (19 Apr 2017)

The problem is Brendan and Protocol private sector workers were paying the merged rates all along I was paying 10.75% PRSI and so was every other private sector worker until the day Usc came in. It is hard to understand how little understanding Brendan has on  prsi in the private sector .Usc was the best thing that ever happened for the people who were paying it all along the people on PRSI A1 .So Varadker need to start looking after the people who were paying high PRSI A1 for years ,


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## newtothis (19 Apr 2017)

Brendan Burgess said:


> But there needs to be a clear link between what you pay in social insurance and what you get out. If you contribute for years you should get a lot more than someone who makes no contribution at all.



That's not how insurance works. I might drive and pay car insurance for 40+ years and never make a claim. Same with social insurance: I might work for 40+ years and never get sick or go on maternity leave, never have a period of unemployment. See http://www.msnbc.com/rachel-maddow-show/paul-ryan-flubs-the-basic-idea-behind-insurance for an example of similar thinking.

I can see what you say makes sense to the extent that retirement benefits (over a basic minimum amount) be linked to amounts paid in, but as a general concept it doesn't make sense.


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## Purple (19 Apr 2017)

newtothis said:


> That's not how insurance works. I might drive and pay car insurance for 40+ years and never make a claim. Same with social insurance: I might work for 40+ years and never get sick or go on maternity leave, never have a period of unemployment. See http://www.msnbc.com/rachel-maddow-show/paul-ryan-flubs-the-basic-idea-behind-insurance for an example of similar thinking.
> 
> I can see what you say makes sense to the extent that retirement benefits (over a basic minimum amount) be linked to amounts paid in, but as a general concept it doesn't make sense.


The point is that if you do need it you should get a higher level of benefits than someone who has never bothered to work a day in their life. At the moment the opposite is the case.


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## jjm (19 Apr 2017)

Brendan said USC is associated with the financial crisis and you get nothing for it.I say USC was always paid by people on PRSI class A1 in the financial crisis the Government extended it to everyone. Varadker wants to put PRSI Class A1 back up where it was 10.75% and take it off everyone who do not pay PRSI Class A1 insurance


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## Protocol (19 Apr 2017)

jjm2016 said:


> The problem is Brendan and Protocol private sector workers were paying the merged rates all along I was paying 10.75% PRSI and so was every other private sector worker until the day Usc came in. It is hard to understand how little understanding Brendan has on  prsi in the private sector .Usc was the best thing that ever happened for the people who were paying it all along the people on PRSI A1 .So Varadker need to start looking after the people who were paying high PRSI A1 for years ,



This is off-topic, but here are some past PRSI rates.

http://www.welfare.ie/en/Pages/SW14-Archive.aspx

2003: main ee PRSI rate = 4% up to a ceiling, Health Levy = 2% on all income

2008: main ee PRSI rate = 4% up to a ceiling, Health Levy = 2%/2.5%

I have been working since 1995 approx, and never paid 10.75% ee PRSI.


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## jjm (19 Apr 2017)

Protctor The problem is lots of people were paying a lot less and you must have being one of them.I don't have a problem with that But I do have a problem allowing the same thing happening again.My PRSI went down from 10.75% The lowered my prsi and added in the USC  Proctor/Brendan can you post a link for PRSI class A1 the year USC came in and the year before.You will see what i am on about .


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## Protocol (20 Apr 2017)

Are you an employee?

Are you class A?

In what exact year did you pay 10.75% employees PRSI?


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## Protocol (20 Apr 2017)

I already posted past PRSI rates, going back to 2003.

Here you go:

http://www.welfare.ie/en/Pages/SW14-Archive.aspx


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## Protocol (20 Apr 2017)

The USC was introduced in 2011.

It replaced the previous Health Levy and Income Levy.


Here are the 2009 PRSI rates:
http://www.welfare.ie/en/downloads/sw14_apr09.pdf

2009 ee PRSI = 4%

The Health Levy was doubled in an emergency Budget in 2009, from 2%/2.5% to 4%/5%.



Here are 2010 PRSI rates:

http://www.welfare.ie/en/downloads/sw14_10.pdf

2010 ee PRSI = 4%, and Health Levy was 4% / 5%


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## Protocol (20 Apr 2017)

The short-lived* Income Levy* was introduced on 1 Jan 2009 at 1% up to 100k, higher rates after that.

*From 1 January 2010*
Income levy rates were as follows:

2% on income up to €75,036
4% on income from €75,037 to €174,980
6% on income above €174,980.
If your income was greater than the minimum threshold of €15,028 per year or €289 per week, you paid the levy on the full amount of your income. (If you were aged 65 or over the minimum threshold was €20,000 per year for a single person and €40,000 per year for a couple).


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## Protocol (20 Apr 2017)

So during 2010, an average worker paid 4% PRSI, 2% Income Levy and 4% Health Levy, with lots of allowances, exemption / bands / ceilings, etc.


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## newtothis (20 Apr 2017)

Purple said:


> The point is that if you do need it you should get a higher level of benefits than someone who has never bothered to work a day in their life. At the moment the opposite is the case.



....and my point is that what you describe is not an insurance scheme: it's more like a restricted savings scheme. Fair enough, if that's what you want to argue for, but the basic model is very different and cannot be presented as social (or indeed any other type of) insurance. In the Paul Ryan example I referenced he fails to grasp that at a very basic level it's the healthy people who pay for the sick people. In social insurance, it's the people who can pay their way who fund those who can't. I suspect your ire is aimed more at those who won't pay their way, but that's a separate argument, and a problem you'll likely have regardless of what system you have in place.


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## Protocol (20 Apr 2017)

You are getting at an interesting point.

How much should a PRSI scheme be insurance, and how much of it should be saving?


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## Protocol (20 Apr 2017)

My point is simple: the insured worker should receive a pension well in excess of the citizen with much fewer, or no PRSI contributions.


