Irish Times editorial: "Broaden the tax base"

[TheBigShort]

I never claimed to be against population replacement... it would mean end of human race!! I stated we shouldn't be paying people to have children when they can't afford it and then justifying it by saying "they'll pay for your pension".
Regarding pensions, are you advocating removal of tax relief, making it more likely people won't contribute at all and thereby put even more burden on the kids then?

You have to understand, having children is a human condition, not a financial strategy.
What I can afford today, I may not be able to afford tomorrow. How you can determine who can, or cannot 'afford' children is beyond me.
Btw, do you get tax relief on that private pension? If yes, who is subsiding it?

 

[noproblem]

It is ludicrous for someone without kids to give out about having to subsidise people with kids.

I'm actually the father of 2 wonderful grown up children who have given me 5 grandchildren and both myself and my wife and my children and their spouses wanted and could rear our children without having the taxpayer pick up the bill. At this stage in your argument I think it would be wise of you to cease your propaganda on society, etc. It's a smart man/woman who knows when they've lost. We've got the gist of your sermon at this stage.

 

[Sarenco]

People are free to have kids or not have kids if they wish, but lest we forget, if nobody does, we're wiped out!

Understood Gordon but surely all taxpayers are entitled to have a view on any particular allowance or benefit, whether or not they are eligible for that allowance or benefit.

It seems a bit unreasonable to suggest that it is ludicrous for somebody without kids to have a view on CA payments, State funded education, etc.

 

[Boyd]

You have to understand, having children is a human condition, not a financial strategy.
What I can afford today, I may not be able to afford tomorrow. How you can determine who can, or cannot 'afford' children is beyond me.
Btw, do you get tax relief on that private pension? If yes, who is subsiding it?

Obviously the government and hence the taxpayer, i.e. me

 

[TheBigShort]

Obviously the government and hence the taxpayer, i.e. me

So as a taxpayer, its ok for your private pension to be subsidized by other taxpayers. But other taxpayers who are rearing children, and cannot afford a private pension, should not expect a subsidy in the form of child benefit?

 

[Boyd]

There is tax relief available on pensions and i avail of same. This credit is also available to parents. They may claim child benefit and home care allowance also. My point was about further increases in child care (eg another child care credit), and the main point being the state isn't running a day care centre. In fact the child care industry previously came out against this credit: (http://www.irishtimes.com/news/irel...-credit-would-not-work-sector-warns-1.2631712)
All you have done on this thread is disagree with me and construct straw man arguments about pension tax relief. Perhaps you could articulate your opinions on the upcoming budget instead?

 

[TheBigShort]

There is tax relief available on pensions and i avail of same. This credit is also available to parents. They may claim child benefit and home care allowance also. My point was about further increases in ini child care (eg another child care credit), and the main point being the state isn't running a day care centre. In fact the child care industry previously came out against this credit: (http://www.irishtimes.com/news/irel...-credit-would-not-work-sector-warns-1.2631712)
All you have done on this thread is disagree with me and construct straw man arguments about pension tax relief. Perhaps you could articulate your opinions on the upcoming budget instead?

With respect, it was yourself that specifically identified childcare benefits as burden on the state

Same story as above.
Child care? Yep, let's make the public further subsidise those who made a life choice to have kids. Existing free money (child benefit and home carer allowance) not enough....OK we'll pay your childcare too!!
Spend spend spend. Someone else will pay.

Your tax relief on your private pension is also a 'spend spend spend. Someone else will pay' policy.

As far as the upcoming budget is concerned, I think tax reliefs for private pension funds should be closed off.

Tax reliefs for private pension funds being closed off will also deter uppity, somewhat naive and innocent kids from signing up to private pension schemes that will be gobbled up in fees for administrators and high inflation in the time ahead.

Your views on the budget would be welcome

 

[Boyd]

Any tax relief is obviously a "spend".
My opinions on the IT article are expressed in my original post.
I disagreed with an increase in child care due to there being two existing tax reliefs, which you seem to have taken issue with. Your rebuttal is to attack the pension tax relief which absolutely nobody is saying to increase (and which, again, parents can also claim).

 

[Gordon Gekko]

With respect, it was yourself that specifically identified childcare benefits as burden on the state



Your tax relief on your private pension is also a 'spend spend spend. Someone else will pay' policy.

As far as the upcoming budget is concerned, I think tax reliefs for private pension funds should be closed off.

Tax reliefs for private pension funds being closed off will also deter uppity, somewhat naive and innocent kids from signing up to private pension schemes that will be gobbled up in fees for administrators and high inflation in the time ahead.

Your views on the budget would be welcome

If only there was a way for the government to get back the tax relief that's given for pensions...

An example might help. Over 25 years, someone can contribute around €800k. The "cost" to the State of doing that is €320k. That person's fund should be at the maximum €2m (or thereabouts). He or she will pay €60k of tax on the lumpsum, and then around €30k in tax per year for the duration of his/her life and his/her spouse's life. 30 years would be a decent estmate of that, meaning €900k in tax. Assuming that the capital value of the fund is preserved, when the couple die, the State gets at least €450k in quasi inheritance tax.

So for its part in the trade, the State foregoes €320k to receive €1.4m, with time value of money to be considered also.

 

[TheBigShort]

Any tax relief is obviously a "spend".
My opinions on the IT article are expressed in my original post.
I disagreed with an increase in child care due to there being two existing tax reliefs, which you seem to have taken issue with. Your rebuttal is to attack the pension tax relief which absolutely nobody is saying to increase (and which, again, parents can also claim).

