Ways to Avoid Sinn Féin's Wealth Tax

LogoMania

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Given the surge in popularity of Sinn Féin, they now have a responsibility to take office and deliver on their promises to increase social welfare, build free houses, provide free GP care for everyone. In order to do this, they plan to significantly increase tax on ordinary, hard-working people. Their proposed Wealth Tax will be one of the most contentious so I thought it would be interesting to look at some scenarios and solutions.

Scenario 1 – John is 66, has a small business, and wants to retire

John started with nothing but hard work and now employs 10 people in his successful small business but has reached an age where he wants to retire. He can sell his business and clear €850k after paying CGT, he has €50k cash in the bank, and he owns his own house outright which is valued at €600k. As a retiree after selling the business, he would have assets of €1.5m subject to the wealth tax, and will therefore face a tax bill of €5k despite already having paid tax on all his money. He will be taxed annually until his wealth goes below €1m.

Solution 1A – John should not sell the business, he should work in the business until he dies to avoid double taxation on his hard-earned wealth. As his health and business performance deteriorate, he should make his employees redundant, forcing them onto the dole, which is now an attractive €245 per week. The business will pay less Corporation Tax and VAT as profits and turnover decline.

Scenario 2 – Paul, father of 3, inherits his parent's home in Dublin

Paul lives in Dublin with his wife and 3 kids. He is the sole provider, earning €60k per annum. They have €200k equity in their own home, €20k in savings, and he then inherits his parent's home in Dublin which is valued at €1.48m. Paul takes out a loan to pay inheritance tax (CAT) of €378k. Including €60k salary which I think is added to the total when calculating wealth, Paul is now worth €1.382m. and must pay €3,820 in wealth tax, as well as service his large new debt.

Solution 2A – Paul can move into the inherited property and let his family home. If he lets, he will pay property tax for having a second house, insurance, professional fees, etc. and he will pay the higher rate of tax on rental income and then be faced with double taxation.

Solution 2B – Paul's wife Mary can re-enter the workforce in order to pay the Wealth Tax bill, as her role as a homemaker is not considered to be a valuable role in society.

Solution 2C – Paul can sell one of the properties. This will go towards clearing his debt, but he will still be left with assets in excess of €1m, so he will pay wealth tax on top of the CAT, while trying to support his family.

Scenario 3 - Laura, successful Irish entrepreneur

Laura has just sold her software company and made €2m for herself after paying CGT. Laura now wants to set up a new business. However, she is now faced with double taxation in Ireland, €20k wealth tax.

Solution 3A – Laura can relocate with her family to another country to create employment and wealth. As she isn't the only entrepreneur in this situation, a number of talented, Irish workers follow these entrepreneurs to new shores to help build these businesses and build lives for themselves, effectively forced to emigrate.
 


ShoutingIsLeadership

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My recollection is that any family home valued under 1 million would be excluded.

What's this double taxation that you speak of? I pay income tax. Then on my after tax income I pay VAT, motor tax, various insurance levies, property tax, VRT, excise duties, VAT calculated on top of excise duties, etc.

Finally, the quip in your OP about free houses- who has promised them? Have I missed something? It seems to me that the only free house is the one worth a million and a half in your OP which you seem to want Paul to have.
 

Cilldara_2000

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Scenario 1: John should sell his business anyway. The first 20% of the family home is ignored. His taxable assets are €1.38m. Invest €380,000 into an pension annuity. Pension funds are exempt. Pay no tax.

Scenario 2. Why does Paul need two gaffs? Sell one. Live in the other. Invest the taxable amount above €1m, over the course of a number of years in order to avail of the income tax relief (at his marginal rate of tax), into a pension. He will pay an ever decreasing amount of wealth tax until his assets other than the pension fund and less 20% of the value of the family home do not exceed €1m.

Scenario 3. If Laura uses €1m to set up her new business, she pays no wealth tax. Businesses are excluded.

Info from here.

Regarding double taxation. Everything is multiple taxation. Regrettably that is the way of the world.

In any case, if SF end up in power, this is one thing I'd expect not to be adopted by their coalition partners.
 

LogoMania

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Scenario 1: John should sell his business anyway. The first 20% of the family home is ignored. His taxable assets are €1.38m. Invest €380,000 into an pension annuity. Pension funds are exempt. Pay no tax.

Scenario 2. Why does Paul need two gaffs? Sell one. Live in the other. Invest the taxable amount above €1m, over the course of a number of years in order to avail of the income tax relief (at his marginal rate of tax), into a pension. He will pay an ever decreasing amount of wealth tax until his assets other than the pension fund and less 20% of the value of the family home do not exceed €1m.

Scenario 3. If Laura uses €1m to set up her new business, she pays no wealth tax. Businesses are excluded.

Info from here.

Regarding double taxation. Everything is multiple taxation. Regrettably that is the way of the world.

In any case, if SF end up in power, this is one thing I'd expect not to be adopted by their coalition partners.
Apologies, I should have factored in that the first 20% off the family home is not taken into account. The general thrust of the points are still valid though.

