# Irish Times editorial: "Broaden the tax base"



## Brendan Burgess (8 Oct 2016)

While it's a welcome call, it's a pity that they didn't actually call a spade a spade and call for taxes to be raised on the lower paid. 

*Budget 2017: An opportunity to broaden the tax base*

"At present 29 per cent of income earners pay no tax. The budget measures on Tuesday, with some cuts in income tax and the USC envisaged, should see that number increase. As the [broken link removed] has pointed out in its budget submission “Ireland has the most progressive [PERSONAL TAX]system in the EU”.

Those on a €75,000 salary in Ireland pay one fifth more in tax than their UK counterparts. Clearly, there is a need to broaden the tax base on grounds of equity, to improve competitiveness and to make the economy less vulnerable to economic shocks; one of the clear lessons for Ireland to emerge from the 2007 financial crisis"


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## TheBigShort (8 Oct 2016)

Brendan Burgess said:


> While it's a welcome call, it's a pity that they didn't actually call a spade a spade and *call for taxes to be raised on the lower paid. *
> 
> *Budget 2017: An opportunity to broaden the tax base*
> 
> ...



And still, no proposals as to how taxes would actually be raised on the lower paid.
And no mention of the elephant in the room - increase the effective corporate tax rate.


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## Boyd (8 Oct 2016)

> And among those giving public expenditure a higher priority, most wanted more spending on health and child care, and increases in the State pension and social welfare payments.


This tells me that most people surveyed are clueless about economics. They want increased spending on basically everything, and then don't want to pay taxes to pay for anything. Where do these eejits think money comes from?!!
Increase the state pension? Sure it's only the most generous in Europe already and totally unsustainable long term. Yeah, Hike it up!
Social welfare? Same story as above.
Child care? Yep, let's make the public further subsidise those who made a life choice to have kids. Existing free money (child benefit and home carer allowance) not enough....OK we'll pay your childcare too!!
Spend spend spend. Someone else will pay.


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## Delboy (8 Oct 2016)

username123 said:


> This tells me that most people surveyed are clueless about economics. They want increased spending on basically everything, and then don't want to pay taxes to pay for anything. Where do these eejits think money comes from?!!
> Increase the state pension? Sure it's only the most generous in Europe already and totally unsustainable long term. Yeah, Hike it up!
> Social welfare? Same story as above.
> Child care? Yep, let's make the public further subsidise those who made a life choice to have kids. Existing free money (child benefit and home carer allowance) not enough....OK we'll pay your childcare too!!
> Spend spend spend. Someone else will pay.


You were going well until you got to the bit about people making  a 'life choice to have kids'.
No kids = no pension for you come retirement my friend!


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## TheBigShort (8 Oct 2016)

username123 said:


> that most people surveyed are clueless about economics



Followed by



username123 said:


> Yep, let's make the public further subsidise those who made a life choice to have kids.



Those kids will be funding your pension and your health service one day. They will also be keeping property prices from crashing.


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## Boyd (8 Oct 2016)

I didn't say anything not having kids. I implied don't have them if you can't afford them then expect the state to pay for them. It's still a life choice. I did also say it's nonsense increasing the OAP. If we keep increasing it, all the kids in the world wouldn't cover the cost.
I am funding my own pension to not rely on same.


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## Boyd (8 Oct 2016)

Delboy said:


> You were going well until you got to the bit about people making  a 'life choice to have kids'.
> No kids = no pension for you come retirement my friend!


Yeah because God forbid my PRSI contributions would be in ring-fenced into my own personal retirement account, where the amount I drawn down is a function of the amount I put in. Instead, we have a scenario where everyone gets pretty much the same, irrespective of how much they put in and their personal financial circumstances at retirement! This is all fine until the merry-go-round of "the next generation pays" comes to an abrupt end, as you alluded to, and which is indeed going to happen soon.


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## TheBigShort (8 Oct 2016)

username123 said:


> I didn't say anything not having kids. I implied don't have them if you can't afford them then expect the state to pay for them. It's still a life choice. I did also say it's nonsense increasing the OAP. If we keep increasing it, all the kids in the world wouldn't cover the cost.
> I am funding my own pension to not rely on same.