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## Purple (20 Apr 2017)

newtothis said:


> ....and my point is that what you describe is not an insurance scheme: it's more like a restricted savings scheme. Fair enough, if that's what you want to argue for, but the basic model is very different and cannot be presented as social (or indeed any other type of) insurance. In the Paul Ryan example I referenced he fails to grasp that at a very basic level it's the healthy people who pay for the sick people. In social insurance, it's the people who can pay their way who fund those who can't. I suspect your ire is aimed more at those who won't pay their way, but that's a separate argument, and a problem you'll likely have regardless of what system you have in place.


If I lose my job I get an income from the State while I am looking for a new job. That's insurance.
If I live long enough I get a pension but if I die young there is no pension fund available for me to leave in my will. Therefore it is not saving. There are of course other things funded by PRSI which are not insurance but just because I pay for other people through my taxes it doesn't mean that it is not insurance.


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## jjm (20 Apr 2017)

Thanks for posting the link Protocol.
I was wrong the year before the Usc came in PRSI Class A1 was 8% on all of my wages over 127 euro.First 127e @4% (20!0)
The following year when the USC came in The Government dropped PRSI Class A1 to 4% on all of my wages + the USC .Varadker is pushing to do away with USC and put up PRSI again Brendan and others are sleep walking behind him.If Vardker was really interested in change he would increasing the benefit t to the people who were paying the high PRSI Class A1 stamp  all of there working life.I would have expected Brendan to point this out. PRSI class A1 was 4% higher than is should have being before USC time for payback.


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## Purple (20 Apr 2017)

jjm2016 said:


> Thanks for posting the link Protocol.
> I was wrong the year before the Usc came in PRSI Class A1 was 8% on all of my wages over 127 euro.First 127e @4% (20!0)
> The following year when the USC came in The Government dropped PRSI Class A1 to 4% on all of my wages + the USC .Varadker is pushing to do away with USC and put up PRSI again Brendan and others are sleep walking behind him.If Vardker was really interested in change he would increasing the benefit t to the people who were paying the high PRSI Class A1 stamp  all of there working life.I would have expected Brendan to point this out. PRSI class A1 was 4% higher than is should have being before USC time for payback.


They should just reinstate the PRSI ceiling that was there until some time around 2001/2002.
I found this when I was looking for the date it was abolished. They were warning that the marginal tax rate would increase to 46.5%. It's now 52% and if you are a company director or self employed it's nearly 60%!


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## newtothis (20 Apr 2017)

Protocol said:


> My point is simple: the insured worker should receive a pension well in excess of the citizen with much fewer, or no PRSI contributions.



Isn't that what a private pension provides? Apart from that, I don't think retirement benefits should be considered as insurance at all. Clearly, what's there is a mess all round (unless someone wants to argue the opposite?).

Personally, I think the insurance aspects (e.g. payments for periods when someone cannot work due to sickness or unemployment or need to care for someone or whatever) should be separated out from retirement benefits, on the basis they are things that may or may not happen. Like any insurance, ultimately it would be the people who don't need it who pay for those who do. The real question is how retirement benefits should be structured. It's hardly a form of insurance, given it's almost certain to happen given life expectancy currently, but if it is just a government managed savings fund on behalf of individuals, how are those who couldn't work (due to disability or need to care for someone) be included? or would they just be told, "sorry, there's nothing in your particular pot?". I say "government managed" as experience shows that leaving it to the private sector just allows providers to soak up large guaranteed incomes with all risk on the customer side.


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## Purple (20 Apr 2017)

I think it's crazy that someone pays into a State pension fund all their life and then gets the same as someone who sat on their ass, claiming welfare, and never worked a day in their life.
We need to stop punishing people for hard work and incentivising other people to live off their neighbours.


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## jjm (20 Apr 2017)

PRSI Class A1 up untill USC came in was Unfair .Other groups who now have to shoulder the burden through USC are getting out of it. Varadker needs to be faced down by the people who were paying the higher prsi all of there life.The 4% that was taken off when the USC came in needs to be explained. Varadker making people who paid 8% prsi A1 stamp all of there life  who have to retire at 65 go on benefit untill they reach 66 he should be ashamed of himself,


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## Sophrosyne (20 Apr 2017)

newtothis said:


> Personally, I think the insurance aspects (e.g. payments for periods when someone cannot work due to sickness or unemployment or need to care for someone or whatever) should be separated out from retirement benefits, on the basis they are things that may or may not happen.



Agreed.

The Social Insurance Fund is dealing with chalk and cheese.


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## Sarenco (20 Apr 2017)

newtothis said:


> Personally, I think the insurance aspects (e.g. payments for periods when someone cannot work due to sickness or unemployment or need to care for someone or whatever) should be separated out from retirement benefits, on the basis they are things that may or may not happen.



Well, there's obviously huge uncertainty how much an individual will draw down in retirement benefits.  It is definitely a form of insurance - against longevity.

I strongly agree with Brendan that there should be some connection between contributions and benefits.


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## jjm (20 Apr 2017)

The connection between contributions and Benefits should start by pushing Varadker to start returning the cutbacks made around 2008 to the people who paid very high PRSI.Can anyone explain what the 4% extra PRSI Class A1 was used for before the usc came in,


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## Sophrosyne (20 Apr 2017)

Brendan Burgess said:


> But there needs to be a clear link between what you pay in social insurance and what you get out. If you contribute for years you should get a lot more than someone who makes no contribution at all.



How would link this work?

Would it apply to all welfare benefits?

Would there be maximum and minimum contributions and benefits caps?


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## Gordon Gekko (20 Apr 2017)

jjm2016 said:


> The connection between contributions and Benefits should start by pushing Varadker to start returning the cutbacks made around 2008 to the people who paid very high PRSI.Can anyone explain what the 4% extra PRSI Class A1 was used for before the usc came in,



Why do you keep ranting and raving about a PRSI rate that did not exist?


