# How much do people aged 66 or over pay in income tax?



## Brendan Burgess

A married couple where one is aged 66, has an exemption from income tax if their income is below €36,000



 |Age <65|Age 65|Age 66
Income|€36,000|€36,000 |€36,000
tax|€2,250|0|0
PRSI|€1,440|€1,440|0
USC|€1,839|€1,839|€1,839
Total|€5,529|€3,279|€1,839
Effective Tax Rate|15%|9%|5%
This example is based on a married couple with a single income. 

A married couple where both are working, who earn €36,000 would have an additional credit of €1,650 so they would pay only €600 tax if under 65.


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## 110quests

Hi , another set of figures:
Income: 44,000
Tax :      7410
USC:       1586
Total;      8996
% Tax         20%

Ded PSP   1950

Tot ded: 10,946

Age 69 widowed.


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## MrEarl

How does that compare with a person / a couple bringing in similar incomes ?

I suspect the above comparisons may be significantly more generous than those for similar income households below retirement age, which seems wrong given the difficult economic times our country is in.

If anything, there is more justification than ever for stricter means testing before granting concessions and possibly heavier taxing of the older generation.


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## Brendan Burgess

MrEarl said:


> How does that compare with a person / a couple bringing in similar incomes ?



Hi Mr Earl

The person Age 60 is the normal person who does not qualify for the age exemption.  I have amended it to make it clearer.

Brendan


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## Protocol

My parents earn approx 900pw and pay 5-8% income tax/USC.

*This is an unbelievably low income tax rate.
*
Taxes on over 65s are too low, compared to the many benefits that they get.

Two med cards
Travel passes
Free TV licence
Subsidised water charges and elec

State pension not touched, Child Benefit cut three times

Small cuts to PS pensions, larger cuts to PS pay.

This is an intergenerational conflict, and families with young children have lost.


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## Padraigb

Protocol said:


> ...
> Taxes on over 65s are too low, compared to the many benefits that they get.


This household pays taxes at the same rates as under 65s pay.


> Two med cards
> Travel passes
> Free TV licence
> Subsidised water charges and elec


Really? How do we get all these goodies? All I have got so far is a travel pass, which I use just occasionally.


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## Brendan Burgess

Protocol said:


> *This is an unbelievably low income tax rate.
> *
> Taxes on over 65s are too low, compared to the many benefits that they get.



Hi Protocol

This is probably a much more key issue than the one I have raised which is just the very generous tax treatment.


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## Protocol

Over 65s pay less income taxes in several ways:

(1) the income tax exemption of 18k single / 36k married.

This exemption only applies to those over 65.


(2) the Age tax credit for people aged 65+ of 245 single / 490 married

(3) exempt from 41% DIRT on deposit interest if income less than 18k single / 36k married

(4) lower USC rates


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## Protocol

Padraigb said:


> This household pays taxes at the same rates as under 65s pay.
> 
> Really? How do we get all these goodies? All I have got so far is a travel pass, which I use just occasionally.



As I outlined above, my parents pay less income taxes than people <65 on the same income.

They receive the HBP Household Benefits Package - free TV licence, cheaper elec, and will get 100 off water charges.

They also have travel passes and 2 med cards.

Indeed, when my father was in *FT employment aged 62, and earning 70k, he received all the above benefits*. 

At that time, he was paying 5k tax on the 70k as he made large AVCs.

I would guess, between age 60 and 70, he will earn 500,000 and pay max 50,000 in tax/USC/PRSI.

I must actually check the figures sometime.


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## Brendan Burgess

Hi Protocol

Are they not exempt from the 4% PRSI as well? 

Brendan


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## STEINER

Over 65's may also qualify for Marginal Relief even if their income > 36k.

I did this recently for my own parents for previous tax years.

http://www.revenue.ie/en/tax/it/leaflets/it8.html


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## Gerry Canning

Interesting threads; 

It suggests that the 65+ are getting away with a lot.Maybe they are .

So between the lines I read a roll back of some of the (goodies) pensioners have.

Brilliant ! . Because as all the posters approach Pension time they can look forward to having voted less for themselves.

Wonderful !

ps ; I am biased as I am 62.


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## STEINER

Protocol said:


> As I outlined above, my parents pay less income taxes than people <65 on the same income.
> 
> They receive the HBP Household Benefits Package - free TV licence, cheaper elec, and will get 100 off water charges.
> 
> They also have travel passes and 2 med cards.
> 
> Indeed, when my father was in *FT employment aged 62, and earning 70k, he received all the above benefits*. _How could a 62yo in full-time employment on 70k have a free travel pass?_



My parents are over 65/70 and are typical members of that subset, with a comfortable lifestyle.  It is fair to say that they are financially better off now in their golden years than at any stage in their younger days, with no mortgage now and an income of circa 1k per week.

If the free tv licence of €160 was ended or the €35 per month free electricity allowance, they would be annoyed, but they could easily afford these bills.


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## Protocol

Brendan Burgess said:


> Hi Protocol
> 
> Are they not exempt from the 4% PRSI as well?
> 
> Brendan



Yes.

They are not exempt from USC, but will very likely pay less USC, max rate 4% instead of 7%.


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## 110quests

Protocol; How could a 62 yr old in FT employment on 70k have travel passes, med cards etc. ?

The conditions for receiving Household Benefit P between 65 to 70 are that you be living alone and in receipt of certain SW payments.

Medical cards as we know are means tested. I cannot understand how in earning 70k a person is granted a medical card. Unless it was on medical need ...but this person was in FT employment ?

Like Padraigb I got travel pass at 65 but nothing else, as family members were living at home then. Never was entitled, and still not, and will not, to medical card with income far below 70k.

There are many variables in this area of over 65s tax: income, marital status, SW payments, dependents, mortgage, high rental payments etc. Not every over 65 owns their own home mortgage /rental free and many have children still in college.

But even considering the above variables, the tax rate payable is the same 20% or 41% depending on income.


