Time for a national maximum wage.

Akrasia

I'm getting very tired of IBEC and ISME and the right wing politicians and economists blaming minimum wages for Ireland's loss of competitiveness.

Instead of scrapping the minimum wage, we should be looking at imposing a national maximum wage on professionals, 'developers' bankers politicians etc capped at about 10 times the minimum wage (170k roughly, including all peripheral benefits, income from investments and pension contribtions) with a 100% tax on all income above this threshold.

Then we can
1. reduce rents
2. reduce health expenditure
3. reduce legal expenses (tribunals, enquiries etc)
4. reduce the costs of the oireachtas
5. reduce the costs at all the quangos and semi state companies
6. increase the income tax take
7. Most importantly, all the owners of profitable small/medium business who think they can increase their profits by reducing the wages of the lowest paid would be prevented from doing so.

Taxipete29

Maximum wages are not the answer. They do nothing to encourage investment or job creation. Terrible idea

turgon

If a company wants to give a worker a million euro per year then thats that company's prerogative and its none - I repeat none - of your business.



From your magic list of miracles you want its clear you understand economics about as much as the common man understands multi-variable differentiation. Perhaps you should become educated as to the consequences of your ideas before putting them out there.

tlev

Yes once we do that we can also take a bus ride to magic land and play with the enchanted fairy unicorns of your dreams

Its pure fantasy and won't ever happen I'm sorry to say!

turgon

Taxipete29 wrote: »

They do nothing to encourage investment or job creation.

They even do more damage than just nothing, they directly disincentive people from getting good important jobs (like flying aircraft), starting and investing in businesses and creating employment.

ei.sdraob

tlev wrote: »

Yes once we do that we can also take a bus ride to magic land and play with the enchanted fairy unicorns of your dreams

Its pure fantasy and won't ever happen I'm sorry to say!

its called socialism

look how that turned out in Cuba and USSR

tlev

ei.sdraob wrote: »

its called socialism

look how that turned out in Cuba and USSR

No I mean it won't happen in Ireland!

turgon

I was just listening to one of the videos on the OP's page, a choice quote:

"This [economic policy of welfare and wage rationalization] is promoted as a single party line by economists"

Shows where the OP stands on economics. The big bad economists eh, thinking they know something about the economy. Darn fools!

ei.sdraob

tlev wrote: »

No I mean it won't happen in Ireland!

Im afraid it already did, even in the best of times no one in above mentioned countries would get paid for doing nothing, like happens here

All hail Comrade Cowen!

:cool:

tlev

For the motherland??

ei.sdraob

on a more serious note

anymore increases in taxes or a cap (seriously only time this was attempted was in communist regimes and that never ends well)
and people would just give up

we already have stories of it being easier to stay on dole than staying at a job, with all them payments and free health care

i myself decided recently to work less, there comes a point when working 9am till 11pm is not worth the extra money that will be almost all taxed to hell

infact i spend the better part of this morning trying to find out how to setup an offshore company and where would be a nice place to move, all my business is done with companies outside of ireland... and i dont like the idea of my tax money going to bailout bankrupt banks, developers and pay the highest welfare rates in world

sigh

tlev

Yeah it would definitely lead to a brain drain in the country. Then again people like Pat Neary could do with a cap on wages....

turgon

These people like the OP dont want to hear those kind of real life stories ei.sdraob. They live in a fantasy land where the employers are useless good for nothing pigs that contribute nothing to society, while the employees are angels that are being exploited. With that kind of fantasy they always find reality a bit too ... how should I put ... real.

ei.sdraob

I think in the 90s the government did its job and made ireland very business friendly, this lead to investment and almost full employment (some people somehow managed to float thru these years on the dole), the boom ran out of steam

but then we (well yee, i managed to stay out of it) and got caught up in a construction/housing bubble

now that the bubble burst everyone is blaming anyone but themselves, tough times bring out all sorts of extreme ideas, my main worry politically and economically is going too far to the left or the right or sideways altogether as that wont help

for a good idea see the parallel thread in the other politics forum about the negative income tax system, quite interesting

http://www.boards.ie/vbulletin/showthread.php?t=2055630041

turgon

ei.sdraob wrote: »

I think in the 90s the government did its job and made ireland very business friendly, this lead to investment and almost full employment (some people somehow managed to float thru these years on the dole), the boom ran out of steam

Yes. Two points: firstly the boom was created in part by bad government policy a and our recession is made worse as a result. So secondly, if we are to get out of this I would say we must stay business friendly. Of course people like the OP will have a hugely subjective view of "business friendly" that will somehow still manage to accommodate huge tax, high spending and general enterprise disincentives.

