Individualisation is here

Hi All

I have to say that I broadly agree with Tedd on this issue. It has indeed been a highly charged and emotive debate with some fine displays of histrionic rhetoric by posters. But, is Tax Individualisation really an anti-woman measure or indeed an anti-family measure?

I don't think that the following important issues have been addressed in the debate so far - apologies if they have. Assumptions: Non-working spouse has no investment income. He/she relies totally on working spouse.

1. <!--EZCODE BOLD START--> Single income married couple - no children<!--EZCODE BOLD END-->
Many single income married couples have no children either by choice or as directed by nature. Should this single income couple derive a tax advantage? What added value does the stay at home spouse give to society in this instance?

2. <!--EZCODE BOLD START--> Single income married couple - grown-up children<!--EZCODE BOLD END-->
Many single income couples have children who no longer need to be "looked after" in the family home by the stay at home spouse. Should the taxpayer be asked to foot the bill for the spouse who chooses to stay at home because the working spouse has a very good salary and or likes the idea of his/her spouse "not having to work".

3.<!--EZCODE BOLD START--> Single income married couple with children<!--EZCODE BOLD END-->
This is where I am a little generous, but, with one caveat: my generosity only extends to those with children who are necessarily engaged in "looking after" the children in the home. We are all aware of the great work being carried out by our fine educational establishments of international repute, whose teachers are at all times in "loco parentis".

Between the ages of 4 and 17, children are legally obliged to attend school. Should the stay-at-home spouse gain a tax advantage for a "job" which he/she is clearly not carrying out? Obviously, this point will have to be refined to take into consideration school holidays, <!--EZCODE BOLD START--> less<!--EZCODE BOLD END--> the actual holiday time which would normally be taken by the working spouse. This would ensure no discrimination between double income families with children and single income families with children who equally look after children during their holidays.

4. Final nail in the coffin for single income married couples per se. Can anyone hazard an educated guess as to who patronises the private golf couses, tennis clubs, shops, cafés, etc during the normal working week? Could we perhaps look no further than the non-working spouse with no chlidren, children at school, grown-up children for the answer?

Should my tax be abused to fund the lifestyle of the stay-at-home spouse? I think not.

I broadly agree with Tax individualisation, I think that it should be refined to fund genuine cases where a spouse elects to stay and look after children of a <!--EZCODE BOLD START--> pre-school<!--EZCODE BOLD END--> age and of course in the hardship cases of child disability. Those who cannot themselves work should also be catered for.

Regards

Marion :hat

Hi Marion.

Interesting stuff. But underlying the questions you pose is that society should have a notion as to whether it is “good” or “bad” for a spouse to stay at home, and reward the spouse accordingly.

I fundamentally disagree. Whether I work at home or go out to work is a decision which I will take having regard to my interests, my spouse’s interests, the interests of my children (if any) and our collective interest as a family. I have no duty to anyone beyond that, and no-one else is entitled to interfere in my decision. A generation ago women had to fight a hard battle to achieve acceptance of this principle, and they should not abandon it now.

Underlying your questions also is the assumption that, under the old system, the two income couple somehow “subsidised” the one-income couple. For example, you talk about the stay-at-home spouse gain a tax advantage for a "job" – her work in the home. Not at all. She had, and could use, a personal allowance and a standard rate band regardless of whether she stayed at home or went out to work. There was, therefore, no tax advantage to staying at home. Two couples earning the same income paid the same tax, regardless of whether they were a single-income couple or a two-income couple. It is individualisation which involves a tax advantage and a subsidy – a subsidy from the one-income couple to the two-income couple. The admitted intention behind individualisation is to create a tax advantage to going out to work – in other words, those who do not work subsidise those who do.

Of course paid work is valuable to society, but its value should be reflected in the wages paid. Distorting the tax system to create an incentive to take up paid work at the expense of those who do not take up paid work is the same thing as (and makes about as much sense as) a direct employment subsidy, paid by the unemployed. In other words, you feel that as well as being rewarded by their employers for what they do, workers should be <!--EZCODE ITALIC START--> additionally<!--EZCODE ITALIC END--> rewarded by those who, for whatever reason, do not work. And, specifically, with the individualisation system, you are saying that <!--EZCODE ITALIC START--> it is only married people who should receive this employment subsidy<!--EZCODE ITALIC END-->. Put in these terms, and you can see what nonsense individualisation is.

