Individualisation is here

the plot thickens...

UDS, what is the story with answering on Madonna's behalf? That's twice now. Is there something we should know? Is Maddy the new Mrs. UDS or is it just a living in sin thing?

PS you better tell her not to be "hopping mad"....now she's burned her bra, she could injure herself!

Re: the plot thickens...

Hi tedd

<!--EZCODE ITALIC START--> “I think it discriminates because individuals who do not pay income tax (eg people who choose not to work outside the home) are benefitting at the expense of individuals who do.”<!--EZCODE ITALIC END-->

How can you say that the single-income couple is benefitting at the expense of the double-income couple if both pay the same tax on the same income?

(Incidentally, “individuals who do not pay income tax” and “people who choose not to work outside the home” are not the same group. I can choose not to work outside the home but enjoy a thumping great investment income – indeed, that may be <!--EZCODE ITALIC START--> why<!--EZCODE ITALIC END--> I can choose not to work outside the home. Will I be a winner or a loser under individualisation? A winner, obvirously. I can use my non-transferrable allowances against my investment income.)

<!--EZCODE ITALIC START--> “I believe choosing not to work is exactly that, a choice. In recent years, I would go so far as to say that I believe it is a luxury.”<!--EZCODE ITALIC END-->

It’s <!--EZCODE ITALIC START--> usually<!--EZCODE ITALIC END--> a choice. There are those – the disabled, for example – who have no choice.

But if follows, I think you’ll agree, that choosing to work is also a choice. Nobody is compelled to work – that’s called slavery, and it’s been outlawed in this country since 1834. Logically, not to work cannot be a choice unless working is also a choice. In truth, there is only one choice – between working and not working. People choose to work, for the most part, because that is the choice which will best enable them to lead the kind of life they want to lead – they need the money to pay the mortgage, they find work socially fulfilling, they like the challenge, they want to afford two holidays a year and run two cars, whatever. They shouldn’t have to justify their choice to anybody. Others choose not to work because it enables <!--EZCODE ITALIC START--> them<!--EZCODE ITALIC END--> to lead the kind of life <!--EZCODE ITALIC START--> they<!--EZCODE ITALIC END--> want to lead – they want to spend more time with their young children, they want to study full-time, their partner’s work involves travelling and they have to choose between staying with their partner and taking a job, whatever. It is not for Charlie McCreevy to say which is the “right” choice for anyone (except Charlie McCreevy, of course).

<!--EZCODE ITALIC START--> “I don't think I, as a taxpayer, should have to subsidise their choice.”<!--EZCODE ITALIC END-->

I agree. Nor should they have to subsidise your choice. The only way that can be achieved is for the choice to be tax-neutral – i.e. your tax should not depend on whether you choose to be a one-income couple or a two-income couple. It is individualisation which involves those who make one choice (and those who have no choice at all) subsidsing those who make the opposite choice.

Hi, Guy Ritchie

<!--EZCODE ITALIC START--> “Is Maddy the new Mrs. UDS”<!--EZCODE ITALIC END-->

Well, you should know!

the plot thickens...

How can you say that the single-income couple is benefitting at the expense of the double-income couple if both pay the same tax on the same income?

Because the expense involved in two people going out to work is greater than if just one does, so at the end of the month an equal salary, less the same tax and double the work-related expenses, leaves the couple in which both individuals work worse off.


"“individuals who do not pay income tax” and “people who choose not to work outside the home” are not the same group."

I mean individuals who do not pay income tax because they choose not to work. People who work from home in some capacity which generates income "work". (I used the term "work outside the home" to indicate paid employment.) The independently wealthy with "a thumping great investment income" pay tax (or at least have a tax liability!) I do not believe it is reasonable to say that the disabled or the elderly (to give two examples) "choose" not to work, nor did I suggest this.


"The only way that can be achieved is for the choice to be tax-neutral – i.e. your tax should not depend on whether you choose to be a one-income couple or a two-income couple."

I take it you mean MARRIED "couple"? What about unmarried couples? Single people? When single individuals and unmarried individuals have the same right as married individuals to share their tax free allowances / tax credits with another person of their choice, then you can say lifestyle choices are tax-neutral.

tedd

Re: Investment Income

I am deligthed that this debate was kept alive without my having to proceed any further with the garment incineration routine.

Also, as regular AAM contributors will know, I already have a thing going with Liam D F and I am not the type of girl to two time so the fact that myself and UDS are ad idem on this one is purely at the philosophical level.

What did fascinate me in that last posting of UDS was this possibility of getting the dinky allowances against investment income without having to put hubby out on the bins.