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## Protocol (21 Apr 2017)

jjm2016 said:


> The connection between contributions and Benefits should start by pushing Varadker to start returning the cutbacks made around 2008 to the people who paid very high PRSI.Can anyone explain what the 4% extra PRSI Class A1 was used for before the usc came in,




I am losing my patience here. This is the last time I will tell you.

Since 2003, the main rate of ee PRSI has been *4%*. _*Please, please, stop making up statements that it was higher.*_

There was also a 2% Health Levy, *which was a tax*. Let me repeat that,* it was a tax.*

It was an earmarked tax, used to finance healthcare.

It was incorporated into PRSI on payslips, that's maybe why you think you were paying more than 4% PRSI.

It was not a separate line on payslips.

It was increased to 4%/5%, and the *Income levy *was introduced.  Again, these were both taxes.

The Health and Income levies were replaced by the USC tax.


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## jjm (21 Apr 2017)

Gordon Gekko/ Protocol
Can you explain why it only affected the people on PRSI Class A1 when you Get a chance.Protocol Your own link for2010 PRSI Class A1 showed 8% Can you explain Please That is the rate I paid.


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## Protocol (21 Apr 2017)

Why _*what *_only affected people on class a1?


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## jjm (21 Apr 2017)

Just look at your link and you will see for yourself.I have checked out your link it includes the total for each group Class A1 is the only one who had to pay extra untill the USC came in .If you look you will see Class A1 is the only class that changed it was 8% in 2010 it went down to 4% in 2011 when the USC came in,There are no extra Hidden charges once the USC came in.All other Groups had no Hidden extra charges so there rates did not chenge ,The now have to pay the USC in other words they  now pay extra making it a more lever playing field,


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## Protocol (21 Apr 2017)

You are de-railing this thread, but I will answer you.

I think I understand what you are getting at now, at long last.

Let's take 2010 as an example.

http://www.welfare.ie/en/downloads/sw14_10.pdf

Low paid workers are in PRSI classes AO and AX.

AO was 38-352 pw - *these people were exempt from PRSI*

They did not have to pay PRSI at all, yet they receive a credit, so they get future benefits.

This continues to 2017, there is a PRSI exemption for low-paid workers.

After 352 pw, workers were in class AX or AL, and they paid 4% PRSI.

Then, at 500pw, workers were in class A1, and the 4% Health Levy kicked in.

*So people in class A1, like you and me, earning over 500pw in 2010, paid 4% PRSI and the Health Levy, which was typically 2%, but which was 4% in 2010.*


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## Protocol (21 Apr 2017)

What you seem to be getting at is that the USC was broader than the Health and Income levies that it replaced.

That is true.


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## jjm (21 Apr 2017)

Protocol.
Check how much PRSI you paid in 2010 include everything
Check how much PRSI you paid in 2011
Having checked both years now do the sums and cross check and post results.for 2010/2011 use 50000 euro for both years.
I think PRSI for 2010 on 50000 euro comes to around 7.47% or 3735.76 euro but I will let you correct me .you are correct All of these extra charges were loaded on to the backs of 600000 to 700000 thousand workers until the USC came in.


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## cremeegg (21 Apr 2017)

Brendan Burgess said:


> But there needs to be a clear link between what you pay in social insurance and what you get out. If you contribute for years you should get a lot more than someone who makes no contribution at all.
> 
> Brendan



SW payments that a person receives due to their PRSI contributions are called benefits, Jobseekers Benefit for example.

SW payments that a person receives based on a means test are called allowances, Jobseekers allowance, for example.

In the past there was a different rate for the two, benefit rates were higher than allowance rates. However they have in recent years been brought into line. I don't know what democratic approval there was for this change in policy.

Under certain circumstances it can be more difficult for a person who has paid PRSI to secure Benefits than it is for a person who has not paid PRSI to get Allowances. I'm thinking of the self employed.




newtothis said:


> In the Paul Ryan example I referenced he fails to grasp that at a very basic level it's the healthy people who pay for the sick people.



That really isn't the nature of insurance. Every one who pays a premium is insured. I can drive my car tomorrow safe in the knowledge that if I cause an accident I will be able to claim any cost on my insurance. The benefit i receive, peace of mind if you will, insurance cover legally, is the same wether I cause an accident or not. It isn't the healthy who pay for the sick. Every one pays for the insurance cover.


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## newtothis (21 Apr 2017)

cremeegg said:


> That really isn't the nature of insurance. Every one who pays a premium is insured. I can drive my car tomorrow safe in the knowledge that if I cause an accident I will be able to claim any cost on my insurance. The benefit i receive, peace of mind if you will, insurance cover legally, is the same wether I cause an accident or not. It isn't the healthy who pay for the sick. Every one pays for the insurance cover.



OK, fair enough, though I did say "at a very basic level". What I was trying to capture was the notion that the premiums of everyone, especially the ones who don't make claims, fund the claims. If you strip out the ones who never make claims (as in the Paul Ryan example) the whole thing collapses due to unaffordability: it becomes just a glorified savings scheme, and woe betide anyone who needs to claim more than they paid in. Insurance relies on the fact that the number of people making claims is much lower than the total number of people making payments. So, to refine what I said, it's not that the healthy who pay for the sick it's the fact that the healthy are there making  their contributions that helps enable the sick to be paid.


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## Sophrosyne (21 Apr 2017)

Some may liken PRSI to a form of insurance, but it is not personal insurance.

To use your analogy, Cremeegg, it would be more like having to pay for motor insurance even if one did not drive.

Because of their personal circumstances and health, certain PRSI contributors in all of the income groups are greater beneficiaries of welfare than others.

Therefore, linking _all_ welfare payments to contributions would be problematic as usage of other benefits would decrease pension benefits.