At bottom, those whose arguments assume that going out to work is more socially useful and we should therefore encourage it are falling into a trap that, in other circumstances, they would recognise and avoid. They are assuming that, because the stay-at-home spouse is unpaid, what she does is of no value. They are assuming that society will be better off if more people go out to work, and we should encourage this through the tax system. This is quite wrong; income is being confused with personal welfare. If we coerce somebody to go out to work by distorting their choice through the tax system when, given a neutral system, they would not have done so, they will be less well-off – less happy, less able to achieve their personal goals about how they would like to spend their life. In addition the welfare of those who stay at home will also have been reduced (because they will be poorer). Society as a whole is therefore richer in material terms, but worse off in personal welfare terms, as a result of policies like this. And what use is maximising society’s income if, overall, it makes us less happy?

<!--EZCODE BOLD START--> <!--EZCODE ITALIC START--> Marion<!--EZCODE ITALIC END--><!--EZCODE BOLD END-->

Those are fine points <!--EZCODE ITALIC START--> ( BTW you wouldn't have a bra to spare by any chance )<!--EZCODE ITALIC END-->

What really galls Benjy is that he stayed at home all those years partly because any of his income would have been subject to higher rate tax. But now that it is worth his while he has lost touch with modern Garbage Disposal methods - he feels badly cheated.

What really galls is seeing Dinkies earning very substantial sums, maybe £100k each. These have been given a windfall which almost embarrasses them. Maybe to level things up a bit, the second income should be subject to a "super" tax rate of say 50% on earnings over say £50,000.

<!--EZCODE BOLD START--> <!--EZCODE ITALIC START--> sfag<!--EZCODE ITALIC END--><!--EZCODE BOLD END--> I was talkin' <!--EZCODE BOLD START--> €<!--EZCODE BOLD END-->. But I don't understand where your £32,000 comes from.:rolleyes

.

I have an idea .......... lets have a whip around for Madonna to come up with the money she looses through this individualisation caper and present it to her after she gets the rest of her kit off .......... are you up for it Material Girl !! :b

Hi Marion - I think you're making very broad assumptions here

<!--EZCODE QUOTE START--><blockquote>Quote:<hr> What added value does the stay at home spouse give to society in this instance? <hr></blockquote><!--EZCODE QUOTE END-->

I personally know of many cases where the 'stay at home' spouses are adding huge value to society. They are the ones taking up the slack for the dinkies when one of the kids is sick, or the man who fixes the gas oven is coming during the day. Many such spouses are actively doing charitable work (Simon community, Oxfam shops) etc etc also.

In fact, I'd say that on average, they are adding move value to society than the dinkies, whose day-to-day activities are totally focussed on adding value to their own income, not society.

Hi sfag - <!--EZCODE QUOTE START--><blockquote>Quote:<hr> Would any posters here send their mothers back out of the house ?<hr></blockquote><!--EZCODE QUOTE END-->

Maybe not, but I know of many cases where the mothers in the 50's simply got bored moping around the empty house and have taken up relatively unskilled work (canteen operative, bank clerk) simply to keep them off the G&T's.

Regards - RainyDay

Re: Hormanal Male

It's a deal, HM. You can get the full monty in the Craic Forum (I don't want to get arrested in this public place).

Ministerial Bravery!

Still think that what McCreevy has done will come back to bite him. Suppose that he had never increased the standard rate tax band or increased it by a derisory amount. We'd all have grumbled, moaned and generally forgot about it after a while, as we focused on his other tax reductions. HOWEVER, he has made a fatal mistake by hugely increasing the band for one section of society and leaving it unchanged for another. Now, not getting a sweetie is one thing; not getting a sweetie which your neighbours are conspicuously enjoying is another and much more painful experience. Doesm't take much knowledge of human nature to figure that one out!

A further point. This has been accepted by the "official feminists" as a good thing. Naturally, as "official feminists" generally being single or part of a dual income household. (Just a common sense observation - no mysogynistic feelings here I assure you) However real feminists are a mixture of full-time employed, part time employed, homemakers, students, etc.

AND todays full time employee is tomorrows stay at home mother and perhaps the day after's back to school student. Such people can clearly see how McCreevy's folly narrows their choices. I was actually amazed at how many two income couples were appalled by the individualisation proposals - I remember several letters to the Irish Times (cultural bias admitted!) in this vein.

Finally, to underline the foolishness of McCreevy's action, the people most affected are middle to upper income, educated middle class. Exactly the demographic most likely to be classed as "floating voter" and thus must likely to inflict huge punishment on Fianna Fail. Nor are they likely to flock to TD's clinics to give them early warning of the carnage that awaits!!

As they used to say on "Yes Minister", 'What a BRAVE proposal!'

Cost of working.