ei.sdraob wrote: »

now that the bubble burst everyone is blaming anyone but themselves

That, in my opinion, is the single greatest factor damaging the recovery effort. House owners want to blame their buying a house and getting huge debts on the banks. Government blame the "world economy" for its own mistakes. Unions blame everyone but their members for the job losses even though they were the ones that pushed for such anti-enterprise measures. The Left blames what they see as the Right; the Right blames what they see as the Left.

ei.sdraob wrote: »

my main worry politically and economically is going too far to the left or the right or sideways altogether as that wont help

There is always that "shock doctrine" element to it. My worry is people will be shocked into believing the anti-business rhetoric spouted so freely these days by posters like the OP, and take choices that will damage us in the long run.

Its obviously hard for me to take this shock principle and equally criticize the Right; me being a proponent and all. All I would ask for is rationalism. The more extreme liberal policies I seek can wait until the recovery, in the interim all I want is to clean up the mess that was made.

Soldie

Begrudgery at its finest.

turgon

Also note how the Left, upon failing in a logical economics debate, will always fall back on slogans.

tlev

turgon wrote: »

Also note how the Left, upon failing in a logical economics debate, will always fall back on slogans.

Yes but catchy slogans like: For the people!! etc strike a chord with the disillusioned masses far better than: xxx policies are counterproductive to growth and will lead to a lower standard of living and a prolonged recession!

turgon

Very true! In fact I would say that most votes for the "Left" are driven solely by that kind of slogan drivel.

And its not like you get an explanation. I jsut got a feeling there is not point asking Soldie to explain that. His trench is about 15 feet deep at the moment, and getting deeper. You can be sure he wont be leaving there anytime soon.


And also, does anybody see the huge irony of Soldie labeling us as begrudgers when most "Left wingers" are motivated primarily by begrudging the rich?

Soldie

I was calling the original poster a begrudger. How deep is my trench now?!

silverharp

Akrasia wrote: »

I'm getting very tired of IBEC and ISME and the right wing politicians and economists blaming minimum wages for Ireland's loss of competitiveness.....

if they are saying that they are not telling the whole story. The reason Ireland has lost cometitiveness is that the gov. created artificial bottlenecks and mal investment in the economy. All businesses should be allowed set salaries so that they can adjust to local circumstances. Your earnings cap is a cop out and would not change anything.
Where you should not listen to IBEC is if they call for the gov. to continue "stimulus" spending as they want the money for their members at the expense of the general population.

Jax Teller

communism is the way forward :pac:

dsmythy

100% tax above the maximum? People are talking about a brain drain on this thread but they are wrong. It would be more of a brain fail. Our national collective smarts would collapse but then everyone would be equal i guess. (OP's whole exercise?)

TheInquisitor

Pwah...socialist thinkin from a person that i guarantee will never be an entrepreneur and will blame everyone else for their problems.

See the linked post. This is the reason the minimum wage AND the dole needs to be cut sharply

http://boards.ie/vbulletin/showthread.php?p=61294714#post61294714

McCruiskeen

I would imagine that the OP's idea is also completely unconstitutional, not that the lefties ever care about such things. e.g. "All the bankers and property developers should be in chains"

Another point against this idea is that any US multinational wishing to set up a company in Ireland would not do so as any US executives seconded here would simply refuse to take a massive paycut to travel here and set up the company. Also many genuinely talented people would be off to the US and the UK ASAP as would (rightly) refuse to pay 100% of their wages in tax.

nesf

ei.sdraob wrote: »

I think in the 90s the government did its job and made ireland very business friendly, this lead to investment and almost full employment (some people somehow managed to float thru these years on the dole), the boom ran out of steam

Ish. The biggest problem was that the Government continued with the policies of the 90s into recent years when times had changed and a different approach to governance was needed. Pre-2000 FF did a relatively good job, post-2000 not so much.

dvpower

Instead of a maximum wage, how about a super tax? Say 65% on earnings over €200,000. Not too draconian but might be a quid pro quo for getting through a reduction in the minimum wage.

turgon

Soldie wrote: »

I was calling the original poster a begrudger. How deep is my trench now?!

Apologies. I jumped the gun here, as I did earlier on in this thread. Ill try to stop my prejudices getting the better of me in future.

Joey the lips

Stupid proposal. For many reasons, but it sounds like a socialsitic policy which I should be in favor of which I am not.