How does that work, UDS?:b

Re: Investment Income

Hi Madonna

<!--EZCODE ITALIC START--> “What did fascinate me in that last posting of UDS was this possibility of getting the dinky allowances against investment income without having to put hubby out on the bins.”<!--EZCODE ITALIC END-->

Easy-peasy. Just take your vast portfolio of income-generating assets and transfer them to his name. (You do trust him, don’t you?) Presto! The income they generate is his, not yours, and he can set his non-transferrable allowances against it.

Hi tedd

<!--EZCODE ITALIC START--> “Because the expense involved in two people going out to work is greater than if just one does, so at the end of the month an equal salary, less the same tax and double the work-related expenses, leaves the couple in which both individuals work worse off.”<!--EZCODE ITALIC END-->

This goes back to my post earlier in this thread. If you believe that people should get a tax deduction for work-related expenses then, obviously, they should get it if they work and not if they don’t, and it should be in some way related to likely levels of work-related expenses. The non-transferrable standard rate band doesn’t meet these criteria. I wouldn’t have the same difficulty with an earned income deduction offered on a uniform basis to all, but the non-transferrable tax bands don’t come anywhere near (and don’t pretend to).

<!--EZCODE ITALIC START--> “I mean individuals who do not pay income tax because they choose not to work.”<!--EZCODE ITALIC END-->

But then you should be unhappy with individualisation. It gives tax benefits to the non-working spouse who chooses not to work because he has significant investment income, while penalising the non-working spouse who is unable to work because of incapacity.

I think what you’re really saying here is that the tax system ought to in some way penalise (or, shall we say, discourage) the taxpayer who can work but doesn’t, to the benefit of (a) those who can work and do, and (b) those who can’t work. Is that a fair summary of your view?

<!--EZCODE ITALIC START--> “When single individuals and unmarried individuals have the same right as married individuals to share their tax free allowances / tax credits with another person of their choice, then you can say lifestyle choices are tax-neutral.”<!--EZCODE ITALIC END-->

I don’t say lifestyle choices are tax-neutral. All I’m saying is that <!--EZCODE ITALIC START--> this<!--EZCODE ITALIC END--> lifestyle choice – to be a single-income couple or a double-income couple – should be tax-neutral.

married v single men and women

There's more to it!

Colm Rapple has just suggested on 5-7 live that it would make sense for the self employed married couple to employ a spouse assuming that both are earning a minimum of £15,000 in order circumvent the tax individualisation issue.

<!--EZCODE BOLD START--> Charlie! I hope you are reading this.<!--EZCODE BOLD START-->

Please stop this madness and close off this loophole fast!

Single but not d<!--EZCODE BOLD END--><!--EZCODE BOLD END-->

subject above is wrong

Should have been:

<!--EZCODE BOLD START--> Self-employed V PAYE worker.<!--EZCODE BOLD END-->

Injustices all around me!

When is it going to stop. I'm having a really bad day!

Re: but why?

But UDS, why should THIS lifestyle choice be different? If you favour the freedom to make individual choices on a tax-neutral basis why should this freedom apply only to single income versus double income married couples only? I'm sure some single people would love to spend a year in full-time education with the possibility (for example) of giving their partner or sibling the benefit of their "unused allowance" for that year in exchange for food and lodgings. Why can't they?

The remainder of our disagreement I think comes down to why a "tax-free allowance" (tax credit, whatever you want to call it) exists, whether it is a right of every citizen to have one and whether it is a transferable right. I have no problem with it being a transferable right, as long as that applies to every citizen.

tedd

Shucks...

<!--EZCODE BOLD START--> "I already have a thing going with Liam D F and I am not the type of girl to two time"<!--EZCODE BOLD END-->



No, in fact

Re: Problem Solved

I have agreed with my employer to take a cut in salary of €19,000. Benjy (the other half) has been put on the payrole on a salary of €19,000. He works from home and his primary duty is to make my lunchbox. (He knows about Liam and doesn't mind, Liam is it over between us?).

Although I have got round it I am still hopping mad, but it has been good to get it off my chest.

Re: Removing my Bra

(This message was left blank)

Re: Boss has Second Thoughts

Boss got worried that paying Benjy €19,000 for fixing my lunchbox might be seen as tax evasion.

I had a blazing row with him, beat him about the head with my bra.

We agreed a compromise.

I would incorporate as Madonna Ltd. Boss would continue to pay Madonna Ltd. my old salary on a consultancy basis.

Over to me now.