If the excess is invested in shares in public companies or in non-trading private companies rather than a pension, then they're still subject to the wealth tax.

If everyone follows your suggestion and puts all excess wealth over €1m into private pensions, that's a huge amout of money not being spent in the normal economy. Pension funds will be delighted of course.

Laura may not want to tie up €1m in her new business, the business may not require that amount of capital or she may seek to share risk by bringing other investors on board. If the business doesn't require that type of funding but she puts the €1m in anyway, it's dead money, it'll just sit there rather than going back into the economy.

It's a very restrictive tax that stifles investment and spending. I would imagine that it would lead people to hide wealth offshore rather than put it to work in Ireland.

On the point of everything being multiple taxation, that's not really the case. Normally taxation is payable when there is some form of a transaction. Not just because you have, on paper, a wealth above a notional figure.
 
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Uganda

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Given the surge in popularity of Sinn Féin, they now have a responsibility to take office and deliver on their promises to increase social welfare, build free houses, provide free GP care for everyone. In order to do this, they plan to significantly increase tax on ordinary, hard-working people. Their proposed Wealth Tax will be one of the most contentious so I thought it would be interesting to look at some scenarios and solutions.

Scenario 1 – John is 66, has a small business, and wants to retire

John started with nothing but hard work and now employs 10 people in his successful small business but has reached an age where he wants to retire. He can sell his business and clear €850k after paying CGT, he has €50k cash in the bank, and he owns his own house outright which is valued at €600k. As a retiree after selling the business, he would have assets of €1.5m subject to the wealth tax, and will therefore face a tax bill of €5k despite already having paid tax on all his money. He will be taxed annually until his wealth goes below €1m.

Solution 1A – John should not sell the business, he should work in the business until he dies to avoid double taxation on his hard-earned wealth. As his health and business performance deteriorate, he should make his employees redundant, forcing them onto the dole, which is now an attractive €245 per week. The business will pay less Corporation Tax and VAT as profits and turnover decline.

Scenario 2 – Paul, father of 3, inherits his parent's home in Dublin

Paul lives in Dublin with his wife and 3 kids. He is the sole provider, earning €60k per annum. They have €200k equity in their own home, €20k in savings, and he then inherits his parent's home in Dublin which is valued at €1.48m. Paul takes out a loan to pay inheritance tax (CAT) of €378k. Including €60k salary which I think is added to the total when calculating wealth, Paul is now worth €1.382m. and must pay €3,820 in wealth tax, as well as service his large new debt.

Solution 2A – Paul can move into the inherited property and let his family home. If he lets, he will pay property tax for having a second house, insurance, professional fees, etc. and he will pay the higher rate of tax on rental income and then be faced with double taxation.

Solution 2B – Paul's wife Mary can re-enter the workforce in order to pay the Wealth Tax bill, as her role as a homemaker is not considered to be a valuable role in society.

Solution 2C – Paul can sell one of the properties. This will go towards clearing his debt, but he will still be left with assets in excess of €1m, so he will pay wealth tax on top of the CAT, while trying to support his family.

Scenario 3 - Laura, successful Irish entrepreneur

Laura has just sold her software company and made €2m for herself after paying CGT. Laura now wants to set up a new business. However, she is now faced with double taxation in Ireland, €20k wealth tax.

Solution 3A – Laura can relocate with her family to another country to create employment and wealth. As she isn't the only entrepreneur in this situation, a number of talented, Irish workers follow these entrepreneurs to new shores to help build these businesses and build lives for themselves, effectively forced to emigrate.
Alternatively move all the money out of reach to Northern Ireland.

the irony being its safe there even tho sf are in power there
 

ffc

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Personally, I think the appreciation in value on the primary residence should be subject to CGT. A small allowance, say 100k, but everything after that should be subject to the full amount. John bought his house in the 80's for 20k in Dublin, now he is selling it for a million. He didn't earn that money, he just sat in the house living his life. Maybe there was some small appreciation due to painting the living room or putting down a rose garden, but mainly the appreciation came about because of his location. The location which received huge infrastructural support, transport, health, education, sanitation, refuse collections, all paid for from central taxation. So put a back in, you greedy bstad.
Likewise with Inheritance Tax, it should be 50%, at least. Inherited wealth is proven to be hugely destructive to the merirtocracy that the capitalist love birds are constantly claiming they believe in. So bring it on, let's level the playing field a little.
 

toughbutfair

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PAUL received an asset worth 1.5m for doing zero? F all sympathy for his tax bill. I earned my wealth.
 

toughbutfair

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Personally, I think the appreciation in value on the primary residence should be subject to CGT. A small allowance, say 100k, but everything after that should be subject to the full amount. John bought his house in the 80's for 20k in Dublin, now he is selling it for a million. He didn't earn that money, he just sat in the house living his life. Maybe there was some small appreciation due to painting the living room or putting down a rose garden, but mainly the appreciation came about because of his location. The location which received huge infrastructural support, transport, health, education, sanitation, refuse collections, all paid for from central taxation. So put a back in, you greedy bstad.
Likewise with Inheritance Tax, it should be 50%, at least. Inherited wealth is proven to be hugely destructive to the merirtocracy that the capitalist love birds are constantly claiming they believe in. So bring it on, let's level the playing field a little.
Agree to an extent, however if you are just moving house then the gain on the house you are selling is prob offset bt the higher cost on the house you are now buying so you are not better off.
 