Economist will teach you the best solution to high costs is lots of competition!

If i spend 10 years in a field of expertise another 20 in practice it is not fair that i am on the same money as less experienced,

nesf

dvpower wrote: »

Instead of a maximum wage, how about a super tax? Say 65% on earnings over €200,000. Not too draconian but might be a quid pro quo for getting through a reduction in the minimum wage.

How is it quid pro quo? Do you think everyone employing people on the minimum wage earns over 200K a year?

Lockstep

McCruiskeen wrote: »

I would imagine that the OP's idea is also completely unconstitutional, not that the lefties ever care about such things. e.g. "All the bankers and property developers should be in chains"

I'm curious; which article in the Constituion would it be against?

ei.sdraob

dvpower wrote: »

Instead of a maximum wage, how about a super tax? Say 65% on earnings over €200,000. Not too draconian but might be a quid pro quo for getting through a reduction in the minimum wage.

there aint that many people yearning that much to make a slightest bit of difference to the hole we are in

and the super rich are masters at avoiding taxes thru various loopholes and offshore arrangements

nesf

ei.sdraob wrote: »

and the super rich are masters at avoiding taxes thru various loopholes and offshore arrangements

Or more accurately they can afford to hire accountants to figure it out for them and still make money doing it. Wealth taxes don't work well, plus we capture quite a lot of their wealth through VAT etc anyway.

ressem

A national maximum wage isn't a runner, but a number of countries such as Germany and Japan have a usual case of paying about 8 times the average company wage to the CEO/ directors, rather than numbers in the millions.

Of course that is to benefit the shareholders, not the 'national interest', and is because the benefit of paying much more doesn't seem to be worthwhile.

OffTopic... Some of their other practices would appear to be of greater benefit, such as the company board of directors having a clear and distinct split, between the executive (headed by CEO) and supervisory roles (headed by chairman).

Hookey

dvpower wrote: »

Instead of a maximum wage, how about a super tax? Say 65% on earnings over €200,000. Not too draconian but might be a quid pro quo for getting through a reduction in the minimum wage.

It wouldn't actually earn that much tax revenue; there are approx 24,000 people earning between €200K and €500k, with an average salary of €204,207 (which shows those 24K people are heavily skewed towards the "low end" of that pay range), so you'd only be charging the 65% rate on an average of €4200, or approx. €66M in tax revenue. Not trivial, but nowhere near enough to fill the hole. The problem of course is that as you get into these high salary ranges, you're increasingly in the realm of the self-employed, the partner or company owner, who have lots of ways to shift their tax burden around. This doesn't mean it shouldn't be done (so long as you accept that the very best talent will go elsewhere), but it would probably generate rather less than €66m.

As for the OP's idea; ridiculous; you may as well burn down what remains of Irish industry right now.

seamus

National Maximum wage == socialism. No way. Aside from taxation, it's none of the government's business how much a private company wishes to pay private individuals. It would be a barrier to economic growth and would stifle development because companies would be less encouraged to invest in R&D in Ireland, since ultimately the people at the top of the chain can't benefit from improving the quality and efficiency of their business.

It's exactly this type of "capping" and benchmarking of salary/wage levels which makes the public sector a cesspit of inefficiency.

However, I support the tone of the OP and public sector wages at the higher levels, including the judiciary, should be adjusted on far more scientific and calculable rates than we currently do.
There's no reason why the salaries of everyone in the public sector can't be linked to economic growth/decline. So if the economy inflates by 5% in a given year (and government income inflates by the same amount), salaries increase by 5%. If the economy deflates, salaries deflate.
And If the politicians wish to increase their salaries outside of these standard rates, they must put the request to referendum. I've never understood the logic of TDs being allowed to award themselves pay increases. Most of us are given enough autonomy to decide how our job is done, but we still have to ask our boss if we want a pay rise. The people are the boss.

MG

Goes without saying (almost) that this is a bad idea that would be a disincentive to work and create a huge black economy.

The only place I've heard of a max wage was in the 50s in UK football. It didn't work and was scrapped, unsurprisingly (partly thanks to Jimmy Hill. Good man Jim)

P. Breathnach

seamus wrote: »

National Maximum wage == socialism...

That's an American-style post: anything that the state does or might do that you do not like is labelled socialism, and that is taken to be a crushing response.

Setting a maximum wage is not socialism, and not everything about socialism is unquestionably bad.

seamus

P. Breathnach wrote: »

That's an American-style post: anything that the state does or might do that you do not like is labelled socialism, and that is taken to be a crushing response.

