A case for 0% income tax?

ParkRunner

As the economy is suffering badly I was thinking that it may take something radical to stimulate economic activity and return to a position of growth.

Having a high vat rate seems pretty pointless with low levels of sales throughout the economy so if there was an extra €13.5bn (taken from government estimates for income tax recepits for 2009) flowing through the economy the vat intake would no doubt increase.

While the €13.5bn extra that people have to spend would not all be used for personal expenditure, the increased economic activity would create more jobs and reduce the social welfare burden.

Obviously wages and vat rates would need to stay pretty much at the same levels, so crossborder shopping would be a problem, however, certainly as a temporary measure at least, I think there is merit in arguing for 0% income tax.

P.S. as im not an economist i'll stick this in After Hours but feel free to move!

Kinetic^

Is that you Brian Lenihan?!

Four-Percent

In before somebody thinks it's funny to point out that taxation is that way <====

phasers

I know nothing about economics but I think that's an awful idea.

Another case of the rich get richer.

Eoin

Who would pay the civil servants then? You can't expect them to scratch their holes for free.

Tannylan

EF wrote: »

As the economy is suffering badly I was thinking that it may take something radical to stimulate economic activity and return to a position of growth.

Having a high vat rate seems pretty pointless with low levels of sales throughout the economy so if there was an extra €13.5bn (taken from government estimates for income tax recepits for 2009) flowing through the economy the vat intake would no doubt increase.

While the €13.5bn extra that people have to spend would not all be used for personal expenditure, the increased economic activity would create more jobs and reduce the social welfare burden.

Obviously wages and vat rates would need to stay pretty much at the same levels, so crossborder shopping would be a problem, however, certainly as a temporary measure at least, I think there is merit in arguing for 0% income tax.

P.S. as im not an economist i'll stick this in After Hours but feel free to move!

Your Right Sticking it After Hours because that post is full of Shi%e

Max Power1

EF wrote: »

As the economy is suffering badly I was thinking that it may take something radical to stimulate economic activity and return to a position of growth.

Having a high vat rate seems pretty pointless with low levels of sales throughout the economy so if there was an extra €13.5bn (taken from government estimates for income tax recepits for 2009) flowing through the economy the vat intake would no doubt increase.

While the €13.5bn extra that people have to spend would not all be used for personal expenditure, the increased economic activity would create more jobs and reduce the social welfare burden.

Obviously wages and vat rates would need to stay pretty much at the same levels, so crossborder shopping would be a problem, however, certainly as a temporary measure at least, I think there is merit in arguing for 0% income tax.

P.S. as im not an economist i'll stick this in After Hours but feel free to move!

There is so much fundamentally wrong with that post I dont know where to start.

cooperguy

Who needs roads, hospitals and about 100 other basic services when we could have some extra money in our pay cheques!

Saibh

EF wrote: »

P.S. as im not an economist i'll stick this in After Hours but feel free to move!

Neither am I, but would have to say, your idea will never work.

Captain-America

You do realise that money is what keeps the country going yes?

ejmaztec

EF wrote: »

As the economy is suffering badly I was thinking that it may take something radical to stimulate economic activity and return to a position of growth.

Having a high vat rate seems pretty pointless with low levels of sales throughout the economy so if there was an extra €13.5bn (taken from government estimates for income tax recepits for 2009) flowing through the economy the vat intake would no doubt increase.

While the €13.5bn extra that people have to spend would not all be used for personal expenditure, the increased economic activity would create more jobs and reduce the social welfare burden.

Obviously wages and vat rates would need to stay pretty much at the same levels, so crossborder shopping would be a problem, however, certainly as a temporary measure at least, I think there is merit in arguing for 0% income tax.

P.S. as im not an economist i'll stick this in After Hours but feel free to move!

That's the only bit that I can't fault you on.:p

ParkRunner

The government would have a similar level of disposable income though. Revenue would come from VAT instead of income tax, which would increase with more personal expenditure. Expenditure would fall with less people on the dole.

SEPT 23 1989

100% income tax is the way forward

Guy:Incognito

EF wrote: »

The government would have a similar level of disposable income though. Revenue would come from VAT instead of income tax, which would increase with more personal expenditure. Expenditure would fall with less people on the dole.

85% of the country is still working If they all kept spending as they were or upped their spending to account for the 15% that cant spend anymore the government income wouldnt be down.

If these people will spend us out of the recession with a few extra Euro in their pockets, why wont they now?

ParkRunner

Stekelly wrote: »

85% of the country is still working If they all kept spending as they were or upped their spending to account for the 15% that cant spend anymore the government income wouldnt be down.

If these people will spend us out of the recession with a few extra Euro in their pockets, why wont they now?