Madonna Ltd. has recruited Benji as chief lunchbox maker, salary €19,000. I get the rest. Same effect.

Let's be serious here folks. Individualisation is unsound and irrational, nowhere else in the Western World is it operated. It is a Charlie fetish. Unique nonsense. It cannot survive. :jem

.

Hi tedd

<!--EZCODE ITALIC START--> “But UDS, why should THIS lifestyle choice be different? If you favour the freedom to make individual choices on a tax-neutral basis why should this freedom apply only to single income versus double income married couples only? I'm sure some single people would love to spend a year in full-time education with the possibility (for example) of giving their partner or sibling the benefit of their "unused allowance" for that year in exchange for food and lodgings. Why can't they?”<!--EZCODE ITALIC END-->

Well, you raise the very interesting (and very broad) question of what recognition, if any, society should accord to marriage as opposed to other kinds of relationship. Some libertarians argue that marriage should be purely private affair, which civil laws should simply ignore. I don’t think that any country in the world has actually adopted that position – all give legal recognition to marriage in relation to matter such as inheritance, property rights, guardianship and custody of children, etc etc etc. Nearly all – in fact, probably all – would give recognition to marriage in the tax code.

Of course you can go further, and give some degree of legal recognition to non-marital “marriage-type” relationships, and many countries do – although not Ireland (at least so far as tax is concerned). I think you can justify drawing the line at marriage on the basis that married couples have a legal obligation to support one another financially, and a legal right to expect financial support from one another, and put themselves in a position where courts can reallocate their property and their income according to their respective needs without regard to which of them actually owns the property or earns the income. None of this is true of non-marital couples. Given this, and the economic reality of a couple who are formally and publicly committed to a permanent shared household, it is logical and consistent for the tax system to recognise their mutual interdependence, and to treat their incomes on an aggregate basis rather than as two separate incomes. Madonna has pointed out the ludicrous tax dodges which are possible for the well-advised when the tax code fails to recognise the social and economic realities of marriage.

Actually, I don’t think I’d have a fundamental problem with a system of freely transferrable tax allowances – at least, freely transferrable to anyone with whom you shared a common household, and I can see the arguments in favour of it. It would still be even further from the individualisation which you favour, of course. And individual tax allowances would have to be much smaller, since many more of them would be actually used to reduce tax bills. I, for example, would be able to use the tax allowances not just of my non-working spouse but of our seven children, two of <!--EZCODE ITALIC START--> their<!--EZCODE ITALIC END--> partners, my mother, my spouse’s mother, my spouse’s grandfather, two retired housekeepers and an elderly woman who calls herself my great-aunt but is in fact unrelated to me, all of whom live with us. Childless couples and single persons living alone would probably complain that the system was discriminatory.

Re: now I understand....

What I mean of course is that now I understand why you come to AAM....with all those people in the house, it must be hard to get a word in edgeways!

tedd

PS. "And individual tax allowances would have to be much smaller, since many more of them would be actually used to reduce tax bills.".....and what do you think married single income couples who use both allowances are doing????

is a company not a separate legal entity

I don't understand Madonna. How can individualisation be of benefit here.

Maybe I should have asked this in the beginners section.

Waiting in the long grass

What a reaction! One of the fastest growing threads ever, surely. I think Fianna Fail will pay dearly for Charlie's folly and stubborness over individualisation. Never has there been a measure which has generated such blind fury and hostility among taxpayers. You see, its not just the money. Now Charlie, being a hard man and all that, thinks everything is about money. This is more fundamental - its about punishing people for a lifestyle choice. Single income couples have usually chosen to be single income couples on the basis of making (in their eyes) a conscious decision usually based on childcare issues. In so doing they naturally forego the income involved. To be further penalised is just galling at a very emotional level. I will never forget the reaction of a colleague of mine when this was first annouinced. This most mild mannered of men, whose wife looks after their handicapped child was spitting mad. He and thousands of others are waiting in the long grass to take their anger out on Fianna Fail. When the election comes its payback time, bigtime. Watch out, Charlie!

Re: is a company not a separate legal entity

Hi, But

<!--EZCODE ITALIC START--> “Is a company not a separate legal entity. I don't understand Madonna. How can individualisation be of benefit here?”<!--EZCODE ITALIC END-->

Madonna doesn’t get up too early – all that clubbing and parties – so I’ll handle this one for her.

It works like this. Boss used to employ Madonna at €38,000. Now he retains Material Girl Ltd on a consultancy fee of €38,000. Cost to Boss is unchanged. Madonna turns up every day – well, most days - and does what she always used to do.