Setting a maximum wage is not socialism, and not everything about socialism is unquestionably bad.

Anything which attempts to limit earnings is effectively socialism. Any attempt by the state to tell private bodies what they must pay someone is also socialism.

No, socialism isn't inherently bad, it has plenty of principles far superior to the ultra-capitalist American ideal, but where it gets involved in compensation for work done, it invariably comes down on the side which is less beneficial from an economic point of view.

tlev

P. Breathnach wrote: »

That's an American-style post: anything that the state does or might do that you do not like is labelled socialism, and that is taken to be a crushing response.

Setting a maximum wage is not socialism, and not everything about socialism is unquestionably bad.

No but limiting the amount you can make in a capitalist economy is bad. Motivates people to either a) leave b)make money illegally

Does anyone see ibec or imse recognising their role in the rise of rip off ireland?..
And all these economists that believe in the free market as being the most important thing in the history of the universe seem to miss the fact that in the last two years capitalisms shortcomings have become apparent..

MG

P. Breathnach wrote: »

That's an American-style post: anything that the state does or might do that you do not like is labelled socialism, and that is taken to be a crushing response.

Setting a maximum wage is not socialism, and not everything about socialism is unquestionably bad.

Not everything American is bad either

nesf

P. Breathnach wrote: »

That's an American-style post: anything that the state does or might do that you do not like is labelled socialism, and that is taken to be a crushing response.

Setting a maximum wage is not socialism, and not everything about socialism is unquestionably bad.

Semantically yes you're completely correct but realistically any kind of wage control is statism on a level similar to socialism. I can see some kind of argument for a limit being placed on salaries paid out by the State but to limit private sector salaries is much bigger and restrictive step.

Boggle

I agree with the OP, although I would make allowances for once off windfalls such as patents or the sale of a (one) business.
Like I said on a different site, 150k is a lot of money. It only stops feeling that way when the guy next to you is on 500k.

And, personally I reckon it would stimulate high end investment in the country as we have a rich talent pool here and, if the company knew they could get 10 top end guys here for the price of one abroad, then it makes sense to locate your top end divisions here such as R&D etc.

I would enforce it through 100% tax above a certain point though and make it applicable to even earnings made abroad and if anybody chooses to emigrate to avoid it I would strip them of their Irish passport and bar them from entering the country. (Maybe not that harsh but not far off)

BTW, I'm no socialist and I hate unions but I tink this would make for a better and more equal country to the detriment of the very few.

seamus

Boggle wrote: »

And, personally I reckon it would stimulate high end investment in the country as we have a rich talent pool here and, if the company knew they could get 10 top end guys here for the price of one abroad, then it makes sense to locate your top end divisions here such as R&D etc.

But you wouldn't get 10 top-end guys here. Because if they were that good, they'd have been offered a much bigger package overseas including a huge house, car, bonusses and all sorts of other paid expenses that they could never get in Ireland because you've limited their compensation.
And so R & D would die because the guys running the business have little encouragment to improve their output/efficiency/earnings because their wages are capped.

I would enforce it through 100% tax above a certain point though and make it applicable to even earnings made abroad and if anybody chooses to emigrate to avoid it I would strip them of their Irish passport and bar them from entering the country. (Maybe not that harsh but not far off)

We're signed up to various treaties which mean that we cannot "uncitizen" anyone if it would leave them without citizenship. So they can emigrate with the above company, say "Fu*ck you" to Ireland (quite rightly) who can't tax them from abroad, get citizenship in the country of their choice after a few years, surrender their Irish passport and then travel freely on their new citizenship. Even back to Ireland.

Boggle

But you wouldn't get 10 top-end guys here. Because if they were that good, they'd have been offered a much bigger package overseas including a huge house, car, bonusses and all sorts of other paid expenses that they could never get in Ireland because you've limited their compensation.
And so R & D would die because the guys running the business have little encouragment to improve their output/efficiency/earnings because their wages are capped.

Believe it or not, not everybody is prepared to leave their home and family just for more money. Also, how long before most of the companies relocate their top end departments to ireland to improve their bottom line?

We're signed up to various treaties which mean that we cannot "uncitizen" anyone if it would leave them without citizenship. So they can emigrate with the above company, say "Fu*ck you" to Ireland (quite rightly) who can't tax them from abroad, get citizenship in the country of their choice after a few years, surrender their Irish passport and then travel freely on their new citizenship. Even back to Ireland.