Its not so much the view that having kids, or not having kids for that matter, is a 'life choice' its statements like this;



username123 said:


> This tells me that most people surveyed are clueless about economics.



then followed by this;



username123 said:


> I implied don't have them if you can't afford them then expect the state to pay for them.



finishing with this;



username123 said:


> I am funding my own pension to not rely on same



that shows you dont really have a grasp of economics yourself.
So what if you are funding your own pension? Without population replacement your pension will be worthless, public or private. Without population replacement, the value of everything will decline rapidly.
Btw, does your private pension attract tax relief? If so, who is subsiding that?


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## rob oyle (8 Oct 2016)

As Miley might have said, 'Well Holy God!'. I thought the discourse on here would've gotten beyond 'no kids = no pension'. Are we really having children so we can saddle them with the cost of our pensions? If we demanded proper pension provision, there would be no need to expect future generations to pay for it. If someone wants to have children it's their choice but as the other thread here showed, the tax burden on childfree couples is exponentially higher than those with children.

Even the native Irish population would grow without migration, not having children is hardly threatening our existence. There'll be over 6 million living here by mid-century, no need to congratulate everyone for adding to the strain on services that we don't seem to be able to provide for the existing numbers.


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## TheBigShort (8 Oct 2016)

rob oyle said:


> Are we really having children so we can saddle them with the cost of our pensions?



No, usually its because lots of couples like the idea of having a family. Its more a human nature thing rather than a financial strategy.



rob oyle said:


> If someone wants to have children it's their choice but as the other thread here showed, the tax burden on childfree couples is exponentially higher than those with children.



In what regard? With so many instances of both parents working the cost of childcare, the cost of feeding, clothing etc far outweighs anything given back in child benefit.
Of course, thats their choice, but if people stop having children, everything will be worthless very quickly.



rob oyle said:


> not having children is hardly threatening our existence.



Eh, it will threaten our existence.



rob oyle said:


> There'll be over 6 million living here by mid-century,



Only if people keep on having children.


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## Boyd (8 Oct 2016)

TheBigShort said:


> Its not so much the view that having kids, or not having kids for that matter, is a 'life choice' its statements like this;
> 
> 
> 
> ...


I never claimed to be against population replacement... it would mean end of human race!! I stated we shouldn't be paying people to have children when they can't afford it and then justifying it by saying "they'll pay for your pension".
Regarding pensions, are you advocating removal of tax relief, making it more likely people won't contribute at all and thereby put even more burden on the kids then?


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## noproblem (8 Oct 2016)

Why should I or anyone else have to pay someone to have sex and produce offspring so the state is the only one who can pay to keep them alive. I've no problem with  children or with people who want to have a family, providing they can afford to support them. I often feel the country shouldn't be giving a so called children's allowance at all, very few see any of it.


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## Gordon Gekko (8 Oct 2016)

noproblem said:


> Why should I or anyone else have to pay someone to have sex and produce offspring so the state is the only one who can pay to keep them alive. I've no problem with  children or with people who want to have a family, providing they can afford to support them. I often feel the country shouldn't be giving a so called children's allowance at all, very few see any of it.



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.


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## Boyd (8 Oct 2016)

Isn't that often the issue, that those in society who actually need the help seem to miss out? Many of those have no choice, compared with choosing to have kids. IMO there is a difference.


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## Delboy (8 Oct 2016)

rob oyle said:


> Even the native Irish population would grow without migration, not having children is hardly threatening our existence.


Break that one down for me


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## noproblem (8 Oct 2016)

"It's called society". Really?

That's not an argument for or against, it's taking the moral ground, ie, a way out when your "spiel" doesn't have legs.


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## Gordon Gekko (8 Oct 2016)

noproblem said:


> "It's called society". Really?
> 
> That's not an argument for or against, it's taking the moral ground, ie, a way out when your "spiel" doesn't have legs.



It is ludicrous for someone without kids to give out about having to subsidise people with kids.


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## Sarenco (8 Oct 2016)

Gordon Gekko said:


> It is ludicrous for someone without kids to give out about having to subsidise people with kids.