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## noproblem

I don't begrudge any of the older people anything they get. Neither do I begrudge them if they pay less in tax percentages, nor getting travel pass, med cards, etc, etc, etc. We have become a bewildering type of nasty people who don't want anyone else having/getting something we don't get ourselves. The old people deserve every privelage they get, long may it continue. I'm guessing you'll go for the public servants next because they're working and earning, even though most of them are struggling like everyone else. Oh, I forgot, they earn too much. Grow up people, these older citizens are taking care of far more than they should be. Making sure they're comfortable is what we should be doing, not this bloody begrudgery we're becoming famous for.


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## Protocol

One spouse >70, one spouse 62.

So HBP was awarded. mED card details, see below:


*QUOTE BELOW*

To qualify for a medical card your weekly income must be below a certain figure. Here we explain the means test for those who are aged over 70. See also other information about the medical card and how to apply.

There are different means test rules for those under 70 years of age.

The assessment of a couple for medical card purposes *is based on the age of the older person.*

Income, savings, investments and some property are taken into account in the means test. However, there are certain exceptions.

According to the HSE's guidelines, if your income is derived solely from social welfare allowances or benefits or HSE allowances, you should be granted a medical card even though your payment may be in excess of the income guidelines for your age and situation.

If your income is above the limits for a medical card you will get a GP Visit Card if your weekly income is not over €700 (single person) or €1,400 (married or cohabiting couple). You can also apply for the Drugs Payment Scheme.

There are some categories of people exempt from the means test, including people entitled to a medical card under EU Regulations.


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## Protocol

noproblem said:


> I don't begrudge any of the older people anything they get. Neither do I begrudge them if they pay less in tax percentages, nor getting travel pass, med cards, etc, etc, etc. We have become a bewildering type of nasty people who don't want anyone else having/getting something we don't get ourselves. The old people deserve every privelage they get, long may it continue. I'm guessing you'll go for the public servants next because they're working and earning, even though most of them are struggling like everyone else. Oh, I forgot, they earn too much. Grow up people, these older citizens are taking care of far more than they should be. Making sure they're comfortable is what we should be doing, not this bloody begrudgery we're becoming famous for.



As a society where many people have experienced wage cuts, tax increases and welfare cuts, we can't afford to leave one group relatively well protected.

Now I don't mean somebody receiving a COAP just, i.e with 230pw income.

I mean that pensioners on 500-1000 + per week have been protected from much of the fiscal contraction during the past six years.

I would love to be able to afford this, but we can't.

Yes, they did pay 12-15% interest rates during hard times in 1980-1990, that's true.

*But with still massive fiscal deficit of 5bn+, we can't afford to charge really, really low taxes on people aged 65+ earning 40-50k+, while at the same time giving them so much social benefits.*


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## Protocol

noproblem said:


> We have become a bewildering type of nasty people who don't want anyone else having/getting something we don't get ourselves. The old people deserve every privelage they get, long may it continue.



It's not nasty to try to spread the pain of fiscal adjustment across the entire population.

We can't afford to give some groups "privileges".

This is the size of our fiscal deficits:

2012 = 13.4 bn
2013 = 11.8 bn
2014 est = 7 bn
2015 est = 5bn

*We are borrowing billions, which future generations must repay, while my parents pay 5-8% income tax on 900pw.*

Lunacy.


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## STEINER

Protocol said:


> _But with still massive fiscal deficit of 5bn+, we can't afford to charge really, really low taxes on people aged 65+ earning 40-50k+, while at the same time giving them *so much social benefits*._



The social benefits have been pared back in recent years.  The HBP is basic enough, with an annual free TV licence worth €160 and a monthly gas/electric allowance of €35.

From Jan 1st 2014 a married couple with 1 > 70 years old with weekly income > €900pw no longer qualifies for a medical card.  Over 70 and over €46,800 pa = no medical card.

Public transport is not overburdened with elderly citizens using their free travel.  A lot of elderly never use their free travel passes.


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## Protocol

I am not advocating any cuts to the State Pension, or med cards, or travel passes, or the HBP.

I am just asking that people 65+ with incomes like 500-1000+ per week be asked to pay a bit more income tax, to help pay for these benefits.

Paying less than 10% income taxes on 900 per week is not affordable, and not sensible.

My parents can't believe how generous the country is.

And all the time we borrow billions.

My unemployed relations, with no or very little income,  pay full (or nearly full) fares on the buses, as they retrain.

My parents pay zero.


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## Gerry Canning

Quote {so much social benefits} . 

I just cannot see the most of them receiving inordinate social benefits; 
It was they who laid the foundations we now have.
I do think it was they; ie anyone over 55 who went on a borrowing binge in early 2000,s.
It was the 25 to 45 year olds who got suckerred into debt.
It was the 25 to 45 year olds who (knew) better.
Sadly that group are paying dearly.


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## Brendan Burgess

Folks

Can you tone down on the personalised comments. Discuss the comments and not the commenter. 

Thanks


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## 110quests

Some calculations on tax payable for various situations with no variables. All 36000k income

Married ,1 earning,  age 60:  Tax 2250;   PRSI 1440:  USC 1839  Weekly net  586

Married, 2 earning, age 60:  Tax 600;     PRSI 1040;  USC 1139    Weekly net 639

Married,  2 pension, age 66: Tax 0          Prsi. 0.          USC 1839    Weekly net 657 

Single   1 pension    age 66 Tax 5977      Prsi 0              USC 1839   Weekly net 542

Widowed 1 pension age 66 Tax 5437  Prsi 0               USC  1839 Weekly net  552 

Calculated on Deloitte calculated.  The unmarried 66+ pensioned pay most tax , the married 66+ on pension pay nil .   The married , both working, is based on 26000 +10000 hence the lower USC. 

In light of the comments on this thread I thought it was revealing, taking the base figure of 36000 with no other considerations of child benefits, investments, interest etc.


