Upcoming budget.

DerKaiser said:
For my part, I'd suggest we eliminate the levies and PRSI and have a combined rate of income tax at a few levels. 0% on the first €10k, 15% on the next €10k, 30% on the next €10k and 50% of earnings above €30k.
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New Simple DerKaiser system:
So a single person on 50,000 would pay:
10,000 @ 0 % = 0
10,000 @ 15 % = 1,500
10,000 @ 30% = 3,000
20,000 @ 50% = 10,000
= 14,500 or 29%

Existing Complex Gombeen System:
They are currently paying (PAYE worker & if my calc is correct):
PAYE:
36,400 @ 20% = 7,280
13,600 @ 41% = 5,576
Less TC: 12,856 - (1,830+1,830) = 9,196
PAYE = 9,196

PRSI @ Class A1 :
Health Levy Free Allowance: 127 * 52 = 6,604
6,604 @ 4% = 264.16
50,000 - 6,604 = 43,396
43,396 @ 8% = 3,471.68
PRSI = 3,735.84

Income Levy:
50,000 @ 2% = 1,000

Tax = 9,196 + 3,735.84 + 1,000
= 13,931.84 or 27.86%

You would need to set up a spread sheet, for different levels of income, but not much difference in tax take @50k and much simpler to administer.
 
DerKaiser said:
1) What about the levies, are they in addition to the 13.5%?
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There are no levies with a flat rate tax system. The rate is based on the total tax take that the Government needs to achieve.

2) All you're doing is taxing the higher earners less and the lower earners more
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No, what I'm proposing is taxing everyone in a fair and equal manner. The comes a point in time when you must step back and ask "what is fair?". In this country we've got to bogged down in a strange combination of a pseudo leftist wealth distribution policy and vested interests availing of tax breaks. This needs to stop. We cant afford to give away billions in tax breaks and we cant afford not to have everyone pay their fair share.

The beauty about a flat rate tax is that it is a % of income and 100% proportionate. You earn more, you pay more.

Also, as a flat rate tax is more efficient and costs a lot less to administer, you will invariably find that compliance will be much higher and it will yield higher. This gives you a more money to target at the genuinely disadvantaged in terms of income suppliments etc.

Using my own circumstances as an example - my household = 2 adults, 2 children, PAYE income, average house/mortgage. Household income was almost bang on the national average in 2009, yet we paid more than twice the national average in income tax. And this seems to be replicated among many friends and family. This is wrong full stop.

Your posts are always excellent..But can you say what you consider to be "middle income "?
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Average income. On a % scale of 1 to 100 of all tax payers, where 50 is the average, I suppose you'd call everyone between 30 and 70 middle income earners.
 
I agree completely with csirl. We need this sort of radical move, if we really want a 'fair' society. Then at least everyone will have a vested interest in how the country is run and how our money is spent. There will be no disincentives to doing overtime etc and nobody can point at people who don't contribute. The system as it is benefits those at the bottom and the top, leaving the vast majority in the middle carrying the can.
 
But the government won't do what is fair. They will do what is politically easy despite what they are saying about taking the hard decisions.
The MOF has already said he has to introduce a new 4 year package of measures at the request of Europe by November. the 3 billion fo rthis budget will be exceded.
They have been bluffing for the past two years and now Europe and the markets are forcing their hand.

Only a few weeks ago the S&P figure of 35 billion for Anglo was dismissed. Now this morning the MOF says it may reach 34 billion.
 
Shawady said:
But the government won't do what is fair. They will do what is politically easy despite what they are saying about taking the hard decisions.
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And that's the scary thing. With the Croke Park Agreement there, where is the 3bn + going to come from?
 
Croke Park agreement will prob last beyond this budget.
3 by-elections early next year. If government lose all 3 we are looking at a general election in May.
FF leave ripping up agreement, introducing property tax and cuttting pensioners for new government.

Thats my theory anyway!
 

I would have agreed with that, except for the announcement of a four year plan this morning.
 
You wonder it would it make sense to have an election now so, that all parties can detail how they would implement the 4 year plan and people could vote accordingly.
 
I don't think the non-government parties have access to the same information as the government so it would give them an easy out to set-out a populist 4 year plan and then say 'ah sorry lads, they've left us a worse mess than we thought so we can't stick to our plan'
 
csirl said:
There are no levies with a flat rate tax system. The rate is based on the total tax take that the Government needs to achieve.
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I'm not sure that the €12bn estimate you mentioned includes PRSI, Health Levy or Income Levy. If this is the case you'd still have to impose these on top of the flat rate tax.



I don't think there is a consensus on fair in terms of Proportionate Vs Progressive taxation anywhere in the world.

http://en.wikipedia.org/wiki/Progressive_tax

I'm with Adam Smith though (highlighting progressive taxation is not a leftist concept):

The necessaries of life occasion the great expense of the poor. They find it difficult to get food, and the greater part of their little revenue is spent in getting it. The luxuries and vanities of life occasion the principal expense of the rich, and a magnificent house embellishes and sets off to the best advantage all the other luxuries and vanities which they possess. A tax upon house-rents, therefore, would in general fall heaviest upon the rich; and in this sort of inequality there would not, perhaps, be anything very unreasonable. It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion

The four things we need to do to reform taxation are:
  1. Close off excessive tax breaks for the rich
  2. Bring more lower paid into the tax net (gradually)
  3. Simplify the system
  4. Increase the tax take
I believe we could and should achieve all 4 without huge changes in who bears the burden. It is clear that middle income people are heavily burdened at the moment which is why 1) and 2) should be implemented first.
 
This report http://www.bbc.co.uk/news/business-11441473 states that

The original budget was going to be €3billion euros of saving/tax increases. This was to reduce the deficit from 14.3%. Now Brian intends to go from 32% of GDP to 3% of GDP by 2014. How many extra billion euros is that?

This really is going to be a budget from hell.
 

Perversely, the higher this year's deficit, the more likely we are to ensure the 2014 budget is more balanced. The bank bailout, if done entirely in this year, will avoid us having to take it on the drip into future year's deficits.
 
I wonder what the country will be like by 2014?
Maybe something like mad max.
 
You're not the first person to say that, stock up on petrol and pig **** and you'll be grand
 

Maybe, but Labour, FF and FG would still have to produce a manifesto to outline their intentions if they are in government. The cuts will still have to made, so at least we get some specifics e.g property tax, pensioners, croke park deal, bringing more into tax net etc.

The EU have forced the government's hand in relation to budget details.
 
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