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

Cato

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Barnacle

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For the purposes of motivation, it is the marginal rate that matters.

It determines if it is worth doing more work.
Removing the PRSI ceiling does not really increase the marginal rate when combined by the revised Levy charge. It has an effect of about than 1%.

For someone earning €200k they will have a net charge to their income of €3k in 2011 of which €1,100 is because of the alterations in bands.
 
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He3

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The study referred to cognitive work. Do you think that includes Cowen and Coughlan?

Drinking and swearing isn't necessarily cognitive.

Ah now Dolores. That's too easy.
 

hmmm

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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.
Your little animation discusses performance & results, not motivation. Why would someone who already has "enough" money do that extra bit to earn more if more than half of their income is swallowed up in tax? At a certain level this kills incentive.
 

Cato

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Your little animation discusses performance & results, not motivation. Why would someone who already has "enough" money do that extra bit to earn more if more than half of their income is swallowed up in tax? At a certain level this kills incentive.
How sad and primitive it would be to be motivated by money.
 

Expatriot

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Whatever the figure you can add another 9% if you are PS.
 

hmmm

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How sad and primitive it would be to be motivated by money.
It's great to see someone who is motivated by your higher ideals, sadly for us mere mortals money is a/the major motivator.
 

Decko

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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.
if burton is finance minister will the last parson to leave ireland (a) milk the cows and (b) turn off the lights
 

hmmm

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But, you seem to be looking at the issue from the point of view that 'earning' more is a major drive in itself - I think you are over-estimating it.
We'll have to agree to disagree. The number of people in this country who have enough money to not care any more and have entered a self actualisation phase is relatively small. Most people still have to earn money and still want to earn more money.
 

Expatriot

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Well if you pay marginal tax you are also paying the pension levy on top, say 9%. The tax relief is going on that too, so it will be effectively doubled. By the time you get 100 euro of overtime into your banks account there would be much to look at or pay the baby sitter.
 

hmmm

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Well if you pay marginal tax you are also paying the pension levy on top, say 9%. The tax relief is going on that too, so it will be effectively doubled. By the time you get 100 euro of overtime into your banks account there would be much to look at or pay the baby sitter.
Don't forget the private sector worker who has to pay 20% of their income to get an equivalent pension.
 

Cato

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It's great to see someone who is motivated by your higher ideals, sadly for us mere mortals money is a/the major motivator.
Needless to say, I am mortal too! ;)

There many people working with me every day for which money is not there motivation.
 

Cato

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We'll have to agree to disagree. The number of people in this country who have enough money to not care any more and have entered a self actualisation phase is relatively small. Most people still have to earn money and still want to earn more money.
Not care about what anymore?
 

Congalltee

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I challenge anyone to justify paying over 50% marginal rate of take on money over 32.5k. If this the way it is on 2011 it will be crippling in 2014. We already have higher income tax before this budget compared to the UK. Who decided we had a low tax economy?

:rolleyes:
What is the effective rate for someone on 100k?
Is it even 40%?
32.5k @ 20% and tax credits, make a huge difference to the effective rate.
 

newell666

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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?
Don't bother then. The country is bankcrupt, thanks to the bank guarantee. This is the end.
 

Harmonica

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Well if you pay marginal tax you are also paying the pension levy on top, say 9%. The tax relief is going on that too, so it will be effectively doubled. By the time you get 100 euro of overtime into your banks account there would be much to look at or pay the baby sitter.
That is your pension, many people have them in public and private sector. A decent private pension would see employee put in 50% of the pension sum which is now the case in the PS. The fact PS pension is so much bigger means PS worker contribution is bigger. Based on the tax relief changes I lose 11% of my own contribution into my pension.
 

jams odonnell

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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.
and why should the state provide tax shelters which are only available to a limited number of citizens?
 


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