Why so?


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## rob oyle (8 Oct 2016)

Delboy said:


> Break that one down for me


The UN's non-migration model for population projections shows our 'native stock' growing in number to over 5m this century and me not having children isn't going to end the existence of the Irish population. Is it OK not to have children and not to have to pay for those who choose to do so? I don't want other people's children to pay for my pension.


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## Gordon Gekko (8 Oct 2016)

Sarenco said:


> Why so?



The same logic could be applied to any benefit or support.

People are free to have kids or not have kids if they wish, but lest we forget, if nobody does, we're wiped out!


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## TheBigShort (8 Oct 2016)

username123 said:


> I never claimed to be against population replacement... it would mean end of human race!! I stated we shouldn't be paying people to have children when they can't afford it and then justifying it by saying "they'll pay for your pension".
> Regarding pensions, are you advocating removal of tax relief, making it more likely people won't contribute at all and thereby put even more burden on the kids then?



You have to understand, having children is a human condition, not a financial strategy. 
What I can afford today, I may not be able to afford tomorrow. How you can determine who can, or cannot 'afford' children is beyond me.
Btw, do you get tax relief on that private pension? If yes, who is subsiding it?


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## noproblem (8 Oct 2016)

Gordon Gekko said:


> It is ludicrous for someone without kids to give out about having to subsidise people with kids.


I'm actually the father of 2 wonderful grown up children who have given me 5 grandchildren and both myself and my wife and my children and their spouses wanted and could rear our children without having the taxpayer pick up the bill. At this stage in your argument I think it would be wise of you to cease your propaganda on society, etc. It's a smart man/woman who knows when they've lost. We've got the gist of your sermon at this stage.


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## Sarenco (8 Oct 2016)

Gordon Gekko said:


> People are free to have kids or not have kids if they wish, but lest we forget, if nobody does, we're wiped out!



Understood Gordon but surely all taxpayers are entitled to have a view on any particular allowance or benefit, whether or not they are eligible for that allowance or benefit.

It seems a bit unreasonable to suggest that it is ludicrous for somebody without kids to have a view on CA payments, State funded education, etc.


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## Boyd (8 Oct 2016)

TheBigShort said:


> You have to understand, having children is a human condition, not a financial strategy.
> What I can afford today, I may not be able to afford tomorrow. How you can determine who can, or cannot 'afford' children is beyond me.
> Btw, do you get tax relief on that private pension? If yes, who is subsiding it?


Obviously the government and hence the taxpayer, i.e. me


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## TheBigShort (8 Oct 2016)

username123 said:


> Obviously the government and hence the taxpayer, i.e. me



So as a taxpayer, its ok for your private pension to be subsidized by other taxpayers. But other taxpayers who are rearing children, and cannot afford a private pension, should not expect a subsidy in the form of child benefit?


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## Boyd (8 Oct 2016)

There is tax relief available on pensions and i avail of same. This credit is also available to parents. They may claim child benefit and home care allowance also. My point was about further increases in child care (eg another child care credit), and the main point being the state isn't running a day care centre. In fact the child care industry previously came out against this credit: (http://www.irishtimes.com/news/irel...-credit-would-not-work-sector-warns-1.2631712)
All you have done on this thread is disagree with me and construct straw man arguments about pension tax relief. Perhaps you could articulate your opinions on the upcoming budget instead?


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## TheBigShort (9 Oct 2016)

username123 said:


> There is tax relief available on pensions and i avail of same. This credit is also available to parents. They may claim child benefit and home care allowance also. My point was about further increases in ini child care (eg another child care credit), and the main point being the state isn't running a day care centre. In fact the child care industry previously came out against this credit: (http://www.irishtimes.com/news/irel...-credit-would-not-work-sector-warns-1.2631712)
> All you have done on this thread is disagree with me and construct straw man arguments about pension tax relief. Perhaps you could articulate your opinions on the upcoming budget instead?



With respect, it was yourself that specifically identified childcare benefits as burden on the state



username123 said:


> Same story as above.
> Child care? Yep, let's make the public further subsidise those who made a life choice to have kids. Existing free money (child benefit and home carer allowance) not enough....OK we'll pay your childcare too!!
> Spend spend spend. Someone else will pay.