It might however be feasible for Old Age Pensions.


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## jjm (23 Apr 2017)

Gorton
Responding to your post 29
Let me be absolutely clear on this ,PRSI Claas 1,Some posters are given Distorted conclusions on the Prsi amount taken from workers in the private sector and workers in the public service after april 6 1995 pay  before the USC in 2011
Facts Since 2011 PRSI A1 Employer stops total of 4%
( I have shown In post no 36) 2010 A person on 50000 euro would have paid 3735 euro total of 7.47% of there  gross wage 4% was taken and put into the PRSI Fund another 3.47% was taken from anyone paying  PRSI Class A1(USC FOR PRSI A1 only)
(No other group paying PRSI got the extra 3.47% taken from there gross wage)
I have gone back and checked and the amount taken from PRSI Class A1 was always around 6 or7%.To give you an example take our good friend proctocol for instance lets say  he started in the public service in 1995 this was the year that the changed people starting in the public service from D stamp to PRSI Class A1. A D stamp was 1.96% and the new PRSI stamp was around 7% at that time.So if protocol started after 6 April he got  5% extra  pay to allow for the  extra PRSI he had to pay meaning that the PRSI stamp had to be around 7%( 1.96 + 5% total 7% Source  Google and you will find it.(Gorton The Total Amount Taken is what you are missing the rest is fake news)In other words Employers stop around 6 or 7% .The Trioka are gone and Varadker would like do away with the USC for his pals and put it back on top of the people paying PRSI Class A1 same as before.This dead cat smells,It is no wonder people think the should not have to pay for any services Valadker should now start paying extra to the people who paid an extra few %  along with there PRSI starting straight away.When the USC came in for everyone it took in over 2 billion this gives you an idea how much extra PRSI Class A1 were paying from there gross wages over everyone else all of there working life.This is not a rant it is facts Leo and his mates should acknowledge.


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## jjm (25 Apr 2017)

cremeegg the example you gave is incorrect from 2011 it was 14.5% 2009/2010 it was over 18% that was taken and if you look at the years before then it was over 17%.Varadker is getting ready to remove the USC and put back the stealth tax which only applied to people in employment paying PRSI Class A1 which is the class in your example,


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## jjm (25 Apr 2017)

cremeegg
I know some one who has being putting  9% into pension since may 1990 it is now worth close to 500000 They can take 25% tax free, Lots of people earning the average wage could not put money into pension between getting caught out for fees for there kids going to collage and paying high PRSI + the stealth tax on top of there PRSI   aka usc for paye workers only,


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## Gordon Gekko (25 Apr 2017)

I am concerned by Varadkar's pronouncements; specifically around the €115k earnings cap and the €2m fund threshold.


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## jjm (25 Apr 2017)

The EU are forcing his hand Leo is not doing this because he would like to give  something back to the  people who already were paying most of the prsi for the past 40 years,He is just testing the waters to see who he can squeeze the most out of ,Hopefully he will not be allowed to put stealth taxes back on top of the prsi class A1 worker on low wages so you know where he is going next,Hope you are as understanding when he starts  takes stealth taxes of the people you are concerned about nothing to see hear when he starts treating other groups the same way as PRSI Class A1 were treated before  2011,I have made my views known where its counts I suspect Leo knows the game is up,Tax breaks will get hit for sure so  don't start raving about something you should never have had.


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## Sarenco (26 Apr 2017)

Gordon Gekko said:


> I am concerned by Varadkar's pronouncements; specifically around the €115k earnings cap and the €2m fund threshold.



Hi Gordon 

Can you post a link to the Minister's comments?  I can't see anything online.

I think it's inevitable that we will see some further reduction to the real value of the fund threshold and/or annual contribution limits over time.  The reality is the State has no interest in allowing people to defer taxes beyond what is required to build a fund to provide for a modestly comfortable retirement.


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## Gordon Gekko (26 Apr 2017)

Sarenco said:


> Hi Gordon
> 
> Can you post a link to the Minister's comments?  I can't see anything online.
> 
> I think it's inevitable that we will see some further reduction to the real value of the fund threshold and/or annual contribution limits over time.  The reality is the State has no interest in allowing people to defer taxes beyond what is required to build a fund to provide for a modestly comfortable retirement.



I'm not convinced, primarily because the €2m also affects public servants, particularly those of decision maker level. €2m is essentially a €60k pension x 30 plus the €200k tax-feee lump sum. As public sector wage cuts are reversed and pay increases come on the agenda, any decrease in the SFT would bring more public servants into the charegable excess tax net.

That's not to say that I'm convinced that the €2m is safe, but if I had to bet on it, my money would be on the €2m being adjusted annually for inflation (again).

The Minister's comments were around SSIA style State support for pensions which makes me worry on the basis that the SSIAs attracted "support" at 25%.


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## jjm (26 Apr 2017)

Dr James Reilly pointed out the other day 38% of workers Earn less  less than 400 per week or 20800 per year. Leo Varadker says we must Cut tax But increase social Insurance to get a fair society .Sarenco is correct Government will no longer be under pressure from the pension Industry.From now on the Pension Industry will be more interested in making money out of people on low wages they will be lobbying to bring in anyone earning a wage which means tax breaks will be transferred from high earners to low income earners which of course nean giving breaks to people who do not pay tax., There will be  lots of Gordon Gekko  Type who will see no problem with the Government being unfair once it is not affecting them   I was pointing out the fact the Government were taking away more than was required They were taking 7%or8% for years before the USC came in of one section only.


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## Gordon Gekko (26 Apr 2017)

How is it unfair to make people contribute to their own pension fund?

If that's the direction things are going, you can have my State Pension, thanks.