Tommy wrote:
"On the other hand, before individualisation there was an inherent unfairness in the tax system in that it never recognised that an individual who goes out to work every morning (as opposed to staying at home to mind kids or whatever) faces costs such as transport, eating out, good clothes etc which are not deductible against tax. These costs are avoidable if a person decided not to work, for whatever reason."

tedd wrote:
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.

Before I start, I'll state that I'm a dinky. Both of us are in our late 20's, planning to start a family a few years down the line, and when we do, the plan is that my wife will leave paid employment and work at home. And in view of that, I'm opposed to individualisation, and hope that it will have been reversed by when the time comes that it affects me.

I would dispute the above arguments as reasons to give greater tax credits to a couple with 2 incomes. Taking Tommy's "unavoidable" costs:

Transport:
Assume working spouse (WS) uses transport to commute, and incurs transport costs. WS may be able to telecommute - avoiding transport costs on days working from home.
It's equally fair to assume that stay-at-home spouse (SAHS) needs transport to bring kids to school/pick them up/go to the supermarket, etc. Transport costs are therefore unavoidable for SAHS, and may be greater than for WS (unless the intention is to make SAHS into housebound spouse).
Conclusion: It's not possible to say that transport costs are greater for WS.

Eating out:
SAHS may choose to be a "lady who lunches" (or even a "man who lunches") - eating out every day, wine with lunch etc.
WS may have a subsidised canteen, or may bring sandwiches to work.
Conclusion: It's not possible to say that eating out costs are greater for WS.

Good clothes:
WS may well work in an environment where casual dress is the norm, so no costs are involved in the purchase of "good" clothes - clothes that are worn to work can also be worn outside of work.
SAHS may well be a dedicated follower of fashion - just because she's only dropping the kids to school, doesn't mean she'll be happy to go out in a baggy tracksuit, without makeup - she'll be meeting the other parents, so she'll want to look her best
(apologies if this can be construed as being non-PC)
Conclusion: It's not possible to say that clothing costs are greater for WS.

So on a case-by-case basis, the costs incurred by working outside the home vary with distance between home and work, mode of transport used, facilities available at work and dress code. It is not correct to assume that because both spouses are working, their expenses are doubled. Hence it is unfair to give extra tax credits to dual income couples, and it was never the reason behind individualisation.

Re: Cost of working.

Hi asd

I agree with what you say, and I'd add to it that, even if you <!--EZCODE ITALIC START--> do<!--EZCODE ITALIC END--> have signficant work-related expenses, it is not the responsbility of other taxpayers to meet them. It is the responsibility of your employer either to meet them or to pay you a salary which enables you to meet them, and still be properly rewarded for the work you do. And this is true regardless of whether you are single or married, and regardless of whether your spouse works or not.

Mentioning work-related expenses in this context is a complete red herring.

Re: You ain't seen nothing yet

Wish I had read this thread before the Dail debate on Wednesday. :\

Let me get this straight. A Fat Cat insurance broker who has accummulated over the years a few residential properties and a few shares - keeps the wifey at home <!--EZCODE ITALIC START--> (or on the golf course)<!--EZCODE ITALIC END--> but because of the investment income he gets full use of the dinkie giveaway <!--EZCODE BOLD START--> AS WELL AS<!--EZCODE BOLD END--> the Home Carer allowance.:eek

The average couple in my consistency are forced to both work and don't even get a smell of the great dinkie largesse.:mad

Contrary to the title of this topic Individualisation is <!--EZCODE BOLD START--> <!--EZCODE UNDERLINE START-->NOT<!--EZCODE UNDERLINE END--><!--EZCODE BOLD END--> here - <!--EZCODE BOLD START--> YET<!--EZCODE BOLD END-->.

Single income couples get €37,000, Dinkies get €56,000 at standard rate. <!--EZCODE ITALIC START--> Charlie's<!--EZCODE ITALIC END--> grand design is to make this €37,000 and €74,000 - FULL individualisation - a tax break in the pocket of €8,140 difference between the two households.

I'm forming a new political party, what will I call it?? Ah the <!--EZCODE ITALIC START--> "Workers Party"<!--EZCODE ITALIC END--> - that should clean up at the elections.

Re: You ain't seen nothing yet

Before this topic turns into a tedious Aer Lingus versus Ryanair style tit for tat (sorry Tharg), can I make a point?

Prior to individualisation, stay at home partners with no other income were in effect subsidised by other tax payers because they were given a legitimate means to reduce their tax as a couple which was not available to unmarried people (individuals or couples). In my view, this results in a higher rate of tax required from those who actually pay tax than would be necessary if this group of people were not given this tax break.

