SF's Crazy Tax Policies

the_syco

http://home.eircom.net/content/unison/national/4390804?view=Eircomnet

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During the debate it emerged that Sinn Fein wants to increase Corporation Tax, double Capital Gains Tax and tax high income earners at a new rate of 50 per cent.

Yesterday, economic experts predicted that the 50 per cent "supertax" policy would lead to "offshore accounts galore", accountants getting richer and the return of wholesale tax evasion.

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Mr Smyth also reiterated Sinn Fein's policy that Capital Gains Tax should be doubled to 40 per cent.

When Ireland halved Capital Gains Tax from 40 per cent to 20 per cent revenue went up five times, from around €225 million to €1.3 billion.

The Government argues that low taxes facilitate more business activity and generate more public resources for social use.

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The Sinn Fein proposal to increase taxes on labour, capital and companies is a direct reversal of the polices which have been backed by every political party in government since 1987, including the Labour Party and Democratic Left, as well as Fianna Fail, the PDs and Fine Gael.

Yesterday, Trinity College economist, Sean Barrett said: "We tried this in the Thirties, Forties and Fifties and tried it again in the Eighties. It's called 'economic nationalism' and a dose of economic nationalism is the last thing Ireland needs now."

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So, now that SF's tax policy is known, would people still vote for them?

mike65

Smart arse reply - The ppl who vote SF don't pay tax so don't care about corporation taxes etc.

Mike

chewy

i have to admit i don't know much about taxation of the economy but this is old story which the indo did a while back too, a thing that the indo do often re-write stories to get a dig in... thanks tony

and the taoiseach said when bush won he was happy cos kerry tax policies would have been bad for the economy then the sunday business post has a story that bush is going to do what bertie feared anyway.. ie reduce corporation tax to attract corporate hq's back to america and therefore away from ireland anyway...

the raising corporation tax a certain amount is not crazy... so few get the benefit of low corporation tax far fewer then mccreevy kept claiming, and it one then things to drive the gap between rich and poor wider, corporations have no responsibilty either raising corporation taxes would address this

AngelofFire

The Indo love having a go at sinn fein for whatever reason they can find, if sinn fein had a low tax-economic liberterian policy, then the indo would still have a stab at them for that.

Meh

mike65 wrote:

Smart arse reply - The ppl who vote SF don't pay tax so don't care about corporation taxes etc.

You're right though. I could probably count the numbers of SF voters who pay 42% tax using one hand. I don't think this article is going to persuade anyone away from SF.

chewy wrote:

and the taoiseach said when bush won he was happy cos kerry tax policies would have been bad for the economy then the sunday business post has a story that bush is going to do what bertie feared anyway.. ie reduce corporation tax to attract corporate hq's back to america and therefore away from ireland anyway...

That SBP article is about a one-off 12-month amnesty for repatriated foreign profits only, very different from what we have in this country.

SkepticOne

Meh wrote:

You're right though. I could probably count the numbers of SF voters who pay 42% tax using one hand. I don't think this article is going to persuade anyone away from SF.That SBP article is about a one-off 12-month amnesty for repatriated foreign profits only, very different from what we have in this country.

Yes, I think this will possibly effect countries like Estonia where they have a zero tax rate for profits that are reinvested in Estonia. Ireland is fairly easy going about repatriation of profits in the first place and this is one of the things that attracts corporations here. I don't think Bush's plans will have any effect on investment here. The measure seems to be more to encourage money to go back to the US rather than some offshore haven like Bermuda.

the_syco

chewy wrote:

corporations have no responsibilty either raising corporation taxes would address this

Then there'd be just no corporations then; they'd f*ck off. Every corporation I can think of wants to make money. If you stop it from making money, the company will simply move.

AngelofFire wrote:

if sinn fein had a low tax-economic liberterian policy, then the indo would still have a stab at them for that.

Aye; but then it would be nice. At a time when alot of people in IT are losing their jobs, this matters. So raising the tax's would not be of gain to anyone. It may be of very short term benifit, but then it would go balls up, and everyone would just leave Ireland.

gary_s

It's because of this sort of biased "journalism" that I never buy the Indo.

Not that I'd ever vote for the Shinners either...

mcdowell

The minutes from that debate can be found at:

http://www.csc.tcd.ie/~duypds/

Cork

The low corporation tax rate has brought maybe industries to this country.

They don't really come for the highly educated work force.

Many EU countrires seem to be bringing down corporation tax rates to attract foriegn direct investment.

bonkey

Cork wrote:

The low corporation tax rate has brought maybe industries to this country.

They don't really come for the highly educated work force.

Yeah. Thats why so many localisation, international-phone-support etc. operations came over here.....because they didn't need educated staff with soeciufic skills...they needed low tax.