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## jjm (26 Apr 2017)

I have a very good private pension along with my state pension.The point I was making is there were lots of people who were paying a total of 7.45% on a wage of 50000 euro per year along with there employers 10.75%
I am not the dog in the manger type .Now stop throwing the toys out of the pram.


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## Gordon Gekko (26 Apr 2017)

jjm2016 said:


> I have a very good private pension along with my state pension.The point I was making is there were lots of people who were paying a total of 7.45% on a wage of 50000 euro per year along with there employers 10.75%
> I am not the dog in the manger type .Now stop trowing the toys out



Your wild claims about PRSI rates have been utterly debunked elsewhere. 

Who's "trowing" their toys out?

You're being unnecessarily confrontational.


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## Sarenco (26 Apr 2017)

Gordon Gekko said:


> The Minister's comments were around SSIA style State support for pensions which makes me worry on the basis that the SSIAs attracted "support" at 25%.



Ah, I see.  Yes, I saw the comments around the Minister's preference for an SSIA "top up" scheme to replace the current system of tax relief.

I certainly take the point that a considerable number of public servants would be impacted by any further reduction to the SFT but hard choices will be required as our population ages dramatically over the coming decades.  I think most people would agree that a pension of €60pa, plus a €200k lump sum, is hardly modest.


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## Purple (26 Apr 2017)

jjm2016 said:


> Dr James Reilly pointed out the other day 38% of workers Earn less less than 400 per week or 20800 per year.


 Lies, damned lies and statistics; 20-25% of the Irish workforce work part time. If you do 10-15 hours and get €300 or €400 for it you are not low paid.


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## jjm (26 Apr 2017)

You are wrong Prsi Class A1 2009/2010 was 4% on the first 6604 or 127 per week balance of 8% up to 1400 per week 9% on anything over 1400 per week.

Before 2009 it was 4% on 6604 or 127 per week balance @ 6% I am just pointing this out Sorry if you find it unnecessarly confrontational if you check it out yourself you will see i am correct Gorton.
Come back when you have checked it out for yourself do not take other people word people working and earning 0ver 500 euro 26800 per year were paying these rates which were not required from any other  group.


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## jjm (26 Apr 2017)

I agree purple  it is not Paul Murphy who is quoting this it is James Rielly Just so you know.


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## Purple (26 Apr 2017)

jjm2016 said:


> I agree purple  it is not Paul Murphy who is quoting this it is James Rielly Just so you know.


A TD from a left of center party and a TD from a Communist party. They are both left wing.


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## Gordon Gekko (26 Apr 2017)

Sarenco said:


> Ah, I see.  Yes, I saw the comments around the Minister's preference for an SSIA "top up" scheme to replace the current system of tax relief.
> 
> I certainly take the point that a considerable number of public servants would be impacted by any further reduction to the SFT but hard choices will be required as our population ages dramatically over the coming decades.  I think most people would agree that a pension of €60pa, plus a €200k lump sum, is hardly modest.



It's on a much smaller scale, but as soon as the mandarins and powerbrokers realised that the parking levy would affect them, it was mothballed.

And I agree, €60k is decent, but it's not Rockerfeller either.


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## Purple (26 Apr 2017)

Gordon Gekko said:


> It's on a much smaller scale, but as soon as the mandarins and powerbrokers realised that the parking levy would affect them, it was mothballed.


 And BIK on mobile phones. 



Gordon Gekko said:


> And I agree, €60k is decent, but it's not Rockerfeller either.


 It is a massive pension for the vast majority of people.


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## Gordon Gekko (26 Apr 2017)

Purple said:


> It is a massive pension for the vast majority of people.



That is a different argument.

For someone with a high-cost base and high earnings throughout his/her career, it is not a massive pension.

The State Pension is fine for a significant cohort, but for others it's trivial. It is wrong to mix the two in my view.


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## Sarenco (26 Apr 2017)

Gordon Gekko said:


> For someone with a high-cost base and high earnings throughout his/her career, it is not a massive pension.
> 
> The State Pension is fine for a significant cohort, but for others it's trivial. It is wrong to mix the two in my view.



I can't agree with that Gordon.

A €60k pension, plus a tax-free lump sum of €200k, is extremely generous by any standards when you consider that the average earnings of full-time workers are only around €45k. 

It seems to me that the State's policy objective should be ensuring that as many people as possible have sufficient means to enjoy a moderately comfortable retirement.  Why should our tax policies be directed at ensuring that high earners are in a position to continue enjoying a high-cost lifestyle in retirement? 

I very much take the point that turkeys rarely vote for Christmas.  The public sector unions in the UK were particularly vocal critics of the decision to reduce their lifetime pension allowance to £1 million and I've no doubt that the public sector unions here would be similarly outraged.  However, I sense that there is a growing political consensus that the burgeoning public sector pension bill needs to be tackled as a matter of some urgency and the tax code would be one way of addressing this issue.

Incidentally, the full contributory State pension has an actuarial value of around €350k - that's hardly a trivial sum by any standards.


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## jjm (26 Apr 2017)

The point I am making is already one section of the workforce were already paying a total of between 6.45 % up until 2008 and 7.45 % in 2009/2010 then it was dropped and the USC came in which amounted to around the same .I think the USC Should be put into a fund everyone had to pay  like when it first came in .It stands for Universal social charge If everyone had to pay it people would be more inclined to Question the spending of it. Rather than try get out of it we should be questioning how it is spent ,


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## Purple (26 Apr 2017)

Gordon Gekko said:


> That is a different argument.
> 
> For someone with a high-cost base and high earnings throughout his/her career, it is not a massive pension.
> 
> The State Pension is fine for a significant cohort, but for others it's trivial. It is wrong to mix the two in my view.


I agree. Someone who can fund that themselves is already part of the 10% who contribute 50% of the tax and probably 80 to 90% of the net contributions when social transfers are taken into account. Getting the tax deferred on their income for all pension contributions is the least they should get.
My problem is with people getting that sort of pension without contributing to it in any meaningful way.


