Income tax

funnyname

I know this is not a simple question but if the PS unions get what they want how high will income tax have to go to balance the books?

ei.sdraob

Assuming we "somehow" endup in Greek like situation and can not borrow since rates are crazy high


to bridge 20 billion gap without cutting expenditure (there alot of fat that can be trimmed and not just from the Public Service of course)

thats 20,000,000,000 / 1,938,000 = ~ €10,000 per year per each and every worker :eek:

It be easier to default at this stage...

zootroid

I doubt it could. Eventually you create a situation where people decide they are better off on welfare than working, so the cost of welfare goes up while the tax take goes down. I think more could be done with taxes (for a start they could decrease the number of tax credits someone has, and also lower the threshold for the higher rate of tax), but government expenditure has to be brought under control, there are no two ways about it.

danbohan

ei.sdraob wrote: »

Assuming we can borrow nothing (unlikely) and somehow endup in Greek situation

to bridge 20 billion gap without cutting expenditure (there alot of fat that can be trimmed and not just from the Public Service of course)

thats 20,000,000,000 / 1,938,000 = ~ €10,000 per year per each and every worker :eek:

which is exactly why we need cut public sector jobs by 20% + , and public sector salarys by 30%+

johnnyjb

zootroid wrote: »

I doubt it could. Eventually you create a situation where people decide they are better off on welfare than working, so the cost of welfare goes up while the tax take goes down. I think more could be done with taxes (for a start they could decrease the number of tax credits someone has, and also lower the threshold for the higher rate of tax), but government expenditure has to be brought under control, there are no two ways about it.

If one of these people wants to join my place in the dole ill be happy to take their job.Id be happy with 350 a week. I cant see ordinary people who have worked all thier live wanting to do this.

The_Honeybadger

johnnyjb wrote: »

If one of these people wants to join my place in the dole ill be happy to take their job.Id be happy with 350 a week. I cant see ordinary people who have worked all thier live wanting to do this.

A family man with two kids and a wife would have to find employment worth 40-45k gross to justify coming off the dole, and even then they are only a little better off, I don't see too many of these type of jobs advertised lately. This is not the fault of those on the dole, and tbh i believe many would take up lower paid jobs and lose benefits, but there is still clearly something very wrong with that picture.

You personally say you would work for 350 a week, if you are young and single good for you, however for some others, leaving the dole and working for that type of wage would be utter madness. They would lose the dole for themselves and their partner, rent supplement and other allowances, but would still receive CB.

zootroid

johnnyjb wrote: »

If one of these people wants to join my place in the dole ill be happy to take their job.Id be happy with 350 a week. I cant see ordinary people who have worked all thier live wanting to do this.

The point I was trying to make is that the more you increase taxes, the less incentive you have to work.

Suppose you earn 350 gross, and the dole remains the same at 196.

Now suppose that in order to cut the current account deficit the government drastically raises taxes, so that out of your gross wage of your gross wage of 350, you actually only take home 150.

This may be an extreme example, but just serves to illustrate my point that raising taxes offers a disincentive to work. Another aspect is how it encourages the black market, and tax evasion. People do nixers, do not report their total income, all so that they pay less income tax. Simply increasing taxes will not be enough to tackle the deficit, cuts have to be made too.

Permabear

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Riskymove

funnyname wrote: »

I know this is not a simple question but if the PS unions get what they want how high will income tax have to go to balance the books?

well OP, hopefully you can see by now that the answer is that no-one knows...but that wont stop them putting forward other scenarios to suit their current agendas

I am afraid this thread is likely to go on for some time but your actual question will not be answered

cson

As with most things, the truth is probably somewhere in the middle. Definitely Government Expenditure must come down significantly but it'll have to be married to an increased or constant tax take. I personally think everyone should be brought into the taxation with perhaps a a standard rate for those under a certain level of income that is lower than the current standard rate. Something like 10% for the first €20,000; 25% for the next €15,000 and 40% for anything above that. Obviously that's a very rough and somewhat flawed scaling but I think its a good starting point that could be tweaked for maximum benefit.

If you do carry out the above; then Welfare and all it's attachments must come down commensurately. I've been a pretty vocal opposer on this forum of the size of welfare payments. They have to come down to a level comparable with our nearest neighbour; there must be an incentive to work. All attached benefits must be tightened too; the rent supplement is laughable and is artifically keeping rents high in areas.

Certain State services have to come at a price now; paying the salaries of teachers in fee-paying schools is abhorrent in my view. Possibly the worst money wasting combination of public-private ethos in the country. You pay for a private school; you pay for the teachers too. Do not expect the State to pay for it. Similarly fees have to be reintroduced at 3rd level.