Your tax relief on your private pension is also a 'spend spend spend. Someone else will pay' policy.

As far as the upcoming budget is concerned, I think tax reliefs for private pension funds should be closed off.

Tax reliefs for private pension funds being closed off will also deter uppity,  somewhat naive and innocent kids from signing up to private pension schemes that will  be gobbled up in fees for administrators and high inflation in the time ahead.

Your views on the budget would be welcome


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## Boyd (9 Oct 2016)

Any tax relief is obviously a "spend". 
My opinions on the IT article are expressed in my original post.
I disagreed with an increase in child care due to there being two existing tax reliefs, which you seem to have taken issue with. Your rebuttal is to attack the pension tax relief which absolutely nobody is saying to increase (and which, again, parents can also claim).


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## Gordon Gekko (9 Oct 2016)

TheBigShort said:


> With respect, it was yourself that specifically identified childcare benefits as burden on the state
> 
> 
> 
> ...



If only there was a way for the government to get back the tax relief that's given for pensions...

An example might help. Over 25 years, someone can contribute around €800k. The "cost" to the State of doing that is €320k. That person's fund should be at the maximum €2m (or thereabouts). He or she will pay €60k of tax on the lumpsum, and then around €30k in tax per year for the duration of his/her life and his/her spouse's life. 30 years would be a decent estmate of that, meaning €900k in tax. Assuming that the capital value of the fund is preserved, when the couple die, the State gets at least €450k in quasi inheritance tax.

So for its part in the trade, the State foregoes €320k to receive €1.4m, with time value of money to be considered also.


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## TheBigShort (9 Oct 2016)

username123 said:


> Any tax relief is obviously a "spend".
> My opinions on the IT article are expressed in my original post.
> I disagreed with an increase in child care due to there being two existing tax reliefs, which you seem to have taken issue with. Your rebuttal is to attack the pension tax relief which absolutely nobody is saying to increase (and which, again, parents can also claim).



Thats fine, everyone has an opinion. But you have moved somewhat from your 'life choice' position.

An increase in child supports could be viewed in other ways. By increasing the spend, it may facilitate the return to full-time employment for some parents and in turn reducing other welfare payments. 
Such an effect may increase demand for places in creches, increasing demand for qualified childminders, further reducing unemployment lines.


The IT article merely highlights things people would like to see done. You have indicated some things you wouldnt like to see done, which is fine. But perhaps you could now identify things you would like to see done?


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## TheBigShort (9 Oct 2016)

Gordon Gekko said:


> If only there was a way for the government to get back the tax relief that's given for pensions...
> 
> An example might help. Over 25 years, someone can contribute around €800k. The "cost" to the State of doing that is €320k. That person's fund should be at the maximum €2m (or thereabouts). He or she will pay €60k of tax on the lumpsum, and then around €30k in tax per year for the duration of his/her life and his/her spouse's life. 30 years would be a decent estmate of that, meaning €900k in tax. Assuming that the capital value of the fund is preserved, when the couple die, the State gets at least €450k in quasi inheritance tax.
> 
> So for its part in the trade, the State foregoes €320k to receive €1.4m.



Ok, is the tax relief still at 40%? I thought it was standardised to 20%?
Anyway, if understand your figures correctly, that someone would, over 25yrs, be contributing €615pw? Even allowing for a 40yr career it would still be €385 pw?
And for that they live of a pension worth €2m a year?


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## Gordon Gekko (9 Oct 2016)

TheBigShort said:


> Ok, is the tax relief still at 40%? I thought it was standardised to 20%?
> Anyway, if understand your figures correctly, that some would, over 25yrs, be contributing €615pw? Even allowing for a 40yr career it would still be €385 pw?
> And for that they live of a pension worth €2m a year?



Yes, tax relief is at 40%. Someone in their 30s can contribute €23,000 a year. That number ramps up as the person gets older. I'm just assuming they contribute the max. The State does well in the end from that trade. Far better than they do from someone who doesn't bother to provide for themself.