Don't be absurd. Ireland was attractive because it offered the right package, not because of any single aspect.

jc

AngelofFire

I think that its time for a review of the corporation tax rate. I would see no harm in raising it by 2-3 % points if it meant that more revenue was generated without causing any harm to job creation. As for sinn feins tax policies. i would see now harm in raising taxes to 50% if it only affected people who could afford it most i.e those earning above 200,000, more revenue could be generated to invest in the public realm. Although we are one of the richest countries in the EU our public childcare services are the second worst in the EU15. Its time we decided whether we are a country of Individual greed or community good.

Mighty_Mouse

They don't really come for the highly educated work force.

OMG :eek: Can I just say "wha"!!

SkepticOne

bonkey wrote:

Yeah. Thats why so many localisation, international-phone-support etc. operations came over here.....because they didn't need educated staff with soeciufic skills...they needed low tax.

The low tax here allows large companies to split their operations into separate profit and loss making ones. The loss-making R&D can be done in the US or any high tax country where there are highly skilled people. Profits can then be run through low corporation tax countries like Ireland. However, in order to do this, according to US tax rules, they must perform some operations in the foreign country. So, for example, a drug company can spend millions on developing a new drug in the US, including researching the manufacturing process. Then the manufacturing operation can take place in Ireland and all the profits can be attributed to the Irish operation. High skills aren't needed in every case. For example, I've heard from someone in the industry, that some drug companies just import the pill powder into Ireland where it is pressed into pills - a relatively low tech operation. Other examples would be localisation of software. Many of the localisation process isn't even carried out in Ireland, the translation process is often outsourced to companies in other countries. Ireland doesn't really need high skills to benefit from low corporation tax and such skills it does need can be imported.

Ireland is (or was) the number one manufacturer of software in the world, but this wasn't because we had more and better programmers than the US, but rather because we were the location chosen to localise and box the software for tax purposes. The software itself was written elsewhere, but this would have been counted as a loss and not taxable. This is how Microsoft gets away with paying no tax in the US and is the thing that Kerry was planning on clamping down on.

These companies do employ some people, but the real benefit to Ireland is the tax-take. Most of the employment in Ireland isn't based on these multinationals but rather on a massive growth in the service sector stimulated by the cash injection due to low corporation tax.

The low corporation tax has benefited Ireland greatly, and the hope is that a critical mass will be reached in some industries and indigenous industry will set root.

It is not the only factor, of course, the fact that Ireland speaks American and produces a reasonable amount of graduates that are willing to work for less than other developed countries also helps.

pork99

AngelofFire wrote:

I think that its time for a review of the corporation tax rate. I would see no harm in raising it by 2-3 % points if it meant that more revenue was generated without causing any harm to job creation. As for sinn feins tax policies. i would see now harm in raising taxes to 50% if it only affected people who could afford it most i.e those earning above 200,000, more revenue could be generated to invest in the public realm. Although we are one of the richest countries in the EU our public childcare services are the second worst in the EU15. Its time we decided whether we are a country of Individual greed or community good.

I have a theory that tax increases for the top earners inevitably leads to tax increases for everyone else as well - I suspect it will work this way. Tax goes up to 50% for those earning over E200,000. This brings in a healthy revenue stream but over a few years these people either move their money outside the country or move themselves to countries with lower tax rates (this was happening back in the 80s - I remember people moving to the US and UK who already had jobs here - the lucky ones - because they would pay lower tax abroad). At this stage the government would be spending incontinently because of the extra revenue they would be getting. As revenue from the higher earners falls what happens? Either they cut spending or hit lower earners for more tax. I suspect the latter course would be the one chosen.

I think that Sinn Fein have already made a huge contribution to the Irish economy by persuading the IRA to stop the "armed struggle". I think that the paramilitary cease fires are an often overlooked factor in the 90s boom here. Headlines like "Shopping Centre Blown to Shreds" and "Postman shot in head while delivering mail" are not conducive to inward investment. I know you all will say "but that was up in NI" - you would be surprised at how many foreigners don't know NI is a seperate state from the ROI and even believe that Dublin is in the UK.

But the Sinn Fein position on tax is not surprising when you consider their background in paramilitarism who think of the business community as a source of extorted cash to fund their warrior of destiny life style. The good thing is though is that it will keep them out of government - who is going to vote for a shafting from the revenue commissioners?

Boggle

They don't really come for the highly educated work force.

Actually they do. Compare the wage of your average GOOD/experienced engineer here and with many places across the world and Ireland is dirt cheap and highly competent.