The above is a rough estimation of what is needed to correct the countrys finances. And even implementing the above will take decades before we're able to balance the books again. There's no point sticking a bandage on it when serious surgery is required. You only prolong the inevitable.

20Cent

donegalfella wrote: »

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So the people taking the pay cuts losing their homes and suffering are the pigs and the financiers are the victims. How Orwellian.

funnyname

Riskymove wrote: »

well OP, hopefully you can see by now that the answer is that no-one knows...but that wont stop them putting forward other scenarios to suit their current agendas

I am afraid this thread is likely to go on for some time but your actual question will not be answered

Indeed it has answered my original question and it's that no amount of income tax increases can balance the books.

Sleepy

donegalfella wrote: »

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Have to admit, I'm encouraged by the spelling of PIGS on that banner (assuming that's an Italian rather than an inaccurate Irish flag).

bobbysands81

donegalfella wrote: »

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what about the public sector worker? Do you think we're immune to the poverty line???

I give a much higher % of my wages to the Govt than any private sector worker earning the same amount as me.

gurramok

cson wrote: »

If you do carry out the above; then Welfare and all it's attachments must come down commensurately. I've been a pretty vocal opposer on this forum of the size of welfare payments. They have to come down to a level comparable with our nearest neighbour; there must be an incentive to work. All attached benefits must be tightened too; the rent supplement is laughable and is artifically keeping rents high in areas.

http://www.irishtimes.com/newspaper/ireland/2010/0430/1224269370973.html

150,000 in receipt of RS. On this forum earlier, so if the average payout countrywide is 700-900E(pick a number), its a huge bill. I think it was stated about 80,000 of these numbers were 'single mothers'.

I recently went to a viewing for renting an apt in a nice area of Dublin(Castleknock). Queuing with me for a viewing was a woman with a RS form in her hands. She may or may not be a 'single mother' but if she was, her entitlements are outrageous.

Why should workers have to compete with RS applicants(especially scammers, not genuine cases) for rentals in expensive areas?(nevermind other areas which have lower rents). There is no incentive to work on those grounds when a roof over your head is provided to you in an area with expensive rent.

The_Honeybadger

gurramok wrote: »

http://www.irishtimes.com/newspaper/ireland/2010/0430/1224269370973.html

150,000 in receipt of RS. On this forum earlier, so if the average payout countrywide is 700-900E(pick a number), its a huge bill. I think it was stated about 80,000 of these numbers were 'single mothers'.

I recently went to a viewing for renting an apt in a nice area of Dublin(Castleknock). Queuing with me for a viewing was a woman with a RS form in her hands. She may or may not be a 'single mother' but if she was, her entitlements are outrageous.

Why should workers have to compete with RS applicants(especially scammers, not genuine cases) for rentals in expensive areas?(nevermind other areas which have lower rents). There is no incentive to work on those grounds when a roof over your head is provided to you in an area with expensive rent.

Myself and the missus are finding the same, we want to move to the town where we both work but rents are very high, partly because of RS, I hope this is reviewed come budget time. I gave an example on another thread of a young unmarried couple with no kids that i know, both unemployed. They have a lovely three bed semi in the town that I want to move to, and pay less than 40 euro pw after RS. Why a one bedroom apartment isn't good enough for them I just don't know, they now have two spare rooms and more space than they could ever use, and people like this are keeping rents high for working folk, very ill-thought scheme IMO.

Head The Wall

bobbysands81 wrote: »

what about the public sector worker? Do you think we're immune to the poverty line???

I give a much higher % of my wages to the Govt than any private sector worker earning the same amount as me.

That's a very vague statement, do you pay a lot of duty on all the pints you drink or do you drive a 6 litre car and pay them through excise duty.

Give us a breakdown of what you pay (leaving out your pension obviously) and we see what these special taxes and PRSI you have to pay are.

danbohan

mickeyk wrote: »

A family man with two kids and a wife would have to find employment worth 40-45k gross to justify coming off the dole, and even then they are only a little better off, I don't see too many of these type of jobs advertised lately. This is not the fault of those on the dole, and tbh i believe many would take up lower paid jobs and lose benefits, but there is still clearly something very wrong with that picture.