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## Purple (26 Apr 2017)

Sarenco said:


> Incidentally, the full contributory State pension has an actuarial value of around €350k - that's hardly a trivial sum by any standards.


 What payments would someone have to make over 40 years to fund that? I recon it is around €600 a month.
Given that PRSI covers disability and dole etc you'd have to be paying well over €1000 a month in PRSI (between you and your employer) to fund your State pension.


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## jjm (26 Apr 2017)

someone now on 55000 started paying 9% of there gross wages since 1990 would have a pension pot of around 500000 now that would buy them 20000 a year at 65 for the rest of there life same amount would buy around 18500 per year and the surviving spouse 9250 for the rest of there life.


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## jjm (26 Apr 2017)

you can see how the 17% + paid by employer employee is away more than is required .Then we should have a USC type payment into which everyone paid to cover to cover universal social charges.This would mean Government  giving away this money unfairly would get there wings clipped and dismissed .In some countries people who are required to retire lets saw at 60 pay more


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## Purple (26 Apr 2017)

jjm2016 said:


> someone now on 55000 started paying 9% of there gross wages since 1990 would have a pension pot of around 500000 now that would buy them 20000 a year at 65 for the rest of there life same amount would buy around 18500 per year and the surviving spouse 9250 for the rest of there life.


That's €412 a month if it's paid on your full income. I'm getting a fund value of €362,000 using the . That gives a pension of €974 a month.

The total PRSI payable for a single person is €2,200. The total USC is €2,040. Even if all of it went towards pensions it still wouldn't cover the cost of the State pension. Given that USC doesn't go towards pensions and PSRI covers far more than pensions it's reasonable to say that a person on €55,000 doesn't even cover 25% of their pension cost through PRSI.


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## Sarenco (26 Apr 2017)

jjm2016 said:


> someone now on 55000 started paying 9% of there gross wages since 1990 would have a pension pot of around 500000 now that would buy them 20000 a year at 65 for the rest of there life same amount would buy around 18500 per year and the surviving spouse 9250 for the rest of there life.



Are you assuming this person has earned exactly the same income for the last 26 years (i.e. an annual contribution of €4,950 for each of the last 26 years)?  You also seem to be assuming a compound annual growth rate (after all fees and expenses) on the contributions of around 8% per annum to get to €500k after 26 years - that's a pretty impressive performance! 

Also, has this person long to go before they reach 65 and what assumptions are you making in terms of contribution and growth rates between now and then?


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## jjm (26 Apr 2017)

I do not know what his wages were in 1990 but I will get back when I find out .The reason I know is he took his 25% cash and put the rest into an Arf a few months ago .When he first spoke to me he thought there was around 450000 in the pot later he told me there was closer to 500000 in the pot.I know it has done well since 2004.


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## jjm (26 Apr 2017)

Purple If you look at what someone was paying in PRSI on lets say 55000 in 2009 as an example

They paid 4% on the first 127 each week or a total of 4% on 6604          total prsi  264 euro
They paid 8% on the balance of 48396 or a total  of                                             3871euro
There employer paid 10.75 on 55000  or a total of                                                5912
Total stopped 10047 euro that is some tax/PRSI on an employer/employee
                                                                                                     total of       10047 euro taken in total almost the same as a person would get in a pension if they were 66.. when i go back and look at my p60 total take is around the same as someone getting the old age pension in that year.anyone on around 55000 now would always have being caught for total prsi.


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## Sarenco (26 Apr 2017)

jjm2016 said:


> I do not know what his wages were in 1990 but I will get back when I find out.



Oh, that was an anecdote!  I assumed from your use of the word "someone" that it was a hypothetical.

With respect Jim, the lack of any detail whatsoever about what was actually contributed by your friend and/or his employer to the pension pot makes this story absolutely meaningless.  It certainly doesn't come anywhere close to demonstrating that workers, on average, are over-paying for their contributory State pension if that's your contention.

Your repeated false assertion that employees paid a rate of PRSI in excess of 4% in 2009 is just tedious at this stage.


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## jjm (26 Apr 2017)

What do you come up with for someone on 55000 in 2009.total please.No one yet has shown an example .I expect i will be waiting for ever but lets see what you come up with.


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## Purple (26 Apr 2017)

jjm2016 said:


> Purple If you look at what someone was paying in PRSI on lets say 55000 in 2009 as an example
> 
> They paid 4% on the first 127 each week or a total of 4% on 6604          total prsi  264 euro
> They paid 8% on the balance of 48396 or a total  of                                             3871euro
> ...


Even if that is correct you are ignoring that PRSI is meant to fund lots of other things as well as the contributory Pension. It also funds the non-contributory pension, sick leave, Dole etc. In reality it all goes into the same pot but even if it didn't only a proportion would go towards pensions. Prior to 2009 there was a PRSI ceiling after which you stopped paying as you had contributed your fair share (a good idea).

This is the Welfare Guide on PRSI from 2009. The low rate, in the first 127 each week was 2%. Income after that, up to €1925 per week, was 6%.
From the link;



> PRSI changes for 2009 Employee’s annual earnings ceiling The employee’s annual earnings ceiling (above which no social insurance contribution is paid) has increased from €50,700 to €52,000. Employee income thresholds
> • The threshold for employee PRSI remains at €352 a week.
> • The threshold for payment of the 2% Health Contribution remains at €500 a week.
> • The annual earnings threshold for the Health Contribution remains at €26,000. Additional Health Contributions
> ...


