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

Expatriot

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Dec 7, 2009
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That I think is a particularly sneaky one that I has gone under everyone's radar .... up until now, you took the gross, took off the PRSI, took off the pension levy, and taxed the rest. Now you'll take off PRSI, tax the rest, then take pension levy (again) from the gross. That is going to seriously hurt the PS ... more than the reduction of credits in fact. :eek: Don't forget that there'll also be the Universal Social Charge taken (again) off the gross. Bizarre. It's a bit like paying VAT on excise duty ... as in the case of petrol and diesel.

They should rename this the "Public Sector Persecution Tax". Don't go looking for a fireman or a nurse anytime over the next while if you can avoid it.
I have looked at the figures from what is in the papers etc and it seems amazing, if you are a middle income PS worker there is no way out of hours or overtime payments will be viable. The net take home per hour will be less than the minimum wage. When child care comes into its a total loser. Nobody in middle income brackets in the PS will want any extra income either in overtime or promotions. Many will want to drop hours as it is uneconomic to work at that marginal rate. Maybe I am missing something, but from what I can see you only bank about 1/3 of your gross income on a middle income at the marginal rate.
 


hammer

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Remember 3 more austerity budgets.

Tax is only going one-way :(

DOF do not see the need to get people back working.

If they keep their heads in the sand it just will not happen :(
 

Expatriot

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The way they have done this is a trap for the next lot. They have massively closed the gap between lower middle income earners and those on SW. So very quickly they will have to cut SW by the same amount. You cannot for example slash SW by 8 euro and the minimum wage by 40 euro. And the same applies to people in the 30-40k bracket. The pressure to slash SW will be massive now from these people. Working once you kit the 32K is now a joke. If you are PS it is even more of a joke. Your average nurse is wasting their time doing overtime, it would not put the petrol in the car and buy a meal to get in for the shift.

The lesson here is get on SW or work less.
 

Harmonica

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Denmark - tax burden is 50% of GDP. It's industrial base is similar to ours (light industries, agriculture), but it may be less reliant on multinationals. It's the most equal country in the world, it's very prosperous, it has very good health outcomes and very high educational attainment. And it has virtually eliminated poverty.
Seems like a fair example (didn't want to see country with lot of natural resources listed) although going on CIA factbook information we have less people below the poverty line. What does the Denmark economy excel at?

High marginal rates of tax see the most affect when it comes to ovetime or bonuses.

Quick calculation on my own salary seems to indicate I would pay about €2500 less income tax in the UK. I know tax mix is different there but still big difference & is only going to get worse.
 

lff12

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incorrect

these are Ireland's 'high earners'
This is where for me the credibility of both government, unions and CSO/ESRI break down.

The government keep insisting that Ireland is "becoming more competitive" and we see eye watering unemployment net gains to the tune of over 450,000 people (recall that in 1994 unemployed "peaked" at about 300,000).

Then we are told that there are "no jobs" for skilled professionals but they now complain about tax take on incomes over 100k? Hang on now, last time I looked at the dole it was nowhere near 100k. Taxation isn't an issue for unemployed professionals right now: unemployment is their key problem (along with debt, loss of current and future earnings). (I wouldn't regard myself as a professional but I know that a brief 6 week spell of unemployment was effectively a net loss in earnings of nearly 2500 net).

Then we are told that the tax "net" is too narrow and lower earners are paying too little. But then we learn that 45% of income earners pay no tax. That to me indicates one of the following about that 45%:
1. They work part time, and could be on reasonable rates but overall pay constrained by working hours
2. They earn less than 16k (single) or about 25k (married, one income)
3. To conclude, this indicates that 45% of income earners earn 25k per annum or less.

Then the government say that only 8% pay the top rate.
Single earners on 32k or more pay this rate.
Married single income earners were not qualifying for the upper rate until about 46k - this will change and they will find themselves coming into the upper bracket at a lower level.

In fairness, 46k a year is a fair enough income by any standards to still be on the lower tax bracket, I'm not entirely convinced this is entirely unfair considering that a single person not only pays the top rate at 32k, but also subsidizes childrens allowance, education costs etc, which the 46k guy gets.

However what it does question for me is just where the figure for the so-called "average industrial wage" is coming from. It doesn't seem like a large number of tax payers are anywhere near this rate; currently about 37-39k, and more interestingly, still rising despite the persistent myth that Ireland is becoming more "competitive."

Bear in mind in any case that the married income earner would still only be paying at the upper rate on income over 42/3k and not on their entire incomes - this is where confusion reigns. Even a lot of upper rate earners still only pay 28-35% of their overall incomes in tax as only a portion is taxed at the upper rate.

What is pernicious, though, is the heavy penalisation of very low earners in order to maintain this glorification of middle Ireland and nuclear families.
 

Harry700

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I worked an average 70 hours per week in my own business last year & grossed $375,000 - high risk/reasonable reward.

With the current tax takes etc etc it is simply not worth the hassle/hard slog. Currently considering retiring to our place in Malaga & closing down the business !! So much for personal incentives & providing employment ---------.

Harry
 

Kevin Doyle

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I worked an average 70 hours per week in my own business last year & grossed $375,000 - high risk/reasonable reward.

With the current tax takes etc etc it is simply not worth the hassle/hard slog. Currently considering retiring to our place in Malaga & closing down the business !! So much for personal incentives & providing employment ---------.

