Cut the dole to cut higher tax rates

[Gerard123]

It's the one size fits all analysis that is wrong. Everyone on social welfare has desperate needs. And all higher tax rate earners are loaded. Simple really!

The reality is that the people in most need are seeing reduced help, as scarce resource are directed to others who do not have a need and are freeloading.

The system should properly discriminate between those who need and should get and those who don't, but still get.

Will be listening in.

 

[TheBigShort]

Increasing tax rates beyond a certain point (or retaining tax rates at that point) is counter-productive for raising further tax revenue

Agreed.

The disposable income of various taxpayers after they've paid their taxes is simply not relevant in this regard.

Not agreed, and your next point illustrates that disposable income is relevant.

Say incomes above a certain level attracted tax at a rate of 100%. Nobody would have any incentive to earn an incomes above that level so the economic effect of a 100% tax rate is to decrease the tax take at that level to zero. As such, tax revenue is maximised a rate that is somewhere between 0% and 100%.

And the incentive is diminished on the basis that disposable income is excessively reduced. Disposable income is relevant.

But you seem to be arguing something different than what the Indo article outlines.
I have no issue with agreeing that paying 40% tax on income after €33,800 is excessive.
I have no problem agreeing that USC, while the principle is broadly progressive, the rates applicable are somewhat regressive.

What I take issue with is that the article suggests low income earners are getting a free ride.
Here is a suggestion, if lower earnings provide for a free ride, take a pay cut!
That of course wont happen nor is it desirable or feasible and I do not advocate it, but merely to illustrate the defunct nature and the futility of the Indo article.
The apparent solution proposed by the author is to transfer tax liability from higher earners to lower earners without any additional supports or without factoring in the cost of childcare, rent, electricity, groceries, motor tax, car insurance, mobile and internet technology, TV license etc, etc.
The cost of these items will take a disproportionately higher % from a low paid workers income than a higher earners income.
That is not to recognize that workers are being squeezed. As someone in a two income household with two kids I am fully cognizant of the limits of those pay cheques to meet the bills. But I fail to see how if I reduced my income (and thereby my tax liability) how my lifestyle would be any better. Put simply, it would not.

 

[Gerry Canning]

Sounds good but,
Anyone who is genuinely (and that is most) on Dole, have it hard nuff without this guff.

Over the years I have sometimes been the grateful recipient of said Dole and in no way could it be cut without a serious hit to the social fabric.
There seems to be an underlying agenda that Dolers have it good !
I know there are Dole leg-lifters but not half as many as Urban Myths espouse.

Maybe we could concentrate on the less obvious but serious thieves in the White Collar /Tax avoidance brigade in order to reduce taxes on most taxpayers.
Maybe we could have a land tax etc ,on those who hoard land , but then again the uproar !

Dolers are an easy mark.

 

[TheBigShort]

The words of Jonathan Swift come to mind; ‘There are none so blind as those who will not see. The most deluded people are those who choose to ignore what they already know’*

*The second bit is a bit harsh in the context of a friendly conversation. It's only included because it's one of the few quotes I know and I'm trying to sound smart.

I prefer Mark Twain

"It aint what you dont know that gets you into trouble. Its what you do know for sure that just aint so"

 

[orka]

I prefer Mark Twain

"It aint what you dont know that gets you into trouble. Its what you do know for sure that just aint so"

You really are fond of that movie...

https://scatter.wordpress.com/2016/...nd-the-most-ironic-quote-misattribution-ever/

my biggest pet peeve about the movie. The Big Short opens with an epigraph:

It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so. – Mark Twain

Here’s the thing: there’s no evidence Mark Twain ever said or wrote those words. The Quote Investigator tackled variations on this quote and determined that the modern version comes from an encyclopedia of humor by Josh Billings written in 1874. The first attribution to Twain comes as early as 1899, but again, there’s no evidence that Twain actually said or wrote those words. Normally, a little Twain misattribution wouldn’t bug me but the quote is literally about the dangers of thinking you know something that actually isn’t true. What delicious irony!

 

[T McGibney]

Maybe we could concentrate on the less obvious but serious thieves in the White Collar /Tax avoidance brigade in order to reduce taxes on most taxpayers.
Maybe we could have a land tax etc ,on those who hoard land , but then again the uproar !

You seem blissfully aware that Ireland (unlike the UK for example) has had stringent general anti-tax avoidance legislation for donkey's years. As for land "hoarders", thankfully property ownership is a constitutional right in this country, so arbitary confiscation is off the cards.

The idea that tackling white collar crime, tax avoidance and land "hoarding" could raise enough money to dramatically cut Income Tax rates is laughable.

 

[Sarenco]

And the incentive is diminished on the basis that disposable income is excessively reduced.

Nope. The incentive to earn an income above a certain level will be excessively reduced by an excessive rate of tax that applies to income at that level.

I have no issue with agreeing that paying 40% tax on income after €33,800 is excessive.

Well then presumably you would agree with lowering this rate to a level you would not consider excessive. That clearly has to be balanced by increasing taxes elsewhere or by reducing public services. Which would you prefer?

 

[Duke of Marmalade]

Well just listened to the bout, Boss won on points but I suppose a knock-out was too much to hope for. I liked the upper cut to Healy's assertion that poor folk pay 33% of their income on VAT, what when VAT is at most 23%, nice one Boss.

I must admit it comes across as very provocative on radio to ask for SW to be cut and for low/middle income earners to be taxed so as to reduce the tax on high earners and more power to the Boss for having the courage to supply this counterweight to the increasingly populist and leftist zeitgeist.