Probably because wages are being cut because employers sales are down. If sales increased again there would be less of a case for wage cuts.

Also income levy, health levy and all the other levies are not helping because the Revenue generated is not stimulating economic activity.

85% of the country may be working but how many are paying income tex?

Guy:Incognito

EF wrote: »

Probably because wages are being cut because employers sales are down. If sales increased again there would be less of a case for wage cuts.

If people spent money sales would be up.

derby7

Can we close off this thread now, as I think EF gets the point !!!

ParkRunner

Stekelly wrote: »

If people spent money sales would be up.

Exactly, so give them €13.5bn more to spend and generate activity

Saibh

EF wrote: »

The government would have a similar level of disposable income though. Revenue would come from VAT instead of income tax, which would increase with more personal expenditure. Expenditure would fall with less people on the dole.

Correct me if I'm wrong, but you would not have to increase the VAT rates to compensate for the loss of income tax, so therefore increasing prices of goods.

Guy:Incognito

EF wrote: »

Exactly, so give them €13.5bn more to spend and generate activity

They already have a couple of hundred billion they wont spend. Give them more and they will hoard it to ride out the recession with.

People arent smart.

ParkRunner

Saibh wrote: »

Correct me if I'm wrong, but you would not have to increase the VAT rates to compensate for the loss of income tax, so therefore increasing prices of goods.

No because Revenue from VAT would increase as people would have more money in their pockets to spend. The Revenue mightn't cover the loss in income tax but decreased expenditure on social welfare from job creation as a result of the economic activity would go a long way to balancing the books and even potentially put us in a better position.

It is a similar idea to scrapping stamp duty to generate activity in the property market (not that I want to start another bubble )

Saibh

EF wrote: »

No because Revenue from VAT would increase as people would have more money in their pockets to spend. The Revenue mightn't cover the loss in income tax but decreased expenditure on social welfare from job creation as a result of the economic activity would go a long way to balancing the books and even potentially put us in a better position.

It is a similar idea to scrapping stamp duty to generate activity in the property market (not that I want to start another bubble )

To decrease expenditure on social welfare, we need to find work first for all the people on the dole.

Guy:Incognito

EF wrote: »

No because Revenue from VAT would increase as people would have more money in their pockets to spend.

and companies would know people have more money to spend. Prices would rise. Peoples money is now worth less and they buy less stuff.

Google inflation.

ParkRunner

Stekelly wrote: »

They already have a couple of hundred billion they wont spend. Give them more and they will hoard it to ride out the recession with.

People arent smart.

Maybe so..give them a bit of confidence and job security with a more stable growing economy and it might help.

The alternative is that the workers alone will carry the burden of the recession with more tax increases and less confidence, waiting for America and the U.K. to recover first

ParkRunner

Saibh wrote: »

To decrease expenditure on social welfare, we need to find work first for all the people on the dole.

It's a vicious circle really, the less economic activity the less work, the more economic activity the more job creation.

ParkRunner

Stekelly wrote: »

and companies would know people have more money to spend. Prices would rise. Peoples money is now worth less and they buy less stuff.

Google inflation.

Good point, which is why it would only work in the short term to get us through this deflationary period.

Degag

EF wrote: »

85% of the country may be working but how many are paying income tex?

Um, the vast, vast majority of them because the figure of 85% wouldn't include those working illegally.

ParkRunner

Degag wrote: »

Um, the vast, vast majority of them because the figure of 85% wouldn't include those working illegally.

Not necessarily, at least if you distinguish between the recently introduced income levy and general PAYE

Degag

EF wrote: »

Not necessarily, at least if you distinguish between the recently introduced income levy and general PAYE

Don't really understand you there... everyone who works legally pays tax, unless you earn a very low amount. (less than minimum wage, which if you were working legally, wouldn't happen)

Pherekydes

Be careful at the seaside this summer, OP.

Don't let your rubber ducky drift out to sea on the current because the coastguard and the SAR services may have been discontinued due to lack of public funding. I suppose you could philosophically think of Darwin at such a moment...

ParkRunner

Degag wrote: »

Don't really understand you there... everyone who works legally pays tax, unless you earn a very low amount. (less than minimum wage, which if you were working legally, wouldn't happen)

The Minister himself in his budget speech said:

In good times, it was possible for us to keep minimum wage earners outside the tax system. This is no longer sustainable. With up to 40% of income earners paying no income tax at all, we can no longer meet our fiscal needs. The challenge is to spread the burden in a fair manner to a wider range of income earners while avoiding economic disincentive effects.

http://www.budget.gov.ie/2009SupApril09/FinancialStatement.html#IncomeTax