Wealth taxes add enormous economic complexity and collect little

Watcher2

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It's not just about tax, it's the notion that nobody should have the freedom that saving money gives you.

The 1970s taxes like CGT were from a time of high inflation and socialist fantasies. If it is harder for people to save money, which is how all capital is made, then you are left with 2 options, you must borrow what you need from a bank or look to the state for handouts.

That gives too much power to banks and politicians, as we have seen the cost of that in 2008-10.

All taxes were increased for 2 world wars, and all customs duties are based on medieval-era protection rackets.
Indeed. Everyone is encouraged and /or forced to spend money. If people have money/savings, it gives them freedom as you say. People need to be on bended knee. Its the same philosophy for politicians as it is for company bosses. The Scandanavian commercial director I once knew told me as such. Said he encourages his sales people to live it large in their personal lives at every opportunity because "it keeps them hungry".
 


McTell

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My radical view is that any civilised state should focus on making life as affordable and enjoyable as possible.
 

Watcher2

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If all taxes - sales (VAT), income and corporate, CGT, CAT - were set at 12.5% without any exceptions and allowances, everyone would save on time and spending zillions to accountants to look for ways out.

Every child would understand, 1/8th goes to the state, end of.

Meanwhiles, "charities" like the GAA or the IRFU are doing just fine.

Face it, if the state can't pay its way on 1/8 of all national spending, it needs serious reform. But we inherited the entire british civil service in 1922 and all its attitudes still prevail.
We really need to re-evaluate the definition of a "charity" in this country. There is nothing charitable about the GAA or the IRFU. The local clubs, yes, but the top companies - you're having a laugh. Include the FAI in that.
 

Lumpy Talbot

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Definitely agree that there is a widespread fraudulence at play in Irish governance in this area. Some agencies in receipt of state funding are actually presenting themselves as a lobbying organisation, a charity, and a commercial business in the state depending on who they are talking to at the time.

That needs to be stopped. And it definitely needs to be stopped where public money is concerned and said organisation refuses to acknowledge principles of transparent governance by suddenly announcing that it has now decided it is a commercial concern and can't give out any info for 'reasons of commercial confidentiality'.

That game has been overplayed in Ireland and it needs to be stopped. Any organisation that won't sign up to the levels of transparency required where public money is concerned should have that income stream withdrawn until such time as they get the publicly funded message.
 

Uganda

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Because they are on low pay - in a very expensive country may I add.

All the wealth is concentrated in a very small percentage of the population.
If they even paid the price of 4 fags a week in tax the exchequer would receive €100,000,000 in tax.
 

making waves

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If they even paid the price of 4 fags a week in tax the exchequer would receive €100,000,000 in tax.
The government is going to increase its PAYE tax take by €600million next year because they didn't index the tax credits and bands in the budget - that is an extra €600million out of the pockets of workers and their families while they hand hundreds of millions to wealthy companies because of 'Brexit'
 

Finbar10

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The following is an interesting paper on income distributions and the taxes people pay at different income levels (among other things):
https://igees.gov.ie/wp-content/uploads/2018/04/Income-Dynamics-Mobility-in-Ireland-Evidence-from-Tax-Records-Microdata.pdf
An interesting conclusion from the data there is that not only are the lower segments of income earners paying proportionately less income tax, but the top 1% are paying a lot less income tax too!

Only around the top 30% of incomes earners are paying a proportionate level of income tax or above (that's anyone earning about €55k or more).
That 30% earn 63% of all income and pay 87% of all income tax. In a progressive system that doesn't seem too bad I guess. However, it is only the top decile (the top 10%) that pay significantly more tax than average. The top decile is listed as those earning from €77k upwards. The top 10% earn 36% of all income and pay 60.7% of income tax (so almost twice the average proportion).

However, there's a very interesting fact in that paper. The highest earning 1% (those earning around 200k and over) of that top 10% are paying far less income tax proportionately. The top 1% earn 11.3% of all income but pay only 10.6% of income tax (so nowhere near double the rate but even less than one to one ratio). So many people in the 77k to 200k range are paying some serious income tax. I think it's fair enough that they are subsidizing the bottom 70% of people who are earning only 13% of all income. However, they also seem to be very generously subsidizing and effectively halving the income tax of the top 1% on over €200k who in total are earning almost as much as the bottom 70% of people! :)
 

Orbit v2

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The following is an interesting paper on income distributions and the taxes people pay at different income levels (among other things):
https://igees.gov.ie/wp-content/uploads/2018/04/Income-Dynamics-Mobility-in-Ireland-Evidence-from-Tax-Records-Microdata.pdf
An interesting conclusion from the data there is that not only are the lower segments of income earners paying proportionately less income tax, but the top 1% are paying a lot less income tax too!