LogoMania

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PAUL received an asset worth 1.5m for doing zero? F all sympathy for his tax bill. I earned my wealth.
John and Laura also earned their wealth, but they're getting hammered too. John worked long hours 7 days a week to keep his business going, he didn't pay himself during the recession to make sure that his employees and suppliers were paid, and now that he's ready to retire he's going to be fleeced.
 

james toney

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Ways to avoid the FG/FF homeless.. health...tax..pension...cervical cancer....disability crisis....and all the other poverty and austerity related issues.
Just take the money that is owed by one of the worlds richest companies.

APPLE AND THE Irish State will begin its appeal in European Courts today over the €14.3 billion Europe has said is owed by the tech giant to the country.

In a landmark 2016 ruling, the European Commission found that Ireland gave multinational tech giant Apple illegal state aid worth up to €13 billion over a decade.

The State is appealing the decision as it denies there was any such sweetheart deal in place, and said the company wasn’t treated any differently.
 

ShoutingIsLeadership

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Agree to an extent, however if you are just moving house then the gain on the house you are selling is prob offset bt the higher cost on the house you are now buying so you are not better off.
If they were taxed it would ultimately be factored into the house price
 

Round tower

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Ways to avoid the FG/FF homeless.. health...tax..pension...cervical cancer....disability crisis....and all the other poverty and austerity related issues.
Just take the money that is owed by one of the worlds richest companies.

APPLE AND THE Irish State will begin its appeal in European Courts today over the €14.3 billion Europe has said is owed by the tech giant to the country.

In a landmark 2016 ruling, the European Commission found that Ireland gave multinational tech giant Apple illegal state aid worth up to €13 billion over a decade.

The State is appealing the decision as it denies there was any such sweetheart deal in place, and said the company wasn’t treated any differently.
But the EC also said that other countries aaround the EC feelss that they are owed part of the 13 billion they are to follow Ire. for their share of the 13 billion so they reckon that the 13 billion could be only 5 or 6 billion
 

neiphin

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But the EC also said that other countries aaround the EC feelss that they are owed part of the 13 billion they are to follow Ire. for their share of the 13 billion so they reckon that the 13 billion could be only 5 or 6 billion
hardly worth the hassle
 

McTell

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No
//

It's a very restrictive tax that stifles investment and spending. I would imagine that it would lead people to hide wealth offshore rather than put it to work in Ireland.
//
There again, one man's hiding money offshore is another man's informed investment strategy covering the global economy.

Saying that you have to invest here, and nowhere else, is another way of saying the state owns your money and your freedom.
 

LogoMania

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There again, one man's hiding money offshore is another man's informed investment strategy covering the global economy.

Saying that you have to invest here, and nowhere else, is another way of saying the state owns your money and your freedom.
Good point.

Scenario 4 - Mr & Mrs Murphy decide to sell off 4 investment properties in Ireland, each valued at €350k which is unaffordable to most first-time buyers. They evict the 12 tenants, all young professionals, that lived in those properties to complete the sales and take professional advice to invest their money into other countries to the benefit of other economies, in a manner in which they avoid the wealth tax.
 

neiphin

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Good point.

Scenario 4 - Mr & Mrs Murphy decide to sell off 4 investment properties in Ireland, each valued at €350k which is unaffordable to most first-time buyers. They evict the 12 tenants, all young professionals, that lived in those properties to complete the sales and take professional advice to invest their money into other countries to the benefit of other economies, in a manner in which they avoid the wealth tax.
Is that you PAT ?
 

Volatire

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SFF financial policy is likely to be in direct conflict with EU budget deficit rules. SFF will not be able to spend in the way they have promised without either
  1. coming in direct conflict with the EU, or
  2. raising personal taxes to a crippling degree, 70% or
  3. confiscatory private wealth taxes
1 will not happen because SF have on their knees sucking Günther's dick since 1905. They are not going to stop now. FF are similarly europhile.

3 could happen. However it would cause a flood of capital out of the country. Property could be targeted, but FF will oppose that. Property prices are likely to collapse in any case.

That leaves 2 as the easiest route for SFF. Crippling taxes on work.

Either way, we are looking at either economic collapse or a reversal of moronic SF economic policy.
 

Armchair Activist

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economies needs mass consumers not minority wealth hoarders.. increase the publics purchasing power and you address this goal.

its hard to achieve on a national level, yes a tax increase would cause many rich to leave our country that gave them so much. their choice, their greed.
 


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