Thats fine, everyone has an opinion. But you have moved somewhat from your 'life choice' position.

An increase in child supports could be viewed in other ways. By increasing the spend, it may facilitate the return to full-time employment for some parents and in turn reducing other welfare payments.
Such an effect may increase demand for places in creches, increasing demand for qualified childminders, further reducing unemployment lines.


The IT article merely highlights things people would like to see done. You have indicated some things you wouldnt like to see done, which is fine. But perhaps you could now identify things you would like to see done?

 

[TheBigShort]

If only there was a way for the government to get back the tax relief that's given for pensions...

An example might help. Over 25 years, someone can contribute around €800k. The "cost" to the State of doing that is €320k. That person's fund should be at the maximum €2m (or thereabouts). He or she will pay €60k of tax on the lumpsum, and then around €30k in tax per year for the duration of his/her life and his/her spouse's life. 30 years would be a decent estmate of that, meaning €900k in tax. Assuming that the capital value of the fund is preserved, when the couple die, the State gets at least €450k in quasi inheritance tax.

So for its part in the trade, the State foregoes €320k to receive €1.4m.

Ok, is the tax relief still at 40%? I thought it was standardised to 20%?
Anyway, if understand your figures correctly, that someone would, over 25yrs, be contributing €615pw? Even allowing for a 40yr career it would still be €385 pw?
And for that they live of a pension worth €2m a year?

 

[Gordon Gekko]

Ok, is the tax relief still at 40%? I thought it was standardised to 20%?
Anyway, if understand your figures correctly, that some would, over 25yrs, be contributing €615pw? Even allowing for a 40yr career it would still be €385 pw?
And for that they live of a pension worth €2m a year?

Yes, tax relief is at 40%. Someone in their 30s can contribute €23,000 a year. That number ramps up as the person gets older. I'm just assuming they contribute the max. The State does well in the end from that trade. Far better than they do from someone who doesn't bother to provide for themself.

 

[TheBigShort]

Yes, tax relief is at 40%. Someone in their 30s can contribute €23,000 a year. That number ramps up as the person gets older. I'm just assuming they contribute the max. The State does well in the end from that trade. Far better than they do from someone who doesn't bother to provide for themself.

Who doesn't provide for themselves? (Assuming we are making exception here for critically disabled people)

 

[Gordon Gekko]

Who doesn't provide for themselves? (Assuming we are making exception here for critically disabled people)

People who rely on social welfare and could have provided for themselves.

 

[TheBigShort]

People who rely on social welfare and could have provided for themselves.

The point of social welfare is that they cannot provide for themselves. For instance if someone is unemployed, they need an income to feed and clothe themselves.

 

[Boyd]

Thats fine, everyone has an opinion. But you have moved somewhat from your 'life choice'

I still think having kids is a major life choice i.e. it's not something one decides on a whim over a Friday evening pint, I hope.

I would like to see a reduction in DIRT, which has doubled since 2008 and crucifies anyone for being prudent. I would like to see some assistance for business start ups and self employed (and no, I'm not self employed nor am i starting a business). To pay for increases, I would like to see some changes in corporate tax which seems very low when compared with personal tax (though this is a balancing act with retaining company presence and it's currently a bit of a political hot potato). Finally, in agreement with the original article, I'd like a broadening of the overall tax base to share the love of paying tax.

 

[Duke of Marmalade]

Gordon, just analysing your example. So €800k was invested in a fund that delivered €5M over the lifetime of the punter. Ahh the good old days!

The State's share of that investment was 40% so if there was tax neutrality the State would be entitled to €2M. Instead it got €1.4M. That is a tax transfer of €600K to begin with. But if the punter had instead invested her net €480k outside the pension system she would have earned €3M. After exit tax and inheritance tax the State would have got at least €1M anyway. So this example shows a massive cross subsidy of over €1.6M to the pension. Of course, I don't accept that it is this stark but the example you have chosen certainly doesn't serve the purpose you intended.

Yes the State has done well enough to get €1.4M for its €320k investment but that's because the punter chose such stellar fund performers. We must presume that the State itself would be at least the equal of your average punter in choosing fund managers, or alternatively that investment in infrastructure would match the returns of the fund manager.

 

[Gordon Gekko]

Where on earth are you getting €5m from?!

 

[Duke of Marmalade]

€500K lump sum, €1.5M fund left to the estate plus 30 years income of €100K p.a. Actually a pensioner needs somewhat more than €100K income to be paying €30K tax.

 

[TheBigShort]

I still think having kids is a major life choice i.e. it's not something one decides on a whim over a Friday evening pint, I hope.

I would like to see a reduction in DIRT, which has doubled since 2008 and crucifies anyone for being prudent. I would like to see some assistance for business start ups and self employed (and no, I'm not self employed nor am i starting a business). To pay for increases, I would like to see some changes in corporate tax which seems very low when compared with personal tax (though this is a balancing act with retaining company presence and it's currently a bit of a political hot potato). Finally, in agreement with the original article, I'd like a broadening of the overall tax base to share the love of paying tax.

I dont necessarily disagree with any of the above, but they simply identify areas where you would prefer to see the extra spend go.
Your initial post implied that you were against increased spending.
I think welfare rates should not be touched, cut nor increased. I think their is scope to apply the 1% USC to all income earners in the interests of fairness. And definitely, the elephant in the room, effective corporate tax rates! There is surely a lot of room to impose increases there without unduly effecting inward investment.