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## thesimpsons

Protocol said:


> I would love to be able to afford this, but we can't.
> 
> *Yes, they did pay 12-15% interest rates during hard times in 1980-1990, that's true.*
> 
> *But with still massive fiscal deficit of 5bn+, we can't afford to charge really, really low taxes on people aged 65+ earning 40-50k+, while at the same time giving them so much social benefits.*



it isn't only the over 70s who paid high interest rates - we're only in late 40s and paid mortgage interest rates of 15% in early 1990s. currently paying more than average industrial wage in payroll taxes plus have to bear full cost of kids in school and college with no medical cards, etc.  meanwhile. my parents and their friends really do have a high life between very good pensions and all the allowances/extras.  they'd grumble a bit if some of the allowances were taken off them, but no where near struggle like we do to balance everything


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## 110quests

I am amazed at the begrudgery in some of the posts.

Do some of the posters think that if the 66+s were taxed by another 5_10%, that their own lot would be improved?  

Each generation pays its taxes - -rather heavily for many years. Pensioners paid tax on income from employment and most pay tax again on pension.

I don't know if there is data available on taxes contributed by pensioners ? Perhaps with the more integrated systems currently on stream this could be extrapolated


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## Sophrosyne

110 Quests agreed!

These were the rates of income tax on taxable income in 1972/73, the year I started working:

First 2,500 @ 35%
Next 2,000 @ 50%
Next 2,000 @ 65%
Balance @ 80%

Married couples _shared_ these rate bands, i.e., there were no double rate bands.

There were no exemptions for people on low income.

We also paid a stamp, the forerunner of PRSI.

Personal tax reliefs were paltry.

Mortgage interest rates were something like 16% and you could not obtain a mortgage unless you already had a sizeable deposit.

Homeowners also paid rates.

Young people then as now had to find work and support themselves and their families.


No one nowadays is required to pay such taxation or mortgage interest rates.


This is not the first time that Ireland has been in recession.

This is not the first recession where the private sector has turned on the public sector.

However, this is the first recession that I can remember where younger people have turned on older folk who didn’t have it so good.

This may be a flippant and disgraceful first, which may set a precedent for future generations.


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## Protocol

I don't think that I am "turning on older folk".

*I am simply asking that the fiscal adjustment be spread evenly across the population, that's all.*

State Pension = no cuts

Child Benefit = three cuts

That is a simple fact.

Note, I am NOT calling for a cut to State Pension, or med cards, or the HBP.

I am saying that 8% income tax on 900 pw / 3900 pm / 47k pa is too low.

That's all.

I ask a simple question:

*Is it fair that people over 65, in receipt of med cards, travel passes, and HBP, pay under 10% tax on incomes of 40-45k?
*
Please answer that question.

Bear in mind that all other welfare payments have been cut twice, and that Child Benefit has been cut three times.


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## Protocol

thesimpsons said:


> it isn't only the over 70s who paid high interest rates - we're only in late 40s and paid mortgage interest rates of 15% in early 1990s. currently paying more than average industrial wage in payroll taxes plus have to bear full cost of kids in school and college with no medical cards, etc.  meanwhile. my parents and their friends really do have a high life between very good pensions and all the allowances/extras.  they'd grumble a bit if some of the allowances were taken off them, but no where near struggle like we do to balance everything



Exactly.

My parents openly admit that they've never had it so good.

They suggest that they should pay something for public transport.

They don't really know how much tax they pay, but I remind them of sub-10% on 40-45k income.


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## Protocol

Sophrosyne said:


> 110 Quests agreed!
> 
> However, this is the first recession that I can remember where younger people have turned on older folk who didn’t have it so good.
> 
> This may be a flippant and disgraceful first, which may set a precedent for future generations.



I'm not turning on anyone.

I am simply pointing out that public policy over the past six years has favoured one group over another.

This is backed up by tons of data.

I am asking that the fiscal pain be spread more evenly.


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## Sophrosyne

You are taking a position from the now and deliberately ignoring what what obtained before.

Explain "tons of data"


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## Protocol

Sophrosyne said:


> You are taking a position from the now and deliberating ignoring what what obtained before.



I accept that people paid 35-65% marginal tax rates in the past.

In return for their sacrifices then, I would love to be able to protect them from the fiscal adjustment / pain ongoing during recent years.

But we can't afford it. Our fiscal deficits are huge:

2012 = 13,444m or 13.4bn
2013 = 11,778m or 11.8bn
2014 = est 7bn


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## Protocol

Sophrosyne said:


> Explain "tons of data"



CSO Household Budget Survey and CSO Survey of Income and Living Conditions, for a start.


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## Ceist Beag

Just so I understand the scenario here, is income from a personal pension for 65+ recipients taxed differently from income earned (for those not yet retired)? If say a 66 year old is still working and earning a wage, are they only paying 8% income tax on the salary?


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## Protocol

Over 65s pay less income taxes in several ways:

(1) the income tax exemption of 18k single / 36k married.

This exemption only applies to those over 65.


(2) the Age tax credit for people aged 65+ of 245 single / 490 married

(3) exempt from 41% DIRT on deposit interest if income less than 18k single / 36k married

(4) lower USC rates


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## dereko1969

This is just another example of the transfer of wealth and debt between the older cohort and the younger and middle aged. 

Those in their 50's with small mortgages or none made out like bandits in the boom and are now getting a double benefit whilst the rest of us get a double disbenefit.


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## Gerry Canning

There are few enough pensoners getting above 30,000 a year.


From the (little) I know, 50% of the retired couples have no pension provision other than Contributory/non-contributory old age pension.
Means 50 % of them have circa 400 per week.
I do not in any way consider what this 50% get as unreasonable.
They may get TV etc but that adds little enough.

For those who have managed to have private pension, it is estimated that average pot they have is circa 200,000.
Today that 200,000 will buy pension of 10,000 a year BUT if index linked that drops to 5,000.
Means (sensible) average couple who worked 40 years end up @ under 30,000 per annum.