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## TheBigShort (9 Oct 2016)

Gordon Gekko said:


> Yes, tax relief is at 40%. Someone in their 30s can contribute €23,000 a year. That number ramps up as the person gets older. I'm just assuming they contribute the max. The State does well in the end from that trade. Far better than they do from someone who doesn't bother to provide for themself.



Who doesn't provide for themselves? (Assuming we are making exception here for critically disabled people)


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## Gordon Gekko (9 Oct 2016)

TheBigShort said:


> Who doesn't provide for themselves? (Assuming we are making exception here for critically disabled people)



People who rely on social welfare and could have provided for themselves.


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## TheBigShort (9 Oct 2016)

Gordon Gekko said:


> People who rely on social welfare and could have provided for themselves.



The point of social welfare is that they cannot provide for themselves. For instance if someone is unemployed, they need an income to feed and clothe themselves.


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## Boyd (9 Oct 2016)

TheBigShort said:


> Thats fine, everyone has an opinion. But you have moved somewhat from your 'life choice'


I still think having kids is a major life choice i.e. it's not something one decides on a whim over a Friday evening pint, I hope.

I would like to see a reduction in DIRT, which has doubled since 2008 and crucifies anyone for being prudent. I would like to see some assistance for business start ups and self employed (and no, I'm not self employed nor am i starting a business). To pay for increases, I would like to see some changes in corporate tax which seems very low when compared with personal tax (though this is a balancing act with retaining company presence and it's currently a bit of a political hot potato). Finally, in agreement with the original article, I'd like a broadening of the overall tax base to share the love of paying tax.


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## Duke of Marmalade (9 Oct 2016)

_Gordon_, just analysing your example.  So €800k was invested in a fund that delivered €5M over the lifetime of the punter.  Ahh the good old days!

The State's share of that investment was 40% so if there was tax neutrality the State would be entitled to €2M.  Instead it got €1.4M.  That is a tax transfer of €600K to begin with.  But if the punter had instead invested her net €480k outside the pension system she would have earned €3M.  After exit tax and inheritance tax the State would have got at least €1M anyway.  So this example shows a massive cross subsidy of over €1.6M to the pension.  Of course,  I don't accept that it is this stark but the example you have chosen certainly doesn't serve the purpose you intended.

Yes the State has done well enough to get €1.4M for its €320k investment but that's because the punter chose such stellar fund performers.  We must presume that the State itself would be at least the equal of your average punter in choosing fund managers, or alternatively that investment in infrastructure would match the returns of the fund manager.


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## Gordon Gekko (9 Oct 2016)

Where on earth are you getting €5m from?!


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## Duke of Marmalade (9 Oct 2016)

€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.


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## TheBigShort (9 Oct 2016)

username123 said:


> I still think having kids is a major life choice i.e. it's not something one decides on a whim over a Friday evening pint, I hope.
> 
> I would like to see a reduction in DIRT, which has doubled since 2008 and crucifies anyone for being prudent. I would like to see some assistance for business start ups and self employed (and no, I'm not self employed nor am i starting a business). To pay for increases, I would like to see some changes in corporate tax which seems very low when compared with personal tax (though this is a balancing act with retaining company presence and it's currently a bit of a political hot potato). Finally, in agreement with the original article, I'd like a broadening of the overall tax base to share the love of paying tax.



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.


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## Boyd (9 Oct 2016)

TheBigShort said:


> 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.


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## TheBigShort (9 Oct 2016)

username123 said:


> 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.


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## Gordon Gekko (9 Oct 2016)

Duke of Marmalade said:


> €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.


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## Duke of Marmalade (9 Oct 2016)

_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.


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## Gordon Gekko (9 Oct 2016)

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).


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## Duke of Marmalade (9 Oct 2016)

_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.


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## Gordon Gekko (9 Oct 2016)

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).


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## Purple (10 Oct 2016)

Gordon Gekko said:


> 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.


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## Gordon Gekko (10 Oct 2016)

Purple said:


> 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.


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## Purple (10 Oct 2016)

Gordon Gekko said:


> 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.


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## demoivre (10 Oct 2016)

Purple said:


> 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.


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