The top 6% pay 49% of all income tax and USC

Or alternatively the LPT could be levied at a more meaningful rate, water charges could be re-introduced, etc.

There are any number of ways of raising revenue but I think most people would agree that a marginal rate of 50/55% on income is probably counter-productive.
 
Gordon Gekko said:
It's simple enough really...cut the top rates of USC to bring the combined highest rates of tax/USC/PRSI to 49%.
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How will you fund the deficit in revenues?

Gordon Gekko said:
The punter then keeps the majority of any incremental income which would have an important psychological effect.
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But that is the case already is it not? The marginal rate, USC and PRSI may all add up to greater than 50% but the effective tax rate is less than 50%.

Gordon Gekko said:
And I stand by my suggestion that we cut the PAYE and Personal Tax Credits.
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But this will increase the tax take from the people that you wish to see paying less tax.
 
TheBigShort said:
How will you fund the deficit in revenues?



But that is the case already is it not? The marginal rate, USC and PRSI may all add up to greater than 50% but the effective tax rate is less than 50%.



But this will increase the tax take from the people that you wish to see paying less tax.
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People seem very confused by the concept of marginal rates and effective rates.

Extra income for a high earner is taxed at his or her MARGINAL rate.

The effective rate is just the blended rate across all of your income.

I would like to see those on lower incomes pay more tax. Cut the 8% USC rate to 5% and cut the two main tax credits by €150.
 
I would also like to see USC structured the way it was when it was first introduced - payable from a very low level of income. Everybody should contribute something from their income.

I would also restore the PRSI contribution cap. Benefits are capped and contributions used to be capped in recognition of this.
 
orka said:
Everybody should contribute something from their income.
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I used to have this view, but now I am not so sure.

From a practical point of view, as social welfare rates are so high, if you tax low earners, you reduce the incentive to work.

It would be better if they paid no tax, but put a significant amount of PRSI into a fund in their own name, and their pension would be based on this.

We are facing a long-term problem where some professionals, public servants and the self-employed will be earning very high salaries and a lot of the rest of the jobs will be on minimum wage or low wage jobs. I think we could address this through the tax system by having little or no tax on the minimum wage, but a bigger contribution to PRSI.

Brendan
 
Gordon Gekko said:
Cut the 8% USC rate to 5%
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Do you have an estimate as to how much this would cost? I'm not saying I'm opposed to the idea but it the deficit needs to filled.
Your tax credit cuts will reap an extra €5-€600m but how much would the cut in USC cost?
And what impact would it have on the top 6% of earners in reducing their 49% liability?
 
If Vradkar approves the move to take more income tax payers out of the marginal rate, which makes sense to me. How will it effect the headline stat of this topic? My estimation is that the top 6% will now pay an even higher % of the total income tax take, even though they too will benefit in monetary terms to the adjustment.
Is this fair?
https://www.rte.ie/news/politics/20...to-signal-tax-cuts-for-middle-income-earners/
 
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Brendan Burgess said:
I used to have this view, but now I am not so sure.

From a practical point of view, as social welfare rates are so high, if you tax low earners, you reduce the incentive to work.
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Social welfare should always be set lower than net income...it should always be worth your while taking a job.
 
Taken from the report posted at the start of this topic

27. The Tax Wedge is defined as the sum of personal income tax plus employee and
employer social security contributions together with any payroll taxes less cash
transfers, expressed as a percentage of labour costs. It is the difference between
what an employer has to pay in terms of gross wages plus taxes to hire an employee
and the net income received by that employee after deduction of all taxes on their
wages. High tax wedges particularly affect low skilled workers, second earners and
older cohorts whose labour force participation is more sensitive to taxation.
Reductions in the tax wedge on these groups can have significant impacts on
participation rates which can increase medium term economic growth rates through
the labour supply channel.
28. Reductions in the tax wedge can also increase the demand for labour from
employers. For these reasons, a competitive tax wedge is considered vital in
encouraging employment growth across all income categories and to incentivise
individuals to remain in or return to the labour market.
29. In terms of international comparisons, according to the OECD “Taxing Wages report
2017”, based on 2016 data, Ireland had the seventh lowest tax wedge (27.1) of the
34 members in the OECD for a single worker on average earnings and the lowest of
the 21 EU members of the OECD.
 
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