I would very much agree that any couple on pension(s) k50+ could pay more, indeed i would think that they may have (used) system over the years to shelter income tax.

To threads; I do take on board that comments are not pensioner bashing but it comes accross that way. It is hard to be fair?


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## Protocol

Ceist Beag said:


> Just so I understand the scenario here, is income from a personal pension for 65+ recipients taxed differently from income earned (for those not yet retired)? If say a 66 year old is still working and earning a wage, are they only paying 8% income tax on the salary?



That 8% is specific to my parents situation, but yes, over 65+ workers will pay less tax, yes.


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## elcato

> Bear in mind that all other welfare payments have been cut twice, and that Child Benefit has been cut three times.


Sorry but this is where any argument is flawed. Just because something is cut a few times more than others doesn't make it non-equitable. Ask yourself, why were they cut ? This is like the old public service argument. It's nothing to do with lowering handouts, it's the fact that they were raised so high in the first place.


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## Ceist Beag

Protocol said:


> That 8% is specific to my parents situation, but yes, over 65+ workers will pay less tax, yes.



Sorry that's not the question I asked Protocol. To clarify:

Retired 66 year old has an annual income of 36K from their personal pension - what rate of income tax do they pay?
Employed 66 year old has an annual income of 36K from their salary - what rate of income tax do they pay?


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## DB74

elcato said:


> Sorry but this is where any argument is flawed. Just because something is cut a few times more than others doesn't make it non-equitable. Ask yourself, why were they cut ? This is like the old public service argument. It's nothing to do with lowering handouts, it's the fact that they were raised so high in the first place.



There were soundings made about cutting the pension a few times over the last couple of years and pensioners and pensioners representative groups were up in arms about it. The govt backed down. Pensioners vote, younger people do not.


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## Protocol

Ceist Beag said:


> Sorry that's not the question I asked Protocol. To clarify:
> 
> Retired 66 year old has an annual income of 36K from their personal pension - what rate of income tax do they pay?
> Employed 66 year old has an annual income of 36K from their salary - what rate of income tax do they pay?



See first post for answer.

Also see post 24.

Answers will depend on if single / married, and whether one or two incomes.

This debate is about people under 65 versus those above.

It is not about the taxation of the *source* of the income.


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## 110quests

110quests said:


> Some calculations on tax payable for various situations with no variables. All 36000k income
> 
> Married ,1 earning,  age 60:  Tax 2250;   PRSI 1440:  USC 1839  Weekly net  586
> 
> Married, 2 earning, age 60:  Tax 600;     PRSI 1040;  USC 1139    Weekly net 639
> 
> Married,  2 pension, age 66: Tax 0          Prsi. 0.          USC 1839    Weekly net 657
> 
> Single   1 pension    age 66 Tax 5977      Prsi 0              USC 1839   Weekly net 542
> 
> Widowed 1 pension age 66 Tax 5437  Prsi 0               USC  1839 Weekly net  552
> 
> Calculated on Deloitte calculated.  The unmarried 66+ pensioned pay most tax , the married 66+ on pension pay nil .   The married , both working, is based on 26000 +10000 hence the lower USC.
> 
> In light of the comments on this thread I thought it was revealing, taking the base figure of 36000 with no other considerations of child benefits, investments, interest etc.



I omitted a category:

Single :    earning  age 60, Tax  4572, Prsi 1440    USC 1839 Weekly net 541.


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## Ceist Beag

The reason I ask Protocol (and I might be wrong on this) is that I very much doubt anyone retired who is in receipt of their personal pension sees that as income in the same sense as someone who is in receipt of a salary. This would be savings they have worked hard for all their life and are now in a position to enjoy. I really wouldn't be in favour of increasing the tax take on anyones pensionable income (although I might have to make an exception for politicians!  ) so for me I would be against any proposals to increase the rates on this income and therefore to me it does differ depending on the source of the income. I realise the threshold for these rates means someone would have a very decent pension built but the principle remains the same to me.


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## Mrs Vimes

Ceist Beag said:


> The reason I ask Protocol (and I might be wrong on this) is that I very much doubt anyone retired who is in receipt of their *personal pension sees that as income in the same sense as someone who is in receipt of a salary*. This would be savings they have worked hard for all their life and are now in a position to enjoy. I really wouldn't be in favour of increasing the tax take on anyones pensionable income (although I might have to make an exception for politicians!  ) so for me I would be against any proposals to increase the rates on this income and therefore to me it does differ depending on the *source of the income*. I realise the threshold for these rates means someone would have a very decent pension built but the principle remains the same to me.



I think a lot of people don't fully realise that the tax deduction they get for contributing to a pension is in fact only *delaying*  the tax on that income. It enables people to spread their earnings over  their whole lives rather than just their working lives and as such  makes a lot of sense.

The fact is that these savings were not taxed when they were earned and as such are taxed when they are received.

It may be helpful to see a pension payout as deferred salary rather than pension - the source of the income is earnings - the pensioner decided not to pay tax when they did the work but it's still earnings.


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## Mrs Vimes

110quests said:


> Single   1 pension    age 66 Tax 5977      Prsi 0              USC 1839   Weekly net 542
> .......
> Single :    earning  age 60, Tax  4572, Prsi 1440    USC 1839 Weekly net 541.



Is there an error here? I reckon single age 60 should be paying more tax than single age 66?


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## 110quests

Mrs Vimes said:


> Is there an error here? I reckon single age 60 should be paying more tax than single age 66?



All feed was done on Deloitte calculator.  Relooked    it's as I posted.

The difference is on the tax credits. For 60 yr old     3300   For 66+  tax cr 1895.    though I think that should be   3300 + 245 age cr  for 66+ ??


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## Mrs Vimes

pensions payments (private or social) are entitled to paye credit so should be 3300 + 245.


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## 110quests

Agreed . 

