Just a quick side point:
in all income tax systems there are (many) people who won't pay any tax as their incomes are too low, e.g. students, part-time workers, etc.
So you will never have a system where ALL earners pay some tax.
But, yes, MORE earners should be paying tax.
The Economist Intelligence Unit has already issued a strong cautionary message for Ireland on this very issue. Its 2012 report, Investing in Ireland – A Survey of Foreign Direct Investors, praises our pool of domestic and foreign workers, but says income taxes could be discouraging senior talent. Investors are concerned about what they see as imbalances in our personal tax system; a large gap between the average all-in tax rate paid by the typical worker, which is among the lowest in the OECD, and the marginal tax rate for top earners, which is among the highest. They believe that these high marginal rates will make it less attractive for senior executives to settle here.
The Department of Finance, in its own published review of the USC in November 2011, said that the abolition of the PRSI ceiling, together with the introduction of the USC, brought about a more progressive and equitable combination of charges. The tax reforms of recent years mean that Ireland now has the most progressive tax system in the European Union.
Most of the print media and RTE, the Public Sector Broadcaster and TV3's very own town crier Vincent Browne, will continue to misrepresent the facts and present a biased view of the facts in order to advance their left-wing agenda.
It particularly annoys me that the 'justification' advanced for increasing the USC by 3% is to bring it into line with the rates for self-employed people - that assumes as a given that a 55% marginal rate for anyone is okay and seeing as the self-employed have sucked it up for a year it's probably safe to whack it onto PAYE people now. Self-employed people also don't have an employer's contribution made on their behalf. For a PAYE worker earning over 100K, the marginal extra tax take is a total of 62.75% (52% from the employee and 10.75% from the employer) - increasing this by 3% would increase the marginal total extra tax to a monstrous 65.75%. That is too much in what is already THE most progressive tax system in the EU.
It's not a direct tax on the employee but it is a tax on employment and it does affect the employee indirectly: if an employer has a budget of say €100 to pay salary, the €100 will be down to €90.29 (to allow for the 10.75% employers PRSI) before the employee sees it and then the employee is taxed, leaving them with €43.34 at current marginal rates - so of the original €100 that the employer had available to send in the employee's direction, the employee sees a lot less than half.While I see where you are coming from to some extent, it's a bit of a stretch to call the Employer's PRSI contribution a tax on the employee.
It's not a direct tax on the employee but it is a tax on employment and it does affect the employee indirectly: if an employer has a budget of say €100 to pay salary, the €100 will be down to €90.29 (to allow for the 10.75% employers PRSI) before the employee sees it and then the employee is taxed, leaving them with €43.34 at current marginal rates - so of the original €100 that the employer had available to send in the employee's direction, the employee sees a lot less than half.
It's easier to tax higher earners than lower. Lower income earners inject more easily their cash into their economy for the basic needs while higher might just invest part of their income more into property or savings that do not make the economy turn around...
That's a spurious argument frequently held up by the Left in this country.
The end result will be that we won't attract people with capacity to earn high incomes here, and we will lose more high earners to countries that actively seek them. Just like we attract the large US multinationals here, so too will other countries attract high earning individuals.
Sorry I don't understand what you mean by "spurious" which is synonym with "false".
Example: someone earning 1000 Eur/month is likely to spend most of the earning on goods of primary necessity like food, clothing, etc.
Someone earning 3000 Eur/month can more likely save part of their income.
Any example that contradicts this pls?
The top rate of tax is reached at a much lower level than most EU countries.
Sorry I don't understand what you mean by "spurious" which is synonym with "false".
Example: someone earning 1000 Eur/month is likely to spend most of the earning on goods of primary necessity like food, clothing, etc.
Someone earning 3000 Eur/month can more likely save part of their income.
Any example that contradicts this pls?
You are absolutely right. What also has to be factored in is that an employer offering an employee €90,000 pre-income tax and other deduction has to get at least €100,000 of productivity out of that employee just to break even. If the employer doesn't think that is possible or likely they will not create that job thereby reducing overall employment.It's not a direct tax on the employee but it is a tax on employment and it does affect the employee indirectly: if an employer has a budget of say €100 to pay salary, the €100 will be down to €90.29 (to allow for the 10.75% employers PRSI) before the employee sees it and then the employee is taxed, leaving them with €43.34 at current marginal rates - so of the original €100 that the employer had available to send in the employee's direction, the employee sees a lot less than half.
Some of the money will go to the employee or to creating extra jobs, or to offering a product at a lower price or to investing in other areas of the business. All of which is positive for the economy.Yeah I did say I knew where you were coming from with this but I still disagree, although I can see your point. By that logic, if Employer's PRSI was abolished in the upcoming budget, every employer would give their employees a pay rise equivalent to the savings of the Employers PRSI, and that is never going to happen in a million years.
It's easier to tax higher earners than lower. Lower income earners inject more easily their cash into their economy for the basic needs while higher might just invest part of their income more into property or savings that do not make the economy turn around...
About the rate to be applied to different earners that's depending on so many variables. Certainly the government has got pressure in repaying the Troika+income tax is "more visible" than many other taxes as regards predictions hence why the disappointment arond...
Simplistic? Maybe... But I still thank J. M. Keynes...
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