It is not the only factor, of course, the fact that Ireland speaks American and produces a reasonable amount of graduates that are willing to work for less than other developed countries also helps.

Who speaks American?!??? But yes, this is a valid point but it is worse than that. At this stage there is more money being an apprentice plumber than being an engineer! The market is flooded with engineers and I find that companies (particularly inthe current down/flat cycle - where they make record profits!!!) are unwilling to give the appropriate pay rises to employees as there quite literally is very little choice as to where to go and there are plenty of people looking for your job...

As for the tax bands - personally I reckon there should be 3 instead of the current 2. I would suggest 20% up to 30K, 30 % up to 40K and 40% above... 42% is too much to be taking from anyone earning above the current ?30K? as the cost of living is already too high... (Doubling corp tax is idiocy though and does show that while SF may have the best of intentions for people, they are still somewhat off the mark as potential govt material.... for now anyway!)

pork99

Boggle wrote:

Actually they do. Compare the wage of your average GOOD/experienced engineer here and with many places across the world and Ireland is dirt cheap and highly competent.

Who speaks American?!??? But yes, this is a valid point but it is worse than that. At this stage there is more money being an apprentice plumber than being an engineer!

If you are a software engineer or otherwise emplyed in IT or Internet development you are more and more competing in a global market (i.e Indians - working in a country where E20,000 pa puts you in the upper-middle class)

Plumbers and the like are competing in a jobs market no bigger than their own city/county. That's why it cost E1,500 to have someone do a shoddy decorating job on a few rooms in your house.

sovtek

the_syco wrote:

Then there'd be just no corporations then; they'd f*ck off. Every corporation I can think of wants to make money. If you stop it from making money, the company will simply move.

Because Pfizer is going broke from Irish corporate tax policy. :rolleyes:

sovtek

pork99 wrote:

Plumbers and the like are competing in a jobs market no bigger than their own city/county. That's why it cost E1,500 to have someone do a shoddy decorating job on a few rooms in your house.

That's it...**** this computer geek stuff...I'm now going to trade school to be a plumber and move back to Dublin.

Boggle

That's it...**** this computer geek stuff...I'm now going to trade school to be a plumber and move back to Dublin.

Don't even joke about it... Only for having bought a car when I started and being broke since I would have fcuked out of this ****hole country long ago...

The Rooster

The lower the taxes, the higher the tax take. Strange, but true!

Increasing the corportion tax rate, by any amount, would be a bad idea. Doubling it is just plain stupid. Unless you want to drive the MNCs to Eastern Europe and Asia. Or unless you've no idea what you're talking about.

Will the Shinners ever learn that Marxism doesnt work?

While there is a little bit of me that can understand voting SF in council elections, IMO, only those intellectually challenged could possibly vote for them in Dail elections.

sovtek

The Rooster wrote:

The lower the taxes, the higher the tax take. Strange, but true!

Funny I distinctly remember new and better ways to impose taxes on PAYE plebs coming into effect over the last few years.
But I suppose that had nothing to do with any increase in revenues?
Sound fiscal policy is soooooooo communist it'n it

bonkey

The Rooster wrote:

The lower the taxes, the higher the tax take. Strange, but true!

Not necessarily true.

There is also a non-zero bottom limit below which decreasing the tax-take will not increase revenue. Therefore, if you are below that point, increasing the tax-take will increase revenue.

The question is where that point is, and its what an awful lot of economists get paid an awful lot of money to hypothesise about...

jc

SkepticOne

bonkey wrote:

Not necessarily true.

There is also a non-zero bottom limit below which decreasing the tax-take will not increase revenue. Therefore, if you are below that point, increasing the tax-take will increase revenue.

The question is where that point is, and its what an awful lot of economists get paid an awful lot of money to hypothesise about...

There is a certain amount of leeway. Raising the the tax from 10% to 12.5% for exporting manufacturers didn't have a huge impact. Doubling it would be disasterous, but SF are going for niche votes and there are many who would find the idea attractive.

bonkey

Sure...but once they get teh votes...what's to say that they'll be the first party in history who actually sticks to its election manifesto???

jc

daveirl

This post has been deleted.

SkepticOne

bonkey wrote:

Sure...but once they get teh votes...what's to say that they'll be the first party in history who actually sticks to its election manifesto???

They are a long way from being a serious proposition for government at the moment and I'm sure they know that too. I'm suggesting that their priority right now is just get votes from wherever they can and there are plenty who believe that doubling corpo tax would be a good thing. If and when they are in a serious position to push for power, then they would need to change this and adopt a more sensible mainstream approach.

I'm sure they realise themselves that doubling corporation tax is simply dumb.