Must look again at the other samples to see if tax credits properly accounted for


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## olddoll

The Children's allowance in the 1970's / 80's was very low. Much more generous now even with the three reductions.  Were the reductions intended to act as a disincentive to having large families. In 1977 the number of births was in the region of 64000 now they are about 74000.


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## Sophrosyne

Ceist Beag, to answer your question:


A. Single person aged *66*. *Pension* €36,000
Entitled to Single Personal, PAYE and Age Credits

Income Tax payable = €4,327.00
PRSI payable =               Nil
USC payable =           €1,838.80
Total =                     €6,165.80

Effective Rate =          17.13%

B. Single person aged *66*. *Employment Income* €36,000
Entitled to Single Personal, PAYE Credits and Age Credits

Income Tax payable = €4,327.00
PRSI payable =           €1,440.00
USC payable =            €1,838.80
Total =                      €7,605.80

Effective rate =           21.13%


C. Single person aged *60*. *Employment Income* €36,000
Entitled to Single Personal and PAYE Credits

Income Tax payable = €4,572.00 
PRSI payable =           €1,440.00
USC payable =            €1,838.80
Total =                       €7,850.80

Effective Rate =           21.81%


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## 110quests

Sophrosyne, Thank you for that very clear layout and numbers re taxing of 66+ and others.

I bow to those with more competence !


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## Mrs Vimes

Employees aged 66 or over pay prsi at class J which is nil on all earnings, with a er contribution of 0.5% so there is no difference in take-home pay between currently earned income and deferred income.


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## PMU

Sophrosyne said:


> This is not the first time that Ireland has been in recession.
> 
> This is not the first recession where the private sector has turned on the public sector.
> 
> However, this is the first recession that I can remember where younger people have turned on older folk who didn’t have it so good.
> 
> This may be a flippant and disgraceful first, which may set a precedent for future generations.



 And  you are correct.  It is the current generation of tax payers HAVE NEVER HAD IT SO GOOD!


 Let's look at the facts and construct a 'misery index' of what you lose due to the mortgage rate; inflation and marginal income tax rate.  I don't normally do free research, but  from 1977 onwards the misery index is:




 Year|Mortgage|Inflation|Marg Inc Tax|Misery Index
 1979|14.15|15.86|60|90.01
 1980|14.15|18.25|60|92.40
 1981|16.25|23.15|60|99.40
 1982|16.26|12.47|60|88.72
 1983|13.00|10.27|65|88.27
 1984|11.75|6.74|65|83.49
 1985|13.00|4.93|65|82.93
 1986|12.50|3.01|60|75.51
 1987|12.50| 3.1|58|73.60
 1988|9.25|2.65|58|69.90
 1989|11.4|4.66|58|74.06
 1990|12.37|2.8|56|71.17
 1991|11.95|3.53|53|68.48
 1992|13.99|2.32|52|68.31
 1993|13.99|1.51|48|63.50
 1994|7.49|2.38|48|57.87
 1995|7|2.33|48|57.33
 1996|6.75|1.81|48|56.56
 1997|6.9|1.99|48|56.89
 1998|5.85|1.78|46|53.63
 1999|5.6|3.36|46|54.96
 2000|6.09|5.86|44|55.95
 2001|6.09|4.18|42|52.27
 2002|4.7|4.96|42|51.56
 2003|4.2|2.02|42|48.22
 2004|3.49|2.65|42|48.14
 2005|3.65|2.36|42|48.01
 2006|4.86|4.93|42|51.79
 2007|5.46|4.7|41|51.16
 2008|5.86|1.15|41|48.01
 2009|4.16|-5.00|41|40.16
 2010|4.02|1.29|41|46.31
 2011|4.42|2.45|41|47.87
 2012|4.33|1.11|41|46.44
 2013|4.38|0.2|41|45.58
 (Mortgage rates from Money Guide Ireland; inflation (CPI) rates from inflation.eu).


  It's only ten years ago that the misery index dropped below 50.  So for most of their working life the current generation of retirees has lived in economically oppressive conditions of high mortgage rates;  high inflation and confiscatory marginal tax rates. Because of these factors, few retirees have had the opportunity to save and build up sufficient wealth to give them economic freedom in their retirement, a point it is reasonable for public policy to take into account.  Also, retirees have worked and have paid high rates of income tax,  unlike others in receipt of state handouts


 Times may be tough but the current generation of tax payers has more money in its pockets due to lower mortage and income tax rates adn can spend it in an environment of low inflation.  Of course income tax rates are too high but are much lower than in the past.


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## Annie51

+ 1


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## olddoll

+ 1.
Well put PMU.
The majority of retirees have put 50 + years into the economy. The reason so many of us feel we have never had it so good currently is because in the 1970s and 1980s it was so tough.  we are so used to making the pennies count that having a little more in the purse is so pleasant and we have something to give our grandchildren, in addition to looking after those very children while we see their parents struggle to hold onto their precarious jobs (in many cases not permanent, just 11 month contracts). We are happy to look after our grandchildren although our health may not be the best.

Instead of focusing on the benefits the older generation are enjoying we should be looking at what is happening in the world of labour and why are good jobs disappearing abroad.


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## Ceist Beag

Fantastic folks, some great data there. Completely agree with the sentiment that those who think things are tough today have no clue just how tough it was for our parents generation.


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## 110quests

PMU: "Misery Index", revealing, even though I lived through 70s and 80s and "felt the pain" of miserly pay cheques and stretching the pounds.

But I guess, for the current generation, there are "new" expenditures which were mere figments of our imagination then.

Costs of: mobile phones, ipads, sky subs, never ending childrens' extra curricular activities, annual (at least) foreign holidays, wine with dinner!, weddings that last 3 days, every birthday with a 0 being party time, 40 handbags, 50 ties and shirts, diets, gyms, over commercialized halloween, christmas, mother's day, father's day, valentine's day, food choice, everything choice etc etc.