You personally say you would work for 350 a week, if you are young and single good for you, however for some others, leaving the dole and working for that type of wage would be utter madness. They would lose the dole for themselves and their partner, rent supplement and other allowances, but would still receive CB.

well perhaps we should tempt them off the dole with some nice sweeties like , food stamps , rent strictly monitored and paid , monetary allowance of 25 euro per person per week only and a 5 year time limit to claiming benefits in a lifetime ,followed by a pension of 50% of what a contributing person would receive, that might bring a bit more enthusiasm to their search, their is far to many career unemployed in this country,and to reach a stage where some family man would need 40, 50k to work is ridiculous

The_Honeybadger

danbohan wrote: »

well perhaps we should tempt them off the dole with some nice sweeties like , food stamps , rent strictly monitored and paid , monetary allowance of 25 euro per person per week only and a 5 year time limit to claiming benefits in a lifetime ,followed by a pension of 50% of what a contributing person would receive, that might bring a bit more enthusiasm to their search, their is far to many career unemployed in this country,and to reach a stage where some family man would need 40, 50k to work is ridiculous

It would be political suicide for whatever party tried to implement what you have laid out there, imagine what Eamon Gilmore & Joan Burton would say if FF brought that in in the next budget, it would be priceless. I do agree the situation is crazy and needs to be tackled but it would be a very difficult thing to do. Fairness must be applied as the vast majority of people on welfare are not there by choice.

danbohan

mickeyk wrote: »

It would be political suicide for whatever party tried to implement what you have laid out there, imagine what Eamon Gilmore & Joan Burton would say if FF brought that in in the next budget, it would be priceless. I do agree the situation is crazy and needs to be tackled but it would be a very difficult thing to do. Fairness must be applied as the vast majority of people on welfare are not there by choice.

agreed , but if you are sinking ship , which as a country we are , then you must try save it , additional baggage such as ps and social welfare must be thrown overboard in an effort to save the sinking ship , or at least the weight needs to be re balanced, otherwise the whole ship sinks and everybody drowns

ParkRunner

Head The Wall wrote: »

That's a very vague statement, do you pay a lot of duty on all the pints you drink or do you drive a 6 litre car and pay them through excise duty.

Give us a breakdown of what you pay (leaving out your pension obviously) and we see what these special taxes and PRSI you have to pay are.

Why should pensions be left out of it? The poster said

I give a much higher % of my wages to the Govt than any private sector worker earning the same amount as me.

This is a true statement. The % of mandatory deductions is significantly higher for public sector workers compared to their equivalent in the private sector..and which is why only draconion paycuts for public sector would have any sort of noticeable effect on the budget deficit..and even then it is questionable if it will have such effect with the knock on job losses in the economy.

Income tax doesn't need to rise by much, we just need every worker paying taxes and to get those who aren't working off the dole and making a contribution. That alone would go a long way towards reducing the deficit instead of continuously going after the same target.

gurramok

EF wrote:

The % of mandatory deductions is significantly higher for public sector workers compared to their equivalent in the private sector..and which is why only draconion paycuts for public sector would have any sort of noticeable effect on the budget deficit

Perhaps the PS earn alot more on average that their private sector counterpart hence more money to grab from them.

EF wrote: »

Income tax doesn't need to rise by much, we just need every worker paying taxes and to get those who aren't working off the dole and making a contribution. That alone would go a long way towards reducing the deficit instead of continuously going after the same target.

How much can the low pay workers(was it 50% of the workforce who earn under 25k?) contribute to reducing the 20bn+ deficit?
(yes they should be taxed but bring welfare down to entice them to make it worthwhile working)

They earn so little in that it would be a drop in the ocean of that 20bn, think about it.

ParkRunner

gurramok wrote: »

Perhaps the PS earn alot more on average that their private sector counterpart hence more money to grab from them.



How much can the low pay workers(was it 50% of the workforce who earn under 25k?) contribute to reducing the 20bn+ deficit?
(yes they should be taxed but bring welfare down to entice them to make it worthwhile working)

They earn so little in that it would be a drop in the ocean of that 20bn, think about it.

Ineviteably a smaller group of more highly qualified, longer serving workers will have a higher average pay than a larger group of proportionately lower skilled contract workers. I don't have the exact figures as to sort of revenue could be generated from broadening the tax net but there are a substantial number of workers out there who could contribute some bit to the exchequer through paying income tax. I agree that welfare needs reducing and restructuring.

Given the demand for services out there I cannot realistically envisage number being slashed by 20-30%. Also what kind of savings will accrue to exchequer from a similar 20-30% cut in pay precisely? The cost of public sector pay and pensions must be about €16bn-€17bn at this stage and falling.

who_ru

why do you think did Lenihan chose to leave Rent Supplement Payments alone last year but cut almost everything else in sight?

Spudmonkey

bobbysands81 wrote: »

what about the public sector worker? Do you think we're immune to the poverty line???

I give a much higher % of my wages to the Govt than any private sector worker earning the same amount as me.

How is this possible? How could you be paying more tax than an equivalent private sector worker?

Have you any proof of that?

Riskymove

Spudmonkey wrote: »

How is this possible? How could you be paying more tax than an equivalent private sector worker?