Material Girl Ltd employs Guy at €19,000 and Madonna at €19,000. So total household income for Guy and Madonna is unchanged, but they have two full sets of tax allowances and tax bands to use. So they pay less tax. Material Girl Ltd has no profits and so pays no tax.

(There are some PRSI complications, but I’m ignoring those. Also there is a modest cost to keeping Material Girl Ltd in existence. The saving in tax should cover all these costs.)

Every time Charlie widens the non-transferrable standard rate band, the tax saving to be made by jumping through hoops like these gets bigger and bigger, so more and more people will do it. Charlie’s policy, obviously, is to create work for accountants and lawyers, and Madonna and Guy are happy to help him achieve that objective.

UDS and Observer

Haven't put my clothes on yet so decided to post unregistered.

UDS - that's exactly it, though my salary is €56,000 and I split it with Benjy either 50/50 or even €37,000/€19,000.

In all seriousness though I agree totally with Observer's sentiments. This is pure stubbornness on Charlie's part.

The various scams which are available to me will not be available to many who are working in large organisations or even the Civil Service. This is unfair at almost every level.:mad

Re: UDS and Observer

Hi tedd

UDS: <!--EZCODE ITALIC START--> "And individual tax allowances would have to be much smaller, since many more of them would be actually used to reduce tax bills."<!--EZCODE ITALIC END-->

Tedd: <!--EZCODE ITALIC START--> <!--EZCODE BOLD START--> . . . and what do you think married single income couples who use both allowances are doing???? <!--EZCODE BOLD END--><!--EZCODE ITALIC END-->

Yes, that’s exactly what they are doing. I was responding to your point that you have “no problem with [a tax-free credit] being a transferrable right as long as that applies to every citizen.” Since that would be much, much worse for the single earner or the two-income couple than a system simply of credits transferrable between married couples, I think your position on freely-transferrable tax credits is inconsistent with the reasons you give for opposing transferrability between spouses.

The bottom line is that individualisation is socially regressive. It tends to transfer the tax burden from two income families to single income families, who (for obvious reasons) are likely to have lower incomes overall. It tends to transfer the tax burden from the employed to the unemployed, who again are likely to have lower incomes overall. It tends to transfer the tax burden from the able to the disabled. It tends to transfer the tax burden from childless people to families with children, whose outgoings are likely to be greater. And it’s a quite open attempt to reduce the freedom of (largely) mothers to choose between caring for their children and going out to work by penalising them financially if, for their own welfare, they make the choice which is not the one Charlie McCreevy wants them to make.

In so far as it succeeds in its stated objective of inducing mothers to enter to the paid workforce, it increases the already overstretched demand for childcare services while simultaneously reducing the supply of stay-at-home mothers who can and do provide much informal childcare for other people’s children.

From almost every point of view it’s a disaster.

The only positive thing which can be said about it – and it’s not <!--EZCODE ITALIC START--> very<!--EZCODE ITALIC END--> positive – is that, from the self-interested point of view of a couple who, for their own welfare, both prefer to work outside the home, it rewards them for doing what they wish to do, at the expense of other couples who are doing what <!--EZCODE ITALIC START--> they<!--EZCODE ITALIC END--> wish to do. But this is not a good thing unless (a) you are that couple, and you consider that you are entitled to expect others to support and reward your own self-interest at the expense of theirs, or (b) you consider that working outside the home is socially or morally more desirable than working in the home, and that one ought to be rewarded and the other penalised, regardless of the decisions couples would make for their own welfare.

Everyone is being discriminated against.

Made all these points two years ago and here they are again.
Before individualisation there was no point in the home maker working unless the job was very highly paid because it all went on the higher rate of tax and child care. They were coherced into the home.
After Individualisation the home maker is coherced into returning to work otherwise the one income family remains behind on penal rates of tax.
Mc Creevey used a stick to get stay at home partners out of the house. He should have used a carrot. £50,000 threshold for a single income family with an extra £30,000+ for dinkies would have done it. No one loses two much and there is an incentive to work.

Individualisation is not all bad. It is just too much of a betrayal to the system that cultivated a one income family environment for most of the last century and then when at last we all thought taxes were going to come down - to cheat those who did stay at home. How does a woman (political correctness abandoned now) who has being minding the children for 20 years return to work place?. Would any posters here send their mothers back out of the house ?
It wont affect my voting patterns but I know from the hearsay of others there are many as hopping mad as Madonna and will not vote FF.

Finally my single income family threshold is now only £32,000 – not as much as Madonnas. Do artists get more ???