Even though your index shows that the present generation "never had it so good" there is the point that current pensioners, generally, did not have credit cards or overdrafts in the 70s and 80s. thus not allowing us to over spend. We had to make do with the pay cheque and Credit Union loan. 

This is not meant to be a rant about the good old days at all, but a recognition of current demands which, mainly, we did not encounter. 

I must admit I do enjoy some of the above"excesses" ie mothers day, birthdays with 0, and why not ? I'm a pensioner(with plenty of stress).


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## Brendan Burgess

Niall Brady covers this issue (and thread) in today's Sunday Times under the heading "Golden oldies thriving"

"Their earnings are in good shape because the state pension is tit only core social welfare payment that has not been cut...

In 2009, the Commission on Taxation concluded that that the income tax exemption for pensioners should continue because the Exchequer would gain little by taxing individual pensioners.  However, its analysis failed to take into account how valuable the exemption is for single income couples, for whom it can mean substantial tax savings when they reach 65, as seen by the example on askboutmoney.com" 

I particularly liked this bit:

"Daring to question pensioners' entitlements is a risky business, with  emotions threatening to spoil the discussion on askboutmoney..."


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## Sophrosyne

Brendan.
Can you post a link to this article. I cannot find it.


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## Bronte

PMU said:


> And  you are correct. It is the current generation of tax payers HAVE NEVER HAD IT SO GOOD!
> 
> Let's look at the facts and construct a 'misery index' of what you lose due to the mortgage rate; inflation and marginal income tax rate. I don't normally do free research, but from 1977 onwards the misery index is:
> 
> It's only ten years ago that the misery index dropped below 50.


 
Is the misery index real. 

I seem to recall that interest rates with Irish Life hit a high of about 17% around 1982. My first mortgage was at, what I thought was a cheap 9.25% fixed!

Currently I'm fixing with Ulster bank for 2.7% over 5 years and I consider that nearly money for nothing, my variable being 2.5%. Also managed last year to move from one bank to another and moved from 4% to 2.5% on my home loan abroad.

My OH, when he started working, he remembers doing overtime for extra money, but about 80 pence was taken in every pound.


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## Bronte

Gerry Canning said:


> For those who have managed to have private pension, it is estimated that average pot they have is circa 200,000.
> Today that 200,000 will buy pension of 10,000 a year BUT if index linked that drops to 5,000.


 
With the indexed at 5K, the person in retirement would be better off withdrawing 10 K each year, they'd get the interest on the balance, and the 200K would last 20 years.  Not many people are going to make it to 86!  But I believe that pensioners are forced into buying annuities.  They are changing this in the UK.  It's an open licence for annuity companies to profit heftily from the hard earned life savings of carefull people.


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## Brendan Burgess

Bronte said:


> Currently I'm fixing with Ulster bank for 2.7% over 5 years and I consider that nearly money for nothing, my variable being 2.5%. .



Hi Bronte

Are you doing this in Ireland? 

If the variable is some sort of tracker, fixing might not be a good idea.


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## Brendan Burgess

Sophrosyne said:


> Brendan.
> Can you post a link to this article. I cannot find it.



Hi Sop

I don't have access to their online edition.

It's in the comment piece in the Money section

Brendan


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## Bronte

Sophrosyne said:


> Brendan.
> Can you post a link to this article. I cannot find it.


 
The Sunday Times is behind a paywall.  I too would like to read it.


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## Gerry Canning

Bronte said:


> With the indexed at 5K, the person in retirement would be better off withdrawing 10 K each year, they'd get the interest on the balance, and the 200K would last 20 years. Not many people are going to make it to 86! But I believe that pensioners are forced into buying annuities. They are changing this in the UK. It's an open licence for annuity companies to profit heftily from the hard earned life savings of carefull people.


.............

If people can put their pot into a AMRF they can retain the benefit but must withdraw  @ least 5% a year.
That is a way around the Annuity Trap. 
Ps . I intend living well past 86 !


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## dereko1969

The misery index doesn't (and couldn't) take into account the large numbers of those who sold mortgage free homes in the "boom" to the younger generation.

Should there be an examination of the relief from CGT given to PPRs?


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## Bronte

Brendan Burgess said:


> Are you doing this in Ireland?
> 
> If the variable is some sort of tracker, fixing might not be a good idea.


 
Yep, Ireland, it's not a tracker nor is it a normal morgage, but the margin on it is fixed, what is variable is the interest rate charged.  Apparently my margin is one of the lowest, according to the bank manager.  It's not a normal mortgage, when they were in an immense hurry to dish out money they gave me some kind of commercial loan instead of a mortgage, didn't realise fully how it worked until a year later when I got a regular enough looking bank statement, similar to my current accounts statements.  

I've always lost on trackers, but I want 5 years peace of mind on this one as it's still a decent amount owing, and I've another mortgage that I'm going to not fix.  I see the Fed is considering rasing rates, there's talk in the UK, there is turmoil politicially elsewhere, so hedging my bets as it were.   What I don't want is to get caught if rates should rise.  As it is, with the same bank I'm paying over 4% for a regular mortgage as they use investors like me to make up for people on trackers and restructurers.  For this other mortgage I don't care as the amount owing is now irrelevant.


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## Bronte

Gerry Canning said:


> Ps . I intend living well past 86 !


 
And fair play to you, but a man of 66 who dreams of riding the waves in Florida, or drinking cocktails in Phuket, is not the man of 86 who does not want to step outside his front door.  

A friend of mine, her parents headed off to the South of France on retirement two or three years ago, he is now in hospital in Marseille, far from home and without a home actually, as they didn't yet buy.   

You never know what life will throw at you.


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## orka

The misery index also does not take account of the average multiple of salaries to house prices.  Interest rates were high but repayments as % of salary probably weren't much worse.  Repayment as % of salary would be a much better component of a misery index than just the interest rate.