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## jjm (26 Apr 2017)

Purple I always thought your training would lead you to check your facts.When you get a chance check again and give an example for someone on 55000 euro and show me where I am going wrong please .take 2009/2010.I expect the Government will once again put stealth tax back on top of the working people paying PRSI A1.This will mean that doing away with the USC will not apply to workers.There are lots of posters back around 2009 pointing out that total take on PRSI A1 earners was around 50% 4% prsi and the top rate of tax would not come near 50% so were the posters incorrect then .Purple if you Google PRSI claas A1 2009 or any other year for that matter you will find correct rate.(PRSI A1 is for people earning over 26000 per year or 500 per week it will bring you straight to the USERS GUIDE which payroll use.. Its looks like you have being looking at the rate for someone  on over 500 per week on a medical card


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## Purple (27 Apr 2017)

jjm2016 said:


> Purple I always thought your training would lead you to check your facts.When you get a chance check again and give an example for someone on 55000 euro and show me where I am going wrong please .take 2009/2010.I expect the Government will once again put stealth tax back on top of the working people paying PRSI A1.This will mean that doing away with the USC will not apply to workers.There are lots of posters back around 2009 pointing out that total take on PRSI A1 earners was around 50% 4% prsi and the top rate of tax would not come near 50% so were the posters incorrect then .Purple if you Google PRSI claas A1 2009 or any other year for that matter you will find correct rate.(PRSI A1 is for people earning over 26000 per year or 500 per week it will bring you straight to the USERS GUIDE which payroll use.. Its looks like you have being looking at the rate for someone  on over 500 per week on a medical card


Read the link I posted!


Purple said:


> This is the Welfare Guide on PRSI from 2009. The low rate, in the first 127 each week was 2%. Income after that, up to €1925 per week, was 6%.
> From the link;


 For income over €1925 a week (€100,100 a year) it was 6.5%


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## jjm (27 Apr 2017)

Purple in 2010 the took it up to 8% in 2011 the took it back to 4% and brought in the USC. Varadker is talking about putting the USC and PRSI back the way it was. meaning the only people who will still be paying it will be the people on PRSI Class A1.If you look at the Users guide for 2010 PRSI went to 8% ,If you look at the users guide for 2011 PRSIA1 is 4% this showes PRSI Class A! Were the only people paying a USC all along and it is heading back the same way again


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## Purple (27 Apr 2017)

jjm2016 said:


> Purple in 2010 the took it up to 8% in 2011 the took it back to 4% and brought in the USC. Varadker is talking about putting the USC and PRSI back the way it was. meaning the only people who will still be paying it will be the people on PRSI Class A1.If you look at the Users guide for 2010 PRSI went to 8% ,If you look at the users guide for 2011 PRSIA1 is 4% this showes PRSI Class A! Were the only people paying a USC all along and it is heading back the same way again


I agree with your sentiment that low and middle earners are grossly under taxed and that the income tax burden in particular, and the tax burden in general, falls on far to narrow a band of people. We punish work and reward idleness. We are well on our way to a socialist "utopia".


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## jjm (28 Apr 2017)

Purple We are not on our way to a Socialist '' utopia. The people Who are twisting the facts are getting help from the Socialist which is a different thing.If you google Advance notice of PRSI changes for computer users 2017 .The thing that jumps out at you is the right hand figure total paid by Employee and employer .There are groups getting away at paying very little PRSI  (CLASS A1).In the Uk self employed pay 11.5% in PRSI I will admit I do not know what the get in return I am sure posters will let me know .


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## jjm (28 Apr 2017)

Purple I hope you don't mind me correcting you.I have always referred to(PRSI CLASS A1 As the group where Employer and employees get singled out for extra taxes.What I am pointing out before it happens.If you are looking for proof look no further than all the people on hear trying to muddy the water .At present high earners are being screwed on PRSI A1.When the USC came in they changed the PRSI fron 8% to 4% now high earners have to pay PRSI on all of there wages.I don't hear anyone saying we need put the ceiling back to where it was before we cut USC for PRSI A1  taxpayers on high income.PRSI A1 are the group I always referred to some posters leave the Class A1 out to muddy the waters .A1 is for people over 26000 at present Seeing the always paid away more there Pension should reflect this Leo can start giving them back the 42 euro a week he took off them between 65 and 66 who have to retire because of there contract of enployment .IF they have to go at 65 they now have to go on job seekers 193 Euro before they got the transition pension 233 euro between 65 and 66.The saving was 2184 euro I don't need to be reminded which Minister brought this cut in no wonder they are at 4% LIKE PRSI  HOPEFULLY THE WILL NEVER GO AS HIGH AS 14.75% like PRSI A1 TAXPAYERS PAY IN TOTAL.


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## Purple (7 Jun 2017)

Back on topic (kind of);
Do people agree with Leo that we should be prioritising those who "get up early in the morning"?


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## noproblem (7 Jun 2017)

Personally I feel that was too loaded a statement and no advice was given/taken before its utterance. I know he tried to explain the meaning later on, but its implication had been registered in peoples brains. I would expect a lot more gaffes from Leo down the line.


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## Purple (7 Jun 2017)

noproblem said:


> Personally I feel that was too loaded a statement and no advice was given/taken before its utterance. I know he tried to explain the meaning later on, but its implication had been registered in peoples brains. I would expect a lot more gaffes from Leo down the line.


Why was it a gaff? 
The State should be giving most support those who contribute to the collective good, be that through wealth generating work or those providing public services. I don't see anything wrong with that.


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## jjm (7 Jun 2017)

The problem is Leo had a chance to Lead by example  in  the department of social protection and fell short by a mile to give back something to the people who got up early in the morning .I have pointed out the government  which Leo was part of robbed over 2 billion Euro off the people who got up early in the morning private pension and to add insult to injury anyone who had a contract of employment in the private sector to retire at 65 finished up getting the same as  a person who never paid a cent in prsi in there life. The people who got up early in the morning and paid there prsi between age 65 and 66 years of age he could have made a stand for these people who got up early and restored  the 42 Euro a week or a total of 2184 Euro taken off them by Joan Burton.He could have given it back seeing he was part of the government who robbed the people who got up early in the morning by taking there pension and taken there well earned Employee and employers  PRSI contribution and renege and went back on the long held view that when they reached 65 the would get an extra 42 Euro until you reached 66 having paid prsi all of your working life.Leo has shown he will Squeeze and treat people like dirt and give there well earned money to his and his other Government ministers vested Interest groups to buy votes


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## Purple (7 Jun 2017)

He was a minor prince in the play.