No such thing as can't seamus. Don't america have some policy of taxing their citizens even when abroad?

seamus

Boggle wrote: »

Believe it or not, not everybody is prepared to leave their home and family just for more money.

Everybody can be bought, particularly those at the top. You don't get to the top without making shedloads of sacrifices, it would be rare that a "top guy" (or woman) would stand firm in the face of a massive salary increase. In fact most people have a price. If a company offered you a home, a car, expenses and €500k a year, but the job is in London, would you turn it down and stay here?

Also, how long before most of the companies relocate their top end departments to ireland to improve their bottom line?

But they wouldn't. Chrysler (for example) might relocate, pick up an Irish whizz for €200k a year and be happy for two years. Then Ford (assuming they're not the same company) say, "We have to get this guy", offer him €600k a year working from an office in Belfast, and the guy jumps ship. That's exactly what would happen. Anyone who relocated here won't get the "top guys" because the top guys will emigrate. Or at least most of them will.

No such thing as can't seamus. Don't america have some policy of taxing their citizens even when abroad?

I'm not sure how it works, but if someone doesn't return to the US and doesn't have a US bank account, there's pretty much nothing they can do about it. You can also file a zero return and say, "I don't live here, I live elsewhere and I made no money last year.". They have no way of finding out if you did or not.

tlev

If someone offered me 500k a year and car etc. I would be gone in a heartbeat. Call me materialistic....:D

Boggle

I'm not sure how it works, but if someone doesn't return to the US and doesn't have a US bank account, there's pretty much nothing they can do about it. You can also file a zero return and say, "I don't live here, I live elsewhere and I made no money last year.". They have no way of finding out if you did or not.

Yeah, I haven't a clue how it works either - its just something I've heard being referred to more than anything.

But they wouldn't. Chrysler (for example) might relocate, pick up an Irish whizz for €200k a year and be happy for two years. Then Ford (assuming they're not the same company) say, "We have to get this guy", offer him €600k a year working from an office in Belfast, and the guy jumps ship. That's exactly what would happen. Anyone who relocated here won't get the "top guys" because the top guys will emigrate. Or at least most of them will.

We have quite a practical and well educated workforce (or at least we have untill FF are finished) so for every so called top guy who leaves, two will jump up and down begging for a chance to prove themselves. Believe me, especially in engineering, the so called top guys are generally nowhere near as good as they'd have you believe.
Also, 4 decent guys can outwork 1 great guy anyday (with your 600vs 150k example) - all it takes, especially with engineering and design, is practical experience.
Don't get me wrong though, some guys will leave but I think there's plenty of others there to replace them and companies will just start viewing families and ties to Ireland as a good thing. You'd never know, maybe they'll make sure that their good employees can have plenty of time with their families and aren't overburdened with work which can only make for a better country on the whole.

By the way, which of Irelands top execs have been worth their money over the past few years??? Does this mean that, maybe, paying more and more for something does not necessarily produce a return?


Edit: I haven't worked out the details of this by any means, but I believe that a more equal society is a better society and some means like a max wage would benefit society as a whole. Althouh taking 150k is just a random figure and it could be higher or lower.

tinkerbell

Capping wages is a ridiculous idea. It doesn't encourage anything in the jobs sector. If a company wants to pay an individual €1m per year then so be it. The higher the private sector wages are, the more income tax the government gets.

Perhaps the idiots in government right now may want to look at the fools they are paying a full salary and bonus for in the infamous "rubber room" because they can't get rid of them, and such people are literally sitting around all day reading a newspaper. And finally well done to the govt for clamping down on social welfare fraud, they've saved themselves €226m already, idiots for not doing it sooner.

Boggle

tinkerbell wrote: »

Capping wages is a ridiculous idea. It doesn't encourage anything in the jobs sector. If a company wants to pay an individual €1m per year then so be it. The higher the private sector wages are, the more income tax the government gets.

Perhaps the idiots in government right now may want to look at the fools they are paying a full salary and bonus for in the infamous "rubber room" because they can't get rid of them, and such people are literally sitting around all day reading a newspaper. And finally well done to the govt for clamping down on social welfare fraud, they've saved themselves €226m already, idiots for not doing it sooner.

Just because its a radical idea does not make it ridiculous.
At the very least we should be talking about multilpe tax bands for those on 60k, 100k, 150k plus (instead of the two we currenly have). Oh, and instead of a tax free allowance I'd put in a 1% or 5% (low) tax band so that everybody contributes something to the running of the country - even if it is only a measly few euro in the week.