Marginal tax rate of 62% to demotivate and demoralise Irish business & professionals

patslatt

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As I understand it,the budget's top rate of tax combined with the universal social charge and PRSI is 62% and is coupled with severe limits on most tax shelters. That is a recipe to demotivate the most skilled professionals and business people in the country. Why bother expanding a business or doing extra work if the government is going to take away nearly two thirds of your profits or earnings?

This budget returns to the disastrously high income tax rates in the bleak 1980s.
 


Grumpy Jack

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As I understand it,the budget's top rate of tax combined with the universal social charge and PRSI is 62% and is coupled with severe limits on most tax shelters. That is a recipe to demotivate the most skilled professionals and business people in the country. Why bother expanding a business or doing extra work if the government is going to take away nearly two thirds of your profits or earnings?

This budget returns to the disastrously high income tax rates in the bleak 1980s.
Are you Brian Lenihan with arithmetic like that?

Top tax rate = 41%
Uiniversal Levy >€16k = 7%
PRSI = 4% (€75k ceiling removed)

Total marginal rate for someone earning more than €75k now 52%
 

gijoe

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Are you Brian Lenihan with arithmetic like that?

Top tax rate = 41%
Uiniversal Levy >€16k = 7%
PRSI = 4% (€75k ceiling removed)

Total marginal rate for someone earning more than €75k now 52%
That is the marginal rate for over €32800 for a single person. The lower and middle earners have been screwed in the budget.
 
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patslatt said:
As I understand it,the budget's top rate of tax combined with the universal social charge and PRSI is 62% and is coupled with severe limits on most tax shelters. That is a recipe to demotivate the most skilled professionals and business people in the country. Why bother expanding a business or doing extra work if the government is going to take away nearly two thirds of your profits or earnings?

This budget returns to the disastrously high income tax rates in the bleak 1980s.
Where are you pulling this figure from? 52% has been used and referenced all evening.
 

Cato

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He3

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Have I got this right?

Private citizen pays a professional say 200 for advice

Government takes vat at 21% off the top, just like that - about 40

Government taxes the remaining 160 or so at 52% - that is another 80 or so.

=> in a transaction costing the client 200, government takes 120, person who does the work gets 80.

That assumes the top rate applies to the transaction, and it won't always apply of course.
 

Tea Party Patriot

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52% is still a ridiculious amount to give up on any part of your earnings. This type of tax rate will see young professionals heading out of the country at the first opportunity. And if Labour come to power this will be 59%, a frightening figure.
 

Lord Wellington

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Have I got this right?

Private citizen pays a professional say 200 for advice

Government takes vat at 21% off the top, just like that - about 40

Government taxes the remaining 160 or so at 52% - that is another 80 or so.

=> in a transaction costing the client 200, government takes 120, person who does the work gets 80.

That assumes the top rate applies to the transaction, and it won't always apply of course.

Essentially yes.

But you can include self employed tradespeople as well.

IIRC the threshold for registering for VAT is (about) €37,000.

So an electrician/plumber/window cleaner are all liable to hand over 21% of there gross to the state.

The you calculate the Levies/PRSI/Income Tax.
 

hmmm

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32800 is less than the "average industrial wage" in Ireland isn't it?
 

Cato

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52% is still a ridiculious amount to give up on any part of your earnings. This type of tax rate will see young professionals heading out of the country at the first opportunity. And if Labour come to power this will be 59%, a frightening figure.
That's just the marginal rate. It's the overall effective blended rate that matters.
 

cobhguy

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Its Not bad

i earned 52k last year and about same this i think this tax rate is high but in the current climate i think its fair.
 

He3

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That's just the marginal rate. It's the overall effective blended rate that matters.
In the example above, the government takes 60%. Blending will bring that down to some extent as you say but it is an eyewatering starting point.
 

TonyB

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Yes, Google seems to agree....though I'd never heard it before, I thought briefly it was some Union I'd never heard of. Which in hindsight might have been apt!
 

Barnacle

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That's just the marginal rate. It's the overall effective blended rate that matters.
Yep, the effective rate is the one that matters. Combining the Income Levy and Health Levy has quite an effect on the higher paid by reducing the liability however this offset by the removal of the PRSI ceiling.

For someone earning €200k, in 2010 their effective rate of tax is about 45%, in 2011 this increases to just over 46% and by 2014 this goes to 48%.

For someone earning €100k, the rates are 40%, 41% and 42% respectively.
€75k - 36%, 37% and 39% respectively
€50k - 28%, 30% and 32% respectively

All based on single person
 

He3

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Your understanding of human motivation is very poor. It has very little to do with monetary reward. In fact, Federal Reserve Bank sponsored research showed that when even rudimentary cognitive skills are required in tasks, larger monetary reward leads, paradoxically, to poorer performance.

The neanderthal who invented the wheel didn't make a bob out of it, but he was pleased as could be about it, nonetheless - and the neanderthal girls thought he was great.

YouTube - RSA Animate - Drive: The surprising truth about what motivates us
Something to bear in mind when considering politicians' and senior CS salaries against the goal of promoting good governance?
 


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