Harry
See ya now, I hope you have suitcases full of your funny eurodollars
 

patslatt

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Most people work for small businesses,though

So you're saying this measure at a stroke will 'demotivate and demoralise' Irish businessmen? The same class that have led us into this mess? Good work so - how much more would it take to get them all on the emigrant boat off to some other they could ruin with their talent and expertise?
 

macedo

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May 24, 2007
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2010 they paid €2,982 PRSI, €49,250 Health Levy & €55,000 Income Levy.

2011 - €39,736 PRSI & Universal Levy €69,319


Total
2010 - €107,232
2011 - €109,055
So you're saying that someone on a million euro a year only pays 10% in tax?
This is the degree of fiscal literacy we can expect in a socialist republican utopia. And the man has the confidence to make over 22,000 posts. Awesome.
 

patslatt

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Extra costs v extra revenues

I have looked at the figures from what is in the papers etc and it seems amazing, if you are a middle income PS worker there is no way out of hours or overtime payments will be viable. The net take home per hour will be less than the minimum wage. When child care comes into its a total loser. Nobody in middle income brackets in the PS will want any extra income either in overtime or promotions. Many will want to drop hours as it is uneconomic to work at that marginal rate. Maybe I am missing something, but from what I can see you only bank about 1/3 of your gross income on a middle income at the marginal rate.
On overtime,you might pay over half the extra wage but your extra costs should be modest barring paying for extra child care or having to leave home on a long journey to do the overtime with the expense of a two way journey.
 

newell666

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I worked an average 70 hours per week in my own business last year & grossed $375,000 - high risk/reasonable reward.

With the current tax takes etc etc it is simply not worth the hassle/hard slog. Currently considering retiring to our place in Malaga & closing down the business !! So much for personal incentives & providing employment ---------.

Harry
Good luck with that. Can't imagine why you'd have lived in this climate anyway if you could f3ck off to Malaga in the morning.
Might you have benefitted from child allowance?
 

patslatt

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Green with envy and jealousy towards those more successful than you?

Good luck with that. Can't imagine why you'd have lived in this climate anyway if you could f3ck off to Malaga in the morning.
Might you have benefitted from child allowance?
 

MuchToDo

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May 23, 2007
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It's disingenious the way people are playing with maths here. It's no good just quoting the headline tax rates and adding them up as some kind of percentage that the government gets. This takes no account of the fact the higher tax rate only applies to *additional* income over the standard rate band. Also people are not factoring in tax credits. And while Lenihan alleges that tax reliefs are being closed, nevertheless a lot of top earners will stash their extra money into schemes where they can avoid tax or minimize it.

Also people seem to have little clue as to what a "normal" wage in Ireland is. The median (50% of workers earn less, 50% earn more) is only about €20K. If you know maths, a moment's thought about the oft-quoted "average industrial wage" will tell you it is a meaningless figure except for certain statistics (e.g. comparing to the same in other countries). The average is greatly influenced by how large the top incomes are.

Anyone on about 30K or average industrial wage is on a good wage (even if pretty modest for Irish costs). Note that the budget actually affects these middle-class people pretty modestly (and I'm not speaking as an independent spectator). People who earn 50K or more have little grounds for whinging - they *are* the privileged few. Costs have fallen more for people on these higher incomes as the "essential luxuries" (i.e. trappings of middle/upper class living) have dropped - whereas actually food prices haven't changed that much and energy and all kinds of other costs have gone up (as you should know) - so life is tougher for those at the bottom. Of course higher earners trapped in unrealistic mortgages is a major problem and surely they and us would be better off if that money wasn't wasted on those - better to have a proper housing market crash and have cheap rents and cheap houses to start again (you'd be able to save pretty quick again on those incomes without the crazy mortgage payments and if rent dropped - and the economy would pick up from the freed-up cash available for disposable income). It would be short-term pain for serious long-term gain. Of course the State would have to jettison the banks in such a scenario.

This budget most of all screws the poor and those struggling on the "normal" Irish income. A lot of the country is actually on less than middle-class income even if they live as middle class. Despite the pretend wealth of the boom and our American-style top incomes, as a country we are way behind others in Europe even after the "Celtic Tiger" or even "2005 levels". Actually we are a lot more like the US, who also pretend that it isn't the case that much of their population are actually not that well off.

It looks like our government is trying to get it like the US where people with jobs need food stamps. Except here you won't even get a food stamp scheme.

By the way, if people are insulted by my referring to class... deal with it. People who think we have a classless society are living in cloud cuckoo land and are part of the problem of preventing social mobility for those at the bottom.
 

Cael

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I worked an average 70 hours per week in my own business last year & grossed $375,000 - high risk/reasonable reward.

With the current tax takes etc etc it is simply not worth the hassle/hard slog. Currently considering retiring to our place in Malaga & closing down the business !! So much for personal incentives & providing employment ---------.

Harry
Of you go, you wont be missed.
 

Cael

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This is the degree of fiscal literacy we can expect in a socialist republican utopia. And the man has the confidence to make over 22,000 posts. Awesome.
I asked him a question about the meaning of his post you idiot.
 

Cael

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His taxes contribute to your public sector salary,so don't be ungrateful.
Whatever he was doing will be done by someone else - and probably someone else with a much less inflated sense of personal entitlement. Im only sorry for the people of Malaga, who will have to endure this Pompous Paddy. As the East Europeans called this sort of Paddy - peasants enriched overnight.
 

lying eyes

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This generation is so spoiled-I rember paying 65p in the pound or punt - income tax plus social insurance 5% or more depending on earmings and another 5% pension . mortgage rates were 18% plus. Get off your asses.
.
 


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