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## jjm (7 Jun 2017)

His side kick is up to his eyes in it.Look who he picked as his side kick.How many do you think will finished up being appointed for there talent.He finished up getting  all the backstabbers.


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## noproblem (7 Jun 2017)

As I said, it was a loaded statement, not thought out properly, aimed at a particular section but hit everyone, especially those who through no fault of their own have fallen on hard times. Leo also has a habit of intruding into other ministers portfolios and making statements on how things should be handled, but yet he was never able to handle any of his own portfolios. In fact he's made a cock up in lots of his attempts at trying to handle jobs he's been given. I guess that's why 2/3 'rds of the grassroots told him they didn't want him.


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## jjm (7 Jun 2017)

If the USC is lumped in with PRSI Lots of LEO buddies will finished up not having to pay it like before only the PRSI CLASS A1 will finish up paying and getting very little back like before,


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## Sarenco (7 Jun 2017)

jjm2016 said:


> ...like before only the PRSI CLASS A1 will finish up paying and getting very little back like before,


Well that didn't take long...


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## jjm (7 Jun 2017)

When the USC was brought in the higher rate that PRSI CLASS A1 was charged at was taken down to 4% from 8% and the USC kicked in for everyone .When FG said they were doing away with the USC I am sure lots were happy who never paid it who should have.You possibly know that already.


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## jjm (8 Jun 2017)

Protocol said:


> You are de-railing this thread, but I will answer you.
> 
> I think I understand what you are getting at now, at long last.
> 
> ...



Once you were paying PAYE class A1 There was an anomaly that only affected employees paying PRSI CLASS A they were the only prsi paying group where the Health Levy kicked in they were always paying a USC Type levy .Lots of other groups should have paid it but it was never followed up  until the USC came in.The point I am making is Leo is saying to put the USC and PRSI together and give extra benefit.

What JOAN BURTON did was cut the Benefit to to this group of PRSI Class A1 Who were paying a type of USC along with there PRSI , Leo had his chance to restore this cut to the people who were paying a usc type levy.To me and I hope I am wrong Leo is trying to squeeze more out of the PRSI A1 taxpayer without giving anything back.


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## Purple (8 Jun 2017)

jjM2016, is there any chance you could start a thread about PRSI Class A and USC and not drop it into every thread.

I though I was bad going on about Unions!


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## jjm (8 Jun 2017)

Purple this is what this thread is about why would I start another go back and read the first post when you get a chance .It was in response to Leo suggestion about linking PRSI AND USC and giving the people who paid in the most something  back in return. You could learn a thing or two from the unions you are on about.There is no point in closing the door when the horse is gone.

FG were going to do away with the the USC and if they did or do do you really think FF/FG/LABOUR are going to leave PRSI A1  at 4% .you must never have looked at your pay slip if you did not know there was more than 4% stopped.There are none so blind as those who will not see.Some people can be lead by a silk tread,The people pushing to do away with the USC are the people who never had to pay the Levy along with there PRSI before USC came in,


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## Purple (8 Jun 2017)

jjm2016 said:


> Purple this is what this thread is about why would I start another go back and read the first post when you get a chance .It was in response to Leo suggestion about linking PRSI AND USC and giving the people who paid in the most something  back in return. You could learn a thing or two from the unions you are on about.There is no point in closing the door when the horse is gone.
> 
> FG were going to do away with the the USC and if they did or do do you really think FF/FG/LABOUR are going to leave PRSI A1  at 4% .you must never have looked at your pay slip if you did not know there was more than 4% stopped.There are none so blind as those who will not see.Some people can be lead by a silk tread,


Yea, but in every thread you post on you seem to make the same point about PRSI.
This isn't just about Class A, it's about balancing the whole system better.


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## Firefly (8 Jun 2017)

jjm2016 said:


> Did you ever check to see who along with PRSI Class A1 had to pay extra along with there prsi.The answer is in all the extra money taken in once everyone had to pay the same levy as PRSI Class A1,



I think you might be inside some echo chamber!


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## jjm (8 Jun 2017)

I think you may be inside the USC net now,
 It will not be as easy to get out as you think


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## jjm (8 Jun 2017)

Purple USC levy you cant get anything more balanced that the usc if there has to be a levy lets all pay it who have an income,= not just paye taxpayers paying PRSI A1 taxpayers, it is very simple to collect and very hard to avoid not paying,You have a very bad memory the last FF Government put a extra 2% levy on  PRSI A1 but did not include any other group with an Income Do you trust them not to do the same again if the ever get back into government ,the USC only hurt the people who were avoiding or not paying a levy already,


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## Purple (9 Jun 2017)

USC was a good tax until they took so many people out of the net. Now it's just another income tax.


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## jjm (9 Jun 2017)

Purple said:


> USC was a good tax until they took so many people out of the net. Now it's just another income tax.


I suspect If Leo is allowed to put it Back in again along with the PRSI Class A1 This is the only Group who will finish up  Having To Pay It like before. Just Look at all  the people  who got Squeaky Bums who never had to  pay the extra levy applied to People like you and I .They expected FG/FF to do away with it .So it is still  a good levy,


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## Sarenco (9 Jun 2017)

Purple said:


> USC was a good tax until they took so many people out of the net. Now it's just another income tax.


Purple

Could I suggest you start a new thread if you want to discuss something other than historic PRSI Class A1 contribution rates?


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