Now the situation has been reversed. And the people who benefited from this injustice for years are now complaining that the tables have turned. And they are damning anyone who does not share their lifestyle as greedy, selfish and antifamily. But they refuse to acknowledge in any way that for years other people were paying for their lifestyle choices.

I have no objection to the State "supporting family life". UDS thinks "tax free allowances" should not be linked to employment costs. Why should they be linked to financially supporting family life (the alternative in this debate) then? If the State wants to support parent-supplied childcare, then restrict this to parents with children from 0 to whatever age. Or provide creches for parents who work and make an equivalent amount available to subsidise parents who stay home in some other way.

Even if such support stretched from 0-18, it would reduce the inequity of the pre-Individualisation days. I would support making concessions to parents of young or disabled children, much has Marion has suggested. But this represents at most one half of the average working life and I disagree with subsidising the rest of it. All the "family-friendly" rhetoric is hiding the fact that for the other half of their expected working life, partners who stay at home are given a legitimate means to reduce their tax as a couple which is not available to others. Irrespective of how they decide to pass their days.

This is unjust.

tedd

ps UDS your argument that all expenses of working should be covered by income is interesting. Why don't we try telling the self-employed that they can no longer reduce their tax liability by claiming expenses. With your theory, they should be earning enough to cover their expenses. I'd like to see the response to that!

Re: You ain't seen nothing yet

Hi PdR

<!--EZCODE ITALIC START--> “Let me get this straight. A Fat Cat insurance broker who has accummulated over the years a few residential properties and a few shares - keeps the wifey at home (or on the golf course) but because of the investment income he gets full use of the dinkie giveaway AS WELL AS the Home Carer allowance.”<!--EZCODE ITALIC END-->

Of course. He’s a well-to-do self-employed professional, so it stands to reason that Charlie will look after him and his lovely wife. How did you think it would work?

Hi tedd

<!--EZCODE ITALIC START--> “Prior to individualisation, stay at home partners with no other income were in effect subsidised by other taxpayers because they were given a legitimate means to reduce their tax as a couple which was not available to unmarried people (individuals or couples).”<!--EZCODE ITALIC END-->

Not so. Married people, whether or not they worked, could pool their tax allowances. Single people, whether or not they worked, could not. Thus, if there was discrimination, it was not between one-income couples and the rest; it was between married and unmarried people.

<!--EZCODE ITALIC START--> “And the people who benefited from this injustice for years are now complaining that the tables have turned.”<!--EZCODE ITALIC END-->

Loaded language, tedd. You’ve yet to demonstrate that, where two couples pay the same tax on the same income, there is an injustice.

<!--EZCODE ITALIC START--> “UDS thinks "tax free allowances" should not be linked to employment costs. Why should they be linked to financially supporting family life (the alternative in this debate) then?”<!--EZCODE ITALIC END-->

Actually, tedd, nobody (apart from yourself) suggests that the non-transferrable standard rate band is linked to employment costs. Are you telling me that €19,000 is a reasonable guess at typical employment costs?

I don’t think it should be linked to financially supporting family life either. I think a couple should have the same allowances and bands available to them regardless of whether one, both or neither of them work, stay at home rearing children or pass their time flower-arranging and writing terrible poetry. There’s a basic principle here; how you choose to spend your days is none of Charlie McCreevy’s business.

So why should anyone get a personal allowance and a standard rate band? Because it is considered wrong and unjust to tax all income at the marginal rate, for two reasons. First, a certain amount is needed for the basic essentials of life. Second, we consider that those whose income is (relatively) higher should pay a greater proportion of their total income in tax. These are the reasons we have a personal allowance, a standard rate band and a higher rate band, and they hold good regardless of whether you work, and whether you are raising children. And a married couple are allowed to pool their allowances and bands in recognition of the social reality that they have pooled their income and expenditure. Failure to recognise this leads to the kind of artificiality which has already been highlighted.

<!--EZCODE ITALIC START--> “UDS your argument that all expenses of working should be covered by income is interesting. Why don't we try telling the self-employed that they can no longer reduce their tax liability by claiming expenses. With your theory, they should be earning enough to cover their expenses. I'd like to see the response to that!”<!--EZCODE ITALIC END-->

Tedd, the treatment of the self-employed exactly illustrates my point. The income of their trade or profession has to first of all cover the expenses of the business – tools, equipment, travel, whatever. Only by deducting these can we identify the profit of the trade or profession, and this is the figure on which they should be (and are) taxed. The self-employed <!--EZCODE ITALIC START--> do<!--EZCODE ITALIC END--> have to earn enough to cover their expenses; otherwise their problem is not tax - they will have no liability - but bankruptcy.