Realistically though, cutting SW is politically (and socially) very difficult. A combination of the social partnership gone out of control and the delusion that we had become one of the richest nations on earth led Bertie to, for example, double the OAP over his terms of office. Difficult to take any of that back but talk of an increase seems madness. I presume that in practical terms the Boss is saying that any fiscal space that is going should be used towards correcting the big imbalances he is drawing our attention to.

 

[TheBigShort]

You really are fond of that movie...

https://scatter.wordpress.com/2016/...nd-the-most-ironic-quote-misattribution-ever/

I am yes.

Thats interesting about the quote attribute. Because I can imagine Tom Sawyer or Huckleberry Finn saying it.
But if he didn't he say it im fine with that.

I really dont get how the article thinks its irony? People were sure house prices were sound and go up and up. They didnt, and lots of people, because of what 'they knew' , got themselves into financial trouble.

Probably the most exaggerated claim of irony ever!

 

[orka]

I really dont get how the article thinks its irony?

I read it as nothing really to do with the movie but that people would use a quote about knowing (or not knowing) stuff while not actually knowing they had got the quote's attribution wrong!

 

[TheBigShort]

Nope. The incentive to earn an income above a certain level will be excessively reduced by an excessive rate of tax that applies to income at that level.

Or in other words, if its all going to the taxman, and not my disposable income, then why bother?

Well then presumably you would agree with lowering this rate to a level you would not consider excessive. That clearly has to be balanced by increasing taxes elsewhere or by reducing public services. Which would you prefer?

Unless there is budget surplus, then no need to raise taxes or cut services. What is the outlook for this year?

 

[TheBigShort]

I read it as nothing really to do with the movie but that people would use a quote about knowing (or not knowing) stuff while not actually knowing they had got the quote's attribution wrong!

Ha! Good one.

 

[Gordon Gekko]

It is perverse that high earners suffered the greatest tax increases in 2008/2009, yet are not seeing those taxes reduced now that things are improving.

How on earth is €70k plus "a high earner"?

 

[Duke of Marmalade]

Are you suggesting that equality of outcome is desirable? I thought we'd sorted that one out.
My disposable income is very low because I've a large mortgage and as a separated father of 4 children I have to rent a large-ish house. I have €60 a week to spend on groceries and cycle into work because I can't afford petrol. I still pay 52% income tax when I try to earn more to ease the burden. Should my tax be reduced because of that?

Purple you must be my next door neighbour; there can't be two people that fit that description

 

[TheBigShort]

I will be debating the issue with Father Seán Healy on Matt Cooper at 5 pm.

And I hope to speak from the audience on the Claire Byrne Show on RTE 1 at 10.30 pm tonight.

Brendan

Disappointing to hear you use the % of % argument as it portrays a distortion.
You said the top 20% pay 75%. Implying that the bottom 80% only pay 20% of the tax.
You also said the bottom 50% pay only 4% , implying the top 50% are overtaxed and pay 96% of the tax.
So at once, a taxpayer can be both undertaxed (bottom 80%) and overtaxed (top 50%) which makes no sense.

 

[Sarenco]

Or in other words, if its all going to the taxman, and not my disposable income, then why bother?

If the marginal tax rate is excessive beyond a particular level it will disincentive people from earning income above that level - regardless of their level of disposable income - and it becomes counter-productive.

That is why Mr Hollande had to repeal his 75% supertax on incomes over €1million in France - it resulted in a lower tax take.

What is the outlook for this year?

The current expectation is that we will achieve a balanced budget in 2017. Most economic commentators would argue that we should be trying to achieve a budgetary surplus during a period of economic expansion.

 

[TheBigShort]

If the marginal tax rate is excessive beyond a particular level it will disincentive people from earning income above that level - regardless of their level of disposable income - and it becomes counter-productive.

Yeh, like I said, if the tax man is taking it taking most of it and im not getting it, then why bother?

 

[orka]

So at once, a taxpayer can be both undertaxed (bottom 80%) and overtaxed (top 50%) which makes no sense.

Sure it does baby bear - there could be those in the middle who are taxed 'just right'...

 

[Sarenco]

Yeh, like I said, if the tax man is taking it taking most of it and im not getting it, then why bother?

So you are now agreeing that it is the marginal tax rate above a certain level and not the level of an individual's disposable income that acts as the disincentive to earning income above that particular level?

If you are then we are in violent agreement (although I wouldn't necessarily agree that an effective marginal tax rate of 40% is excessive).

 

[losttheplot]

Disappointing to hear you use the % of % argument as it portrays a distortion.
You said the top 20% pay 75%. Implying that the bottom 80% only pay 20% of the tax.
You also said the bottom 50% pay only 4% , implying the top 50% are overtaxed and pay 96% of the tax.
So at once, a taxpayer can be both undertaxed (bottom 80%) and overtaxed (top 50%) which makes no sense.

There is no distortion. If the top 20% pay 75%, then the remaining 80% pay 25%.
Moving from the top 20% to top 50%, covers 96% of tax intake. No where does it imply if you're in the top 50% that you're overtaxed.
It shows the distribution of the where the tax is coming from and that it is skewed..

If you use an example of 100 people and rank them by earnings and assume the total tax take is €1000. Taking tax from the first 20 would give you €750. Taking the next 30 people would give €210. From the remaining 50 people, you would only collect an additional €40.