AngelofFire

pork99 wrote:

I have a theory that tax increases for the top earners inevitably leads to tax increases for everyone else as well - I suspect it will work this way. Tax goes up to 50% for those earning over E200,000. This brings in a healthy revenue stream but over a few years these people either move their money outside the country or move themselves to countries with lower tax rates (this was happening back in the 80s - I remember people moving to the US and UK who already had jobs here - the lucky ones - because they would pay lower tax abroad). At this stage the government would be spending incontinently because of the extra revenue they would be getting. As revenue from the higher earners falls what happens? Either they cut spending or hit lower earners for more tax. I suspect the latter course would be the one chosen.

If the people earning in excess of E200,000 are dissatisfied with paying tax at 42%(mind you half of them dont even pay that much) they can still find ways to avoid it. I doubt that increasing it by a few percentage points would encourage them even more so. Countries Like Denmark and Sweeden can always maintain high revenue with higher taxes than most of europe and thats why their childcare, education and other public services are the best in the world.

cdebru

it's just re hashed **** sunday indo journalism

they seem to have a list of stories they reprint every now and then to fill up space
and of course try and keep the shinners down

of course they wont do a story on tony o'reilly and where he pays his taxes
that's a more interesting story than tax policies of sinn fein that wont ever be implemented
as much as i hate micheal o leary at least he pays his taxes here
but the rest of them that fly in to buy the telephone company run their business
and then fly out so they dont have to pay tax
like that other ****er dennis o brien who lectures on disability rights because he did some work for the special olympics but ****ed off out of the country when he sold esat so he wouldn't pay tax
so he wants rights and services for the disabled and rightly so but he doesn't think he should have to pay anything towards it
and i dont want to hear **** about he gives money to charity so what that doesn't negate your responsibility to pay tax

bonkey

AngelofFire wrote:

Countries Like Denmark and Sweeden can always maintain high revenue with higher taxes than most of europe and thats why their childcare, education and other public services are the best in the world.

One can also look at that the other way around...

Because they have made their state-funded services amongst hte best of their type in the world, people are willing to pay the high taxes to keep those services.

The problem facing the likes of Sinn Fein is that they can't sell the same model.

What they want (if we assume they are genuine about their manifesto) is exactly what the Scandinavians have - high personal (and coroporate?) tax, but with that tax paying for nationalised services for everyone - rich and poor alike - which are of a quality that is second to none. What that is billed as by the media and their skeptics (as if the two were seperate groups!) is "increased taxes". Not "increased taxes for a better standard of living" or whatever their vision is....all we get to hear is "increased taxes". And of course, given that every irishman knows that Civil Service is synonymous with Wasting Money....increased taxes would simply mean "wasting more money".

Personally, I think that if the likes of SF - or any socialist-leaning political party - want to get taken in any way seriously, they should be preaching increased efficiency in our civil service and semi-state to be followed by tax increases if the increased efficiency isn't enough to do X, Y, and Z.

But anyone who is suggesting that we spend more money on our craply inefficient model.....well.....as pointed out, thats just a vote-winning pitch to a certain segment of society.

jc

Stabshauptmann

The economists stand point (if I can remember back 40mins ) is that tax creates a dead weight loss. There are a pile of graphs used to illustrate this but basically if you want to tax something a lot you should pick something where demand is in ellastic.

So is Capital Gains suitable?

When Ireland halved Capital Gains Tax from 40 per cent to 20 per cent revenue went up five times, from around €225 million to €1.3 billion.

But then again there was the mitigating factor of THE CELTIC TIGER. There were more instances were Capital Gains Tax was due; this was totally unrelated to the cut. For those of you with access, Gene Kerrigan wrote an article about CPT after McCreevys departure in the Sunday Indo (I think it was two weeks after the announcement).

Capital Gains Tax for a private citizen is hard to escape, those who do effectivly do an elaborate residency scam. So while I personally would hate it and do my best to avoid it (which is legal, evasion is illegal (I love my course )) it would increase revenue.

On the other hand corporation tax is not something that can be easily messed with. While a citizen can't easily move outside the tax net a corporation can. We have, as a country, lost most of our competitive advantages. Weather we alter tax or not, without a major shake up of our society we WILL lose foreign investment.

Income taxes.
I dont understand why ppl have to keep balancing tax rates between rich and poor. Create a third band or even a fourth. Why not, departmentalization provides efficency- the first few grand you earn in the higher tax band are wasted (or at least i feel that way) and likewise once your earnind a million pluse paying 42% is meaningless. There is much scope for improvement and is something I feel can both continue to reward productivity while at the same time narrowing the rich-poor divide.


All this is an attempt to be socialist without any major thought put into it. Well thats my 2 cents anyway (and im not willing to give 50% of it to the state )