But the self-employed don’t get a tax deduction for travelling from home to work each day, for buying suits, for eating lunch, and these, I think, are the kind of expenses that you mention to justify the notion that a two income family should have greater tax allowances than a one-income family on the same income.

Bottom line; the tax a couple pay should depend on the level of income they have, and not on how they got it.

Re: Game, Set and Match

This has been a long and divisive debate but I think the last word goes to <!--EZCODE ITALIC START--> UDS<!--EZCODE ITALIC END--> who succinctly summarized the whole matter thus: <!--EZCODE QUOTE START--><blockquote>Quote:<hr> <!--EZCODE BOLD START--> <!--EZCODE ITALIC START--> "Bottom line; the tax a couple pay should depend on the level of income they have, and not on how they got it. "<!--EZCODE ITALIC END--><!--EZCODE BOLD END--><hr></blockquote><!--EZCODE QUOTE END--> I am not going to gloat over the fact that I won as I think we should move on, there is a fascinating debate about the centre of the Universe in the <!--EZCODE ITALIC START--> Great Debates Forum.<!--EZCODE ITALIC END-->

For those who get there kicks below the waste I have taken my kit off in the <!--EZCODE ITALIC START--> Craic Forum<!--EZCODE ITALIC END-->.

waist not want not

For those who get there kicks below <!--EZCODE BOLD START--> the waste<!--EZCODE BOLD END--> I have taken my kit off in the Craic Forum

What utter rubbish :lol

Individualisation

Couldn't you equally argue - bottom line, the tax a person pays should depend on the income they have, not on anything else.

Re: Individualisation

Hi UDS,

I agree with you and your alter ego Madonna that the discussion has run its course.

I do think it's a little unfair to accuse me of using loaded language. Yourself and Madonna were happy to implicate the personal lives of politicians to suggest they had vested interests in the support of your argument. That's pretty loaded, too.

My view is that the previous sytem of tax was unfair to a group of people. Your view (I think) is that the current system of tax is unfair to a different group of people. I think the discussion brought out some interesting suggestions for taxation strategies that might be more acceptable to both groups.

All the best,
tedd

PS Madonna, will you please put your clothes on?!

Re: Individualisation

Fair enough, ladies and gents. We'll leave it here for the time being.

It's been challenging and stimulating. Thanks to all.

Re: Individualisation

Congratulations. I don't think I have seen another topic that has exuded the passion expressed in alot of these posts. Well done.

Attempt at a Summary

Here is my attempt at a summary of the discussion.

(NB <!--EZCODE ITALIC START--> Not<!--EZCODE ITALIC END--> an attempt to have the last word, and apologies in advance to anyone who feels their viewpoint is overlooked or misrepresented.)

<!--EZCODE BOLD START--> In Favour of Individualisation<!--EZCODE BOLD END-->

Purely self-interested concerns aside, someone might favour individualisation for either (or both) of the following reasons.

First, the view that marriage is a private affair, which ought to be ignored by the tax system. Advocates of this view would (I think) favour a much greater degree of individualisation than we in fact have – they would argue that a married couple should be taxed in all respects like two single people.

Secondly – and probably more common – the view that participation in the paid workforce is socially desirable and/or for moral or political reasons ought to be rewarded or encouraged, and the tax system ought to give effect to this. Some advocates of this view would add that the tax system ought to confer comparable treatement on those who cannot, or should not be expected to, participate in the paid workforce – e.g. carers, the disabled, those over pension age – so that it is only those who could participate but choose not to who are (relative to others) disadvantaged by individualisation.

<!--EZCODE BOLD START--> Against Individualisation<!--EZCODE BOLD END-->

Purely self-interested concerns aside, the reasons for opposing individualisation can be summarised as follows.

The view that marriage is a social and economic reality which involves the pooling of income and expenditure, and that the tax system ought to recongnise this by taxing a married couple on an aggregate basis rather than as two individuals.

The view that participation or otherwise in the paid workforce is a personal choice made for the citizen’s own welfare which the tax system ought not to seek to distort.

Individualisation

Sorry to add my two cents worth after you've signalled the closure of the thread, UDS, but there is one point I haven't seen mentioned anywhere which is germane to the issue.

I think it is highly likely that, had the old (marriage-favouring) system been retained, it would have been subject to challenge at a European level, as discriminatory, by gay couples who cannot marry under law here. Charlie may simply have been facing that medium-term reality, as well as encouraging married women back into the workforce at a suitable time tactically, by proceeding as he did with individualisation.