Only around the top 30% of incomes earners are paying a proportionate level of income tax or above (that's anyone earning about €55k or more).
That 30% earn 63% of all income and pay 87% of all income tax. In a progressive system that doesn't seem too bad I guess. However, it is only the top decile (the top 10%) that pay significantly more tax than average. The top decile is listed as those earning from €77k upwards. The top 10% earn 36% of all income and pay 60.7% of income tax (so almost twice the average proportion).

However, there's a very interesting fact in that paper. The highest earning 1% (those earning around 200k and over) of that top 10% are paying far less income tax proportionately. The top 1% earn 11.3% of all income but pay only 10.6% of income tax (so nowhere near double the rate but even less than one to one ratio). So many people in the 77k to 200k range are paying some serious income tax. I think it's fair enough that they are subsidizing the bottom 70% of people who are earning only 13% of all income. However, they also seem to be very generously subsidizing and effectively halving the income tax of the top 1% on over €200k who in total are earning almost as much as the bottom 70% of people! :)
Good post. I wouldn't dispute any of it, including the top 1% paying disproportionately low tax.

One comment on that though. In order to know that they are paying disproportionately low tax, means they are at least declaring their true income and are therefore availing of legal tax shelters.

I think a very useful exercise would be for the revenue to do an analysis of the tax shelters that these people are using. We should be able to see a complete aggregated list of the deductions that people are claiming. As I said in a previous post, many of these originated as useful measures to encourage investment, but we can't really judge the overall cost/benefit without also knowing how much tax was foregone.
 

Uganda

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The government is going to increase its PAYE tax take by €600million next year because they didn't index the tax credits and bands in the budget - that is an extra €600million out of the pockets of workers and their families while they hand hundreds of millions to wealthy companies because of 'Brexit'
They're still going to allow almost 1 million people in receipt of an income to pay no income tax whatsoever.

Not a sausage.
 

Patslatt1

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The Irish Minister for Finance is indeed in the business of providing tax haven facilities, which curiously enough means he or she is working against the interests of the state at least some of the time.

Noonan and co deliberately allowed for various forms of 'special purpose vehicle' which means the state becomes one leg of the offshore corporate and HNW individual's financial strategy and that means paying little to no tax.

You can see this with Ireland's history of being one leg of a tax avoidance strategy by aircraft leasing consultants (ie middlemen who are often also the people who pay the bribes abroad to secure the order) with the deals taking place in offshore jurisdictions and Ireland providing the necessary onshore 'cover'.

Such deals provide no tax income in Ireland.

The latest is a new form of special purpose vehicle specifically set up to assist US investors in pharma securitisation, a mix of private equity model set up to match drug discovery and pipeline milestones.

There is a company which is based in New York, which claims it is 'headquartered' in Dublin in order to qualify for this special purpose vehicle and all investments in their pharma-royalty fund are tax free so that produces no taxable income in the state and effectively allows US and 'international' investors to avoid tax either in Ireland or the US.

It is a brass plaque in Dublin and nothing more.
Brass plate companies generally account for a lot of profits in Ireland on overseas activities with a nominal connection to Ireland. That generates a lot of tax for Ireland. As for pharma,important drug discoveries now cost over a billion dollars each,with a high percentage of failures. Those vast losses likely create opportunities for optimising genuine tax writeoffs. Incidentally,if a cure could be found for dementia, it would save hundreds of billions a year globally in health care and related costs.
 
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Patslatt1

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If all taxes - sales (VAT), income and corporate, CGT, CAT - were set at 12.5% without any exceptions and allowances, everyone would save on time and spending zillions to accountants to look for ways out.

Every child would understand, 1/8th goes to the state, end of.

Meanwhiles, "charities" like the GAA or the IRFU are doing just fine.

Face it, if the state can't pay its way on 1/8 of all national spending, it needs serious reform. But we inherited the entire british civil service in 1922 and all its attitudes still prevail.
The UK government is frugal compared to the French government which takes 57% of the economy and heavily regulates its private sector as a kind of socialist lapdog.
 

