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Government's tax policy will drive away the best managers


Disillusioned democrat

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Joined
Mar 16, 2010
Messages
15,640
Three of my direct reports, all at manager level and all doing a great job, have been justifiably agitating for more money. They have taken pay cuts 3 years ago and have had no pay increases since then, despite a heavier work load.

The problem is that they have got to a level where the government will effectively take more than half of any possible increase I can give them, so to them to get a €5k pay rise actually means I need to find over €10k and so forth.

My ability to meet their expectation is minimal, and these guys could all walk into a job in the UK tomorrow, so there's every risk that I'll lose 2 out of the 3 within 6 months. If they go it will be a huge problem for the company I work for but given the tax multiplier effect I can't afford to pay them enough.

The probability is that this cycle will continue over and over - get the right people, give them the experience and lose them until you have to decide do you (a) try to skill down, and get people who won't have the ability or drive to be able to leave to do the job or (b) just get used to the idea of being a creche for a generation of managers-for-export.

Either way Ireland's competitiveness and commercial capability will suffer greatly and further erode our ability to get to a stage where we don't need to hold a begging bowl to the rest of Europe.
 

IbrahaimMohamad

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Joined
Feb 5, 2013
Messages
4,226
Three of my direct reports, all at manager level and all doing a great job, have been justifiably agitating for more money. They have taken pay cuts 3 years ago and have had no pay increases since then, despite a heavier work load.

The problem is that they have got to a level where the government will effectively take more than half of any possible increase I can give them, so to them to get a €5k pay rise actually means I need to find over €10k and so forth.

My ability to meet their expectation is minimal, and these guys could all walk into a job in the UK tomorrow, so there's every risk that I'll lose 2 out of the 3 within 6 months. If they go it will be a huge problem for the company I work for but given the tax multiplier effect I can't afford to pay them enough.

The probability is that this cycle will continue over and over - get the right people, give them the experience and lose them until you have to decide do you (a) try to skill down, and get people who won't have the ability or drive to be able to leave to do the job or (b) just get used to the idea of being a creche for a generation of managers-for-export.

Either way Ireland's competitiveness and commercial capability will suffer greatly and further erode our ability to get to a stage where we don't need to hold a begging bowl to the rest of Europe.
Have you considered renumeration through share options?

The best way to avoid income tax is to minimise income and maximise capital gains!
 

Congalltee

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Nov 10, 2009
Messages
6,211
Or they could move to an Irish company who will pay them the €10k more. Or who will give them more time off instead of pay increases.
 

Sync

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Aug 27, 2009
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28,845
Make the lowest performing, newest entry to the company redundant and spread their money around those who are performing?
 

firefly123

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Joined
Dec 8, 2009
Messages
28,156
As I am so often reminded there are 400,000 people waiting to walk in to their job in the morning*.





* I am very much aware that those 400,000 don't necessarily have the qualifications or skills to perform the task but since when has reality got in the way of a nice soundbite?
 

Pissyknickers

Active member
Joined
Oct 1, 2012
Messages
232
Taxing work at 52% at just 1 x average wage for a single person is hugely damaging, the OP is in no way exaggerated. What's going to happen is tax on work will start to fall and property tax will rise in parallel. Expect property tax to head towards 1%.
 

GDPR

1
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Jul 5, 2008
Messages
224,093
If they're that good they can generate the extra profit required to pay whatever you need to pay them and if they can't do that, they're being paid more than enough as it is.
 

IbrahaimMohamad

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Feb 5, 2013
Messages
4,226
The Revenue's employee share option scheme allows employers to pay employees €12,700 per year tax free by way of shares!

Why do employers not make more use of the scheme?
 

Howya

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Feb 29, 2012
Messages
1,690
The Revenue's employee share option scheme allows employers to pay employees €12,700 per year tax free by way of shares!

Why do employers not make more use of the scheme?
Probably because is a private company, valuations are difficult and there is no liquid market for the shares.
 

Howya

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Feb 29, 2012
Messages
1,690
Have you considered renumeration through share options?

The best way to avoid income tax is to minimise income and maximise capital gains!
With CGT at 33%, the differential to income tax rates is getting smaller and you could argue no longer reflects risk/reward of waiting a few years to cash in the options. In the current environment, there is a premium on cash now rather than maybe cash down the road.
 

Sync

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Aug 27, 2009
Messages
28,845
If they're that good they can generate the extra profit required to pay whatever you need to pay them and if they can't do that, they're being paid more than enough as it is.
Unless they're not directly involved in sales. Or already represent a disproportionate amount of sales for the company so that they would be difficult to replace for the same money.
 

daveL

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Joined
Oct 29, 2010
Messages
19,593
Taxing work at 52% at just 1 x average wage for a single person is hugely damaging, the OP is in no way exaggerated. What's going to happen is tax on work will start to fall and property tax will rise in parallel. Expect property tax to head towards 1%.
especially at relatively modest incomes when compared internationally to top level income tax thresholds
 

GDPR

1
Joined
Jul 5, 2008
Messages
224,093
Unless they're not directly involved in sales. Or already represent a disproportionate amount of sales for the company so that they would be difficult to replace for the same money.
Then the problem is an organisational one within the company. Either way the problem is not the amount of tax we have to pay, it's the lack of profit or profitable opportunities his company is generating at the moment.
 

Lúidín

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Mar 14, 2013
Messages
7,402
As your company is doing well, sell it, take the cash and put it where the sun do shine. That's what all the big boys of capitalism do.
 

brughahaha

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Jun 1, 2009
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15,304
especially at relatively modest incomes when compared internationally to top level income tax thresholds
Yep , thats the killer ....the absurdly low level at which the highest rate of tax kicks in
 

Sync

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Joined
Aug 27, 2009
Messages
28,845
Then the problem is an organisational one within the company. Either way the problem is not the amount of tax we have to pay, it's the lack of profit or profitable opportunities his company is generating at the moment.
How does that theoretical organisational issue affect the demands of the 3 people who DD says he needs to retain?
 

DuineEile

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Joined
Aug 29, 2010
Messages
14,939
There are hundreds of thousands on the rock and roll. Three years ago I was one of them and now I am a top performing manager. Managerial skills are easy to develop and replace.

Tell these trash that they know where the door is DD are you a man or a mouse.
Not sure I like your management style. Do you consider your own direct reports to be 'these trash'?


D
 
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