Rich Germans petition for a wealth tax

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ivuernis

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A petition has been launched in Germany for a wealth tax of 5% for 2 years on individuals with a fortune greater than €0.5m. It is estimated that there are 2.2 million people in Germany who would fall into this category and if they all paid it would generate a fund of €100bn.

If implemented in Ireland how much would such a move generate? Let's assume the oft quoted figure of 30,000 millionaires is exaggerated and/or reduced in the last few years. Let's assume there are 10,000 left and apply the 5% to fortunes above €1m. This, over a 2 year period would generate a minimum €1 billion fund.

Unlikely to happen here but is it something worth considering?
 
That's a minimum tax of €25,000 p.a.!!!!!
Is this €500,000 in assets or €500,000 in cash? If it is assets will property, and especially the PDH, be included? Will it include shares? Is it net wealth after deductions for borrowing? None of this is explained in the article.

There will be many people out there who would have assets over €500,000 and earn less than €25,000 per year. The idea is unworkable in my opinion and borders on the insane. Going after those that "made a fortune through inheritance, hard work, hard-working, successful entrepreneurship, or investment" is counter-productive.
 
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It seems unfair to me to target wealthy people in this way. Many of these people will already be paying high income tax anyway. And worked hard, taken risks etc to earn their wealth.
 
Capital has a tendency to accumulate. It's all very well to talk about people having accumulated assets through hard work and thrift - but the accretion of capital from one generation to the next is not uniform and tends to increase inequality in a society.

I think a wealth tax is a good idea in principle - but very difficult to implement in practice and especially difficult unless it has broad acceptance (which I am afraid it will never have in Ireland).

There is huges scope for divisive debate. I am taking as a given that private dwellings would be excluded. But there is still plenty of scope for argument. Do we include pension funds? For example, a realtively modest public sector pension of, say, 25k per annum ( indexed) has an actuarial value comfortably in excess of €500k - can we tax this as part of a wealth tax? If we don't, would it then be unfair to tax the man who instead has three rented houses as his informal pension arrangement?
 
MOB said:
Capital has a tendency to accumulate. It's all very well to talk about people having accumulated assets through hard work and thrift - but the accretion of capital from one generation to the next is not uniform and tends to increase inequality in a society.
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Well then tax it at a higher rate of inheritance tax at the transfer stage. This makes far more sense than paying 5% tax from disposable income each year on an asset which may not give a 5% return.
You won't get a 5% dividend per year on many shares but they would be taxed at this rate under the German plan. Seems daft to me.

I agree with you regarding the pensions.
 
Joanne1 said:
It seems unfair to me to target wealthy people in this way. Many of these people will already be paying high income tax anyway.
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The problem is that they don't.

Average tax rates can be pushed down to 20 - 15 - 10% by using all sorts of tax reliefs.


Plenty of countries have wealth taxes, e.g. France and Switz, and they seem to work ok.
 
Protocol said:
Plenty of countries have wealth taxes, e.g. France and Switz, and they seem to work ok.
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They don't work out ok - they penalise pensioners who are on a low income, have worked hard all their lives to pay off their mortgages, but because of the estimated value of their homes, have to pay the wealth tax out of their meagre pensions.
 
Is there much public disquiet / complaining, etc. in these countries over the wealth tax?
 
A FG/Labour coalition introduced a wealth tax of 1% in 1975 which was abolished by the succeeding FF government with effect from 5/4/1978.
There was a huge furore at the time and due to lobbying by farmers and the business lobby concessions were made which led to about one quarter of the estimated tax initially envisaged being collected.
That FF government also abolished domestic rates and motor tax !
Perhaps any future FG/Labour coalition might be tempted to have another go at Wealth Tax ?
 
Hi there, I am sorry but I dont get this, you can tax people 100% but if money is not being spent correctly such as ministerial expences and public sector payments .. we'll still be broke....
 
shnaek said:
Is it not the case that 4% of individuals in Ireland pay 48% of income tax?
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It may be true that x% of people pay a higher than x% of the tax, but that is because they have massive income.

Overall, their average tax rate is still lower than me or you.
 
Complainer said:
If it is, wouldn't it be interesting to know what % of their income those 4% are paying?
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It would be interesting alright.

They may well have massive income, but 48% from 4% is also a massive contribution.

It would still be interesting to get the breakdown Compaliner mentioned.
 
All the information you need is already there in the . P54 has a table of the income distribution in Ireland in 2006.

I've copied the table here and added a few extra columns. The last column gives the average effective tax rate in each band.

From this you can work out all sort of things. It is true that roughly the top 4% do pay about 48% of income tax. Whether they're paying enough is open to debate. Obviously incomes have dropped from 2006 but it still gives a good indication. From these figures I also worked out that increasing the top rate of tax from 41% to 48% (as the Trade Union leaders keep advocating) would yield roughly €770m.
 
ivuernis said:
From these figures I also worked out that increasing the top rate of tax from 41% to 48% (as the Trade Union leaders keep advocating) would yield roughly €770m.
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But the thing is, it wouldn't ( or perhaps I should say it mightn't). Strangely, however, this is a point that seems utterly lost on many of those involved in framing fiscal and taxation policy.

The people at the high end of the table have a fair amount of discretion about how much taxable income they receive (e.g. whether to draw income as compared to, say, leaving retained profits in companies taxed at a much lower rate).

Many of them may also have some discretion as to where they are taxed on their income.

When seeking to maximise income tax yield by taxing the so-called 'fat cats', you have to bear in mind that there is a sort of tipping point beyond which your tax yield drops when you raise rates - because you have made it worth their while to organise their affairs differently. I don't know if an increase from 41% to 48% would bring us across that line. But it would be foolish to ignore the possibility.

Of course, it is not only at the high end that you have a possible tipping point. For example, if you make it more profitable for low\medium earners to be unemployed than to be paying tax, then you can likewise expect to see the logical consequences.
 
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