Lumpy Talbot

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Well, we wouldn't have much to shout about in that regard considering the lack of regulation in Ireland around certain areas of endeavour such as banking, the charity sector, the public sector.

We've had a string of failures of governance and I'm not seeing much regulation as a reaction to prevent such failures of governance. I'm definitely not seeing enough in the way of reform, particularly around areas identified by the Troika as cartels in Irish economic life.
 

making waves

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They're still going to allow almost 1 million people in receipt of an income to pay no income tax whatsoever.

Not a sausage.
As I pointed out already - these people don't pay income tax because their pay us so low - they do however pay over a quarter of their income in indirect taxes.

In contrast companies making huge profits have a tax rate of half that - and in a significant number of cases they don't even pay that.
 

Fritzbox

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Boll*cks - the poor pay through a variety of indirect taxes, through homelessness, high rents, made creche fees, poor wages etc - all to line the pockets of the elites. For 2009-2010 (the last year I can find figures for at this hour of the night - the poorest 10% of the population paid over 27% of their income on indirect taxes - the richest 10% paid just over 6%.

In terms of total tax - the top 10% paid 29.24% of their income in tax - the bottom 10% paid 27.67% of their income in tax. The poorest 10% of the population have almost the same tax burden as the richest 10% as a percentage of their income. (ref - NERI WP 2014/No 18 )
Is that the NERI report that's over 260 pages long and written in a completely turgid impenetrable prose - I'd say many people know and even cite that report - even fewer have read it, I'd say. In any case that report is boll*cks too. there are many other reports which say the opposite: that people on low incomes pay very little taxes and duties and gain a lot financially in return. VAT is still 00:00% on basic foodstuffs in Ireland - it's 07% in Germany.
 

Patslatt1

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Well, we wouldn't have much to shout about in that regard considering the lack of regulation in Ireland around certain areas of endeavour such as banking, the charity sector, the public sector.

We've had a string of failures of governance and I'm not seeing much regulation as a reaction to prevent such failures of governance. I'm definitely not seeing enough in the way of reform, particularly around areas identified by the Troika as cartels in Irish economic life.
Banking has been heavily regulated in advanced countries in reaction to bailouts in the banking crash. There are new regulationa in charities in Ireland.
 

Patslatt1

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As I pointed out already - these people don't pay income tax because their pay us so low - they do however pay over a quarter of their income in indirect taxes.

In contrast companies making huge profits have a tax rate of half that - and in a significant number of cases they don't even pay that.
They pay about a third of pretax corporate profits in tax when tax on dividends at top marginal tax rates are included in the calculation. See my figures earlier in the thread.
 

Patslatt1

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Is that the NERI report that's over 260 pages long and written in a completely turgid impenetrable prose - I'd say many people know and even cite that report - even fewer have read it, I'd say. In any case that report is boll*cks too. there are many other reports which say the opposite: that people on low incomes pay very little taxes and duties and gain a lot financially in return. VAT is still 00:00% on basic foodstuffs in Ireland - it's 07% in Germany.
Low income people need a break given very high VAT of 23% (vs 17% UK), high rents, high costs of running a car thanks to out of control car insurance compo and the need for private health care to avoid hospital waiting lists. Also, the generous level of social welfare has created long term unemployment even as jobs are available.
 

Paddyc

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If all taxes - sales (VAT), income and corporate, CGT, CAT - were set at 12.5% without any exceptions and allowances, everyone would save on time and spending zillions to accountants to look for ways out.

Every child would understand, 1/8th goes to the state, end of.

Meanwhiles, "charities" like the GAA or the IRFU are doing just fine.

Face it, if the state can't pay its way on 1/8 of all national spending, it needs serious reform. But we inherited the entire british civil service in 1922 and all its attitudes still prevail.
How did Renua get on with their flat tax proposal at the last General Election?
 

making waves

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Is that the NERI report that's over 260 pages long and written in a completely turgid impenetrable prose - I'd say many people know and even cite that report - even fewer have read it, I'd say. In any case that report is boll*cks too. there are many other reports which say the opposite: that people on low incomes pay very little taxes and duties and gain a lot financially in return. VAT is still 00:00% on basic foodstuffs in Ireland - it's 07% in Germany.
So you dismiss a report because you don't like its conclusion - and then fail to provide any contrary evidence.
 


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