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.
How much do people aged 66 or over pay in income tax?
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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.
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.
I omitted a category:
Single : earning age 60, Tax 4572, Prsi 1440 USC 1839 Weekly net 541.
Ceist Beag
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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.
) 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.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!
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.
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+ ??
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.
Sophrosyne
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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%
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%
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:
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
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.
+ 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.
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.
Ceist Beag
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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.
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).
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).
Brendan Burgess
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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..."
"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..."
Sophrosyne
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Brendan.
Can you post a link to this article. I cannot find it.
Can you post a link to this article. I cannot find it.
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