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## Niall Brady

From The Sunday Times, Sept 14



> An interesting debate that surfaced last week on askaboutmoney.com, a personal finance forum, looked at a couple earning €36,000. Up to age 65,
> they pay income tax of €2,250, universal social charge (USC) of €1,839 and pay-related social insurance (PRSI) of €1,440.
> At 65 they are immediately €2,250 better off because the couple become exempt from income tax on the basis of their age and earnings. They also
> become exempt from deposit interest retention tax on their savings.
> At 66 they gain another €1,440 because at this age people stop paying PRSI. At 70 there is a further gain of €600 because they fall out of the 7% rate
> of USC.
> Their earnings are in good shape too because the bedrock of retirement earnings — the state pension of up to €12,000 per person — is the only core
> social welfare payment that has not been cut. However, government has made it harder for pensioners to qualify for medical cards and slashed
> subsidies for their energy and telephone bills and television licences.
> Daring to question pensioners’ entitlements is a risky business, with emotions threatening to spoil the discussion on askaboutmoney.com. Cooler
> heads were in control when the government’s Commission on Taxation examined the income tax exemption for pensioners in 2009. It concluded the
> exemption should continue because the exchequer would gain little by taxing individual pensioners.
> However, its analysis failed to take account of how valuable the exemption is for single-income couples, for whom it can mean substantial tax savings
> when they reach 65, as seen by the example on askaboutmoney.com.
> One of the justifications for being soft on pensioners is to provide some reward for the punishing taxes they paid in the 1970s and 1980s. Workers
> currently paying 52% tax on earnings over €32,800 can only hope that future generations will be equally appreciative of their sacrifice.


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## Brendan Burgess

Thanks Niall


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## henry

Re: The Misery Index, should USC be included for the latter few years.


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## Bronte

Niall Brady said:


> From The Sunday Times, Sept 14


 
Thanks for posting up this, I buy the international edition but it doesn't naturally have Irish news stories.

If Noonon or his mandarins are reading this article, I hope they don't go after pensioners as an easy target.  Though the medical card march, and the fact they are voters might temper his cuts.


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## Gerry Canning

I am assured by a pensioner who checked it, that the 36,000 threshold has the following catch . Can some AAM member advise.

He is married .
He has pension 23,000 .
She has pension 22,000.
.............................
Total pension     45,000
............................
Revenue say that the lower pension can avail of Nil  tax.ie no tax on the 22,000.
The catch is that the higher pension gets no allowance ie taxed@41%  on the full 23,000.

Seems the 36,000 is a bit of a con?

Await comments please.


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## T McGibney

Gerry Canning said:


> I am assured by a pensioner who checked it, that the 36,000 threshold has the following catch . Can some AAM member advise.
> 
> He is married .
> He has pension 23,000 .
> She has pension 22,000.
> .............................
> Total pension     45,000
> ............................
> Revenue say that the lower pension can avail of Nil  tax.ie no tax on the 22,000.
> The catch is that the higher pension gets no allowance ie taxed@41%  on the full 23,000.
> 
> Seems the 36,000 is a bit of a con?
> 
> Await comments please.



The end result may be the same (the exemption doesn't apply, apart from limited marginal relief, if the income exceeds €36k) but otherwise their theory has no basis in reality.


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## Gerry Canning

T Mc Gibney; thanks.
Does your comment mean that the k36 is in effect not much of a benefit?


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## T McGibney

It's excellent if the combined incomes are below or marginally above €36k, but meaningless otherwise.


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## Gerry Canning

T McGibney said:


> It's excellent if the combined incomes are below or marginally above €36k, but meaningless otherwise.


 .........

Thanks again; 

What I was told is that combined incomes are NOT nil tax up to K36 ,but that revenue only allow nil on lower income .So in the case I have given. the couple will be taxed @41% on the 2nd income of 23,000 ie 9,430.

If so a combined income of 45,000 will get taxed 9,430.

Ergo .most pensioners are not being mollycuddled?
Am I correct?


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## DB74

The €45K is taxed as normal. There is very little difference if the €45K was earned by a couple who are 64 and a couple who are 65.

The only difference is that the 65yo couple will get the Age Tax Credit (worth €490)

When this couple reach 66 they also don't have to pay PRSI

NONE of the €45K is tax-free at any stage

None of it would be taxed at the 41% rate either, it's all at the 20% rate

The total PAYE payable on that pension income is €1,910

€45,000 x 20% = €9,000 less tax credits of €7,090* = €1,910

*marriage credit = €1,650 x 2 = €3,300
paye credits = €1,650 x 2 = €3,300
age credit = €245 x 2 = €490


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## DB74

Just to add here that a single-income family (non self-employed) with at least 1 child can earn €28,800 without paying any PAYE

€28,800 x 20% = €5,760 less tax credits €5,760* = NIL

* married tax credit = €3,300
paye tax credit = €1,650
home carers credit = €810

while a dual income family could potentially earn €33,300 without paying any PAYE


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## 110quests

Hi, don't understand why total is taxed at 20%.


Is the following correct?

Income 65yr old Single, on 45,000k pension.

32,800@20%=6560
12,200@41%=5002
Total          =11562
minus Tax Cr=3545*
Tax payable=8017

*single tax cr 1650
 paye cr        1650
age cr            245
Total            3545

There is a big disparity between tax payable by single v married.


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## DB74

Well in the example posted by Gerry Canning, it was a married couple with 2 separate incomes, so I used those figures

http://www.askaboutmoney.com/showpost.php?p=1400625&postcount=75

I would expect a big difference in tax paid for single person and a married couple. I would also expect a big difference in living expenses too.


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## DB74

110quests said:


> Hi, don't understand why total is taxed at 20%.
> 
> 
> Is the following correct?
> 
> Income 65yr old Single, on 45,000k pension.
> 
> 32,800@20%=6560
> 12,200@41%=5002
> Total          =11562
> minus Tax Cr=3545*
> Tax payable=8017
> 
> *single tax cr 1650
> paye cr        1650
> age cr            245
> Total            3545
> 
> There is a big disparity between tax payable by single v married.



