The energy plan was huge and may well have contributed to the failure of the whole mini budget, but every interview, podcast, article, etc. puts the emphasis primarily on the tax cuts.
Over 1 million tax payers now paying tax at the higher rate
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We'd need a whole different thread to even begin to scratch the surface of its folly.
What I was really wandering if why is the UK referenced? Is it a good example for us to follow? Has their policy produced a radically different and more successful economy compared to Ireland's? Or is it just that they have a different tax distribution. If it's the latter then I'm not seeing the argument.
Why is 1 million people paying some part of their tax at the marginal rate a bad thing? I'm just trying to first see what problems the current system is causing. Based on what I've read on the economy, productively and labour participation are far from a concern right now. If anything the government should be taking money out of the economy not adding to it right now.
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What's repeatedly missed though is the value those high earners receive for their taxes from comparable countries.
When I lived in France, I paid a lot of tax, I also received a lot of benefits. The healthcare system was well run & nearly free to use with cheap medication to boot, I could buy low cost public transport tickets on services which were reliable, modern & frequent. I had subsidised childcare, a better state pension etc). The deal there is, if you earn more, you pay more, but you also receive. Conversely when I lived in the States, it was the opposite, had to pay for everything but the taxes reflected that.
For higher earners in Ireland, we pay European levels of taxation, for access to US levels of social benefits.
T McGibney
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The most obvious problem I can see is that it's grossly inflationary.
Take rents. If a highly mortgaged landlord is paying 52% tax on their rental profits (up from circa 42% not that long ago), their only options are to 1. Charge the tenant higher rents to compensate. 2. Exit the market.
So we end up with a concurrent rent price spiral and an abject rental accommodation shortage.
That's a very specific case that reflects other factors not just tax. In general cutting taxes - i.e., putting more money into people's pockets means they can now spend more - this will likely cause further inflation. Using your example the landlord could just as easily put up rents after a tax cut because the tenant also received the same tax cut.
Ironically (highly) mortgaged landlords can offset their interest payments against tax.
Tax will of course be a factor in any business decision but to go back to the point of this thread, I don't see how increasing tax bands so that less than 1 million people now pay the top rate of tax will materially ease the rental crisis - or indeed right some other wrong that's out there.
By all means target landlords but altering the entry point of the top rate of tax is a fairly blunt instrument. Sledgehammer and nut comes to mind.
Depends on which part of the US. Some states have low/no income tax but in others the state/local taxes are so high you are at European levels. If I lived in NY or CA, I would pay more taxes than I do here.
I find that very hard to believe. Which social benefits exactly?
the fact that these bands have not been raised along with inflation is what is blunt, crude , unfair and actually dumb, its the government that has been waving the sledgehammer and its the tax payers on the middle incomes that have been getting hit with it.
T McGibney
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It's actually very typical.
Situations like this have been discussed ad nauseam on AAM for several years.
On a purely selfish basis I would of course prefer to pay less tax but to suggest our income tax system is all of the above is not credible.
We've one of the most progressive tax systems in the OECD.
https://www.oecd.org/gov/gov-at-a-glance-2021-ireland.pdf
Our tax system also ranks highly across Europe for reducing income inequality.
So to recap: Ireland has one of the most productive workforces in Europe with a unemployment rate at close to record lows and an employment rate at record highs. At the same time the tax system is both progressive and has contributes to reduced income inequality.
Having a million people pay some part of their income tax at the top rate makes for a catchy stat but what's fundamentally wrong with it?
T McGibney
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Income equality isn't worth much to the working families who these days struggle to save sufficiently for periodic financial emergencies like health insurance renewals and car replacements and end up being ripped off by scams like PCP financing on car purchases.
You do know that at the last budget the entry point to the top rate of tax went from €36,800 to €40,000. That's an increase of 8.7% the budget was announced on September 27th.
The rate of inflation in August 2022 was...
8.7%!
But the increase in wages that family may have received should have helped.
Ireland's wage growth compared with the EU, UK and US
Indeed has released new wage tracker analysis showing Ireland's wage growth compared with the EU, UK and US
businessplus.ie
On the last point changing tax bands will do nothing for financially literacy.
T McGibney
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What increases in wages?
Yes but again a legacy issue is these should have been raised long ago, and it still needs to be raised alot more if our taxation system is to maintain credibility and the veneer of fairness
I don't know what you think a fair tax system looks like but I would think the most progressive tax system in the OECD is a good place to start.
Who, apart from yourself, thinks the current system is incredible and unfair?
T McGibney
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Most progressive in the OECD ≠optimal.
There is presumably a good reason why every other country, many both more successful and historically less vulnerable to economic shocks than ours, has a system that leans less on higher earners.
Me.
Okay now we might be getting somewhere. One of the issues during the property crash - if I remember correctly - was the tax base was too narrow. We were overly reliant on stamp duty. It's fair to say everyone should pay something. I believe that was one of the reasons why USC was introduced.
But your argument is weak - the use of "presumably" isn't helping. Can you flesh it out with some evidence/credible material to support this?
Oh you've nearly a quorum!
DublinHead54
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It feels like we are taxed much heavier than other countries I have lived in (UK, USA).
Do those charts consider USC etc?
I earn the same now as I did in the US but I pay a lot more tax here.
Do those charts consider USC etc?
I earn the same now as I did in the US but I pay a lot more tax here.
T McGibney
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Weak, how? We're clearly an outlier in terms of progressive taxation. The assumption that we're correct and everyone else is wrong may be a reasonable one but is hardly sustainable on its own without rigorous supporting data if you wish to cite it as a virtue. You can "presumably" do your own research on that if the mood takes you.
By the way, our tax base is even narrower now than it was in the last bubble.
Okay sticking with hyperbole, fair enough.
You realise then you're making an argument for more not less tax.