Have you any proof of that?

he didn't mention 'tax' he said 'to the government'

I presume he is takling about the pension levy which is only paid by PS

I have seen this talk before, while its true that PS have to pay an extra amount to the Government, it is (at least technically) about contributing to a pension.....private sector may not pay it but they dont get a PS pension either

Spudmonkey

Riskymove wrote: »

he didn't mention 'tax' he said 'to the government'

I presume he is takling about the pension levy which is only paid by PS

I have seen this talk before, while its true that PS have to pay an extra amount to the Government, it is (at least technically) about contributing to a pension.....private sector may not pay it but they dont get a PS pension either

I know he didn't mention tax and I know that was what he was hinting at. I just wanted to quiz him over the point you made!

Head The Wall

EF wrote: »

Why should pensions be left out of it?

Riskymove wrote: »

he didn't mention 'tax' he said 'to the government'

I presume he is takling about the pension levy which is only paid by PS

NEWSFLASH - Private sector workers also pay towards their pensions (the ones that have one). That's why they should be left out of the deductions. If PS pensions were managed by someone other than the govt they would still have to make the same payments and there would still be no change to his wages. It's more of the figure fiddling that the PS come out with.

e.g If I had a mortgage from the council for an affordable house well then I am paying an even higher % to the government than Bobbysands81. It's a crap point to be raising

Riskymove

Head The Wall wrote: »

NEWSFLASH - Private sector workers also pay towards their pensions (the ones that have one). That's why they should be left out of the deductions.

perhaps you could quote my entire post rather than selecting a bit that makes it look like I am saying something different than I am

MrsNY

Head The Wall wrote: »

That's a very vague statement, do you pay a lot of duty on all the pints you drink or do you drive a 6 litre car and pay them through excise duty.

Give us a breakdown of what you pay (leaving out your pension obviously) and we see what these special taxes and PRSI you have to pay are.

Check out www.taxcalc.eu and you can easily see the differences in taxes between private and public sector workers.
(as I've stated before I'm private btw)

Nijmegen

On RTE's Frontline when we were looking at the cuts in the last budget, they had a fairly straight tax expert on to talk about how we'd have to make the savings without having cuts, as the unions were calling for.

Basically, for couples with a shared income over €75,000 (IE two people each earning more than €37,500 each), you'd need to tax them at 75% on all earnings over the €75k.

Those were just last (this) years cuts...

Tipp Man

This pension business in the Public sector is madness. Public and private sector workers earning exactly the same should have the same deductions (everything else equal).

To do this the government need to abolish the Public pension defined benfiit and create a defined contribution scheme, the same as you would get in many companies all over the country. PS employee pays his share, government pays another share up to say 5%. Its the same as the vast majority of private sector pensions, People can opt in or out, there is much greater transparency, much less cost to the government and everybody is happy

Head The Wall

Riskymove wrote: »

perhaps you could quote my entire post rather than selecting a bit that makes it look like I am saying something different than I am

I am pointing out that is irrelevant, it just so happens that PS workers pay their pension to the Govt and other workers pay it to someone different. People that pay pensions pay it to someone, it is a deduction for anyone that has one. He is trying to imply that the Govt is robbing it off him

MrsNY wrote: »

Check out www.taxcalc.eu and you can easily see the differences in taxes between private and public sector workers.
(as I've stated before I'm private btw)

When you put in 25,000 for Public sector down in the gross pay it takes off 5% straight away. What is this reduced gross pay crap it's doing, it's either gross or it's not. You get paid it or you don't

To balance things up I put in 26316 and the gross pay was then showing 25,000. I also added a pension deduction of €1162 from the private sector worker, same as the PS pension deductions. These are the results


public

Gross Pay: 25000.0
Pension & Ded: 1161.708
Income Levy: 500.0
PRSI & Health: 689.0517
Net Tax Due 1107.6587
Net Pay: 21541.584

Private

Gross Pay: 25000.0
Pension & Ded: 1162.0
Income Levy: 500.0
PRSI & Health: 689.04
Net Tax Due 1107.6001
Net Pay: 21541.361

As you can see they are identical for both levels. Are the PS staff under the impression they are getting paid 25,000 but are actually only getting 23.750. Where is the 1250 going

NinjaTruncs

Tipp Man wrote: »

This pension business in the Public sector is madness. Public and private sector workers earning exactly the same should have the same deductions (everything else equal).

To do this the government need to abolish the Public pension defined benfiit and create a defined contribution scheme, the same as you would get in many companies all over the country. PS employee pays his share, government pays another share up to say 5%. Its the same as the vast majority of private sector pensions, People can opt in or out, there is much greater transparency, much less cost to the government and everybody is happy

I fully agree, especially on the opt in/out bit. I find it