The reason that it is all taxed at 20% is because everyone can earn €32,800 (can be increased to €41,800 in certain circumstances) per annum without hitting the 41% tax bracket. In the example given it is for 2 people with separate incomes, one at €22K and one with €23K. As neither earns more than the €32,800 figure the entire sum is taxed at 41%

Your figures for a single person are correct


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## jpd

DB74 said:


> The reason that it is all taxed at 20% is because everyone can earn €32,800 (can be increased to €41,800 in certain circumstances) per annum without hitting the 41% tax bracket.



Not true - if your only source of income is interest from cash deposits or income from investments in funds rather than shares, then the income is taxed at 41%


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## 110quests

Thank you DB74 for clarification.

From the examples ie married/single on 45000k pension age 65 the tax payable is a difference of approx 6000k p a.....  500pm.  

Would it be correct to assume that 'singles' contribute the majority of total income tax take? Or numerically speaking do married persons greatly outweigh singles in the workforce ?  Or are singles, probably being younger, at the lower income scales thus paying less tax?

This is not to be construed as an attempt to set  singles in a war of numbers with married couples !


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## DB74

jpd said:


> Not true - if your only source of income is interest from cash deposits or income from investments in funds rather than shares, then the income is taxed at 41%



Well I was trying to keep it simple rather than list all types of income and the tax rates that apply.

Nonetheless just to keep the pedantry going, income from interest or investments is classed as "unearned" income while I was referring to earned income only!


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## PMU

Bronte said:


> I seem to recall that interest rates with Irish Life hit a high of about 17% around 1982.


  The figures for mortgage rates are taken from Money Guide Ireland at http://www.*****************.com/history-of-mortgage-rates-in-ireland.html



henry said:


> Re: The Misery Index, should USC be included for the latter few years.


Yes,[FONT=Times New Roman, Times New Roman, serif] and we should also add in the temporary income levy in 1993; the employment and  training levy from 1997 to 1999; the income levy from 2009 and the health levy from 1979.  Income levies introduce another level of misery but were also  paid by those now retired and levies do not alter the relatively better off taxation and economic positions of the current cohort of working tax payers vis-a-vis retirees.[/FONT] 

[FONT=Times New Roman, Times New Roman, serif]The problem with BB's analysis in post # 1 is that it calculates 'effective' income tax  rates and this has given the erroneous impression that those 65 and over actually pay income tax at these rates, e.g. post no 5 by 'Protocol',.[/FONT]


Protocol said:


> My parents earn approx 900pw and pay 5-8% income tax/USC.
> _*This is an unbelievably low income tax rate.*_


 

 
 [FONT=Times New Roman, Times New Roman, serif]and a rather smug headline in last weeks' Sunday Times that 'Golden oldies' are 'thriving'.  But, nobody pays tax at effective tax rates and you will get as many effective tax rates as there are taxpayers, due to differing levies, thresholds, exemptions, etc.  [/FONT] 

 
[FONT=Times New Roman, Times New Roman, serif]If you want to know how much tax is paid by those aged 66 and over the answer is :[/FONT]
 
 Those 66 and over pay the same income tax as all other taxpayers (i.e. marginal rates of 20% or 41%) .  This applies after (a) an exemption limit of EUR 18,000 and (b) an Age Tax credit of  EUR 245.  There is also (a) a USC benefit for those aged 70 years or over who are not self-assessed, and whose aggregate  income [FONT=Times New Roman, Times New Roman, serif]exclusive[/FONT] of social welfare payments is EUR 60,000 or less, who pay a maximum USC of 4% of [FONT=Times New Roman, Times New Roman, serif]all[/FONT][FONT=Times New Roman, Times New Roman, serif] income over EUR 10,036, except where any non-PAYE income exceeds EUR 100,00 in which case a 7% rate applies on the excess amount; and (b) those aged 66 or over do not pay PRSI on occupational pensions.[/FONT]

 
[FONT=Times New Roman, Times New Roman, serif]That's the factual position.  Over 66s pay the same tax rates as all other tax payers, after certain limits and benefits.[/FONT]
[FONT=Times New Roman, Times New Roman, serif]
[/FONT]
[FONT=Times New Roman, Times New Roman, serif]  But nobody starts work at age 66 and you cannot directly compare the tax situation of  over 66s with that of someone currently  working.  To get these age-related benefits the current cohort of over 66s have worked in tougher economic times and have had to pay income taxes at higher rates than the current cohort of taxpayers, and they have done this over a long period of time.[/FONT]


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## Gervan

> Those 66 and over pay the same income tax as all other taxpayers (i.e. marginal rates of 20% or 41%) .  This applies after (a) an exemption limit of EUR 18,000 and



This makes it sound as though only income above €18,000 will be taxed. To clarify: this exemption applies to the single taxpayer of 65 or over whose total income does not reach €18,000.
It does not benefit pensioners on large incomes.


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## Gerry Canning

PMU; 
Excellent post .

I hope this notion that Pensioners are  coining it on the back of todays workers has been killed off by the posts in aam.
Pensioners by definition have earned their pension and as your historical figures clearly show, todays pensioners  contributed dearly at other (poor) times.

I suppose every generation gets a hit in their working lives . This generation is taking their hit today.
This poor time will pass.


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## fobs

Gerry Canning said:


> PMU;
> Excellent post .
> 
> I hope this notion that Pensioners are coining it on the back of todays workers has been killed off by the posts in aam.
> Pensioners by definition have earned their pension and as your historical figures clearly show, todays pensioners contributed dearly at other (poor) times.
> 
> I suppose every generation gets a hit in their working lives . This generation is taking their hit today.
> This poor time will pass.


 
I hope you are correct and I get to reap the rewards in 21 years time! Hoping the contributory pension is still there and my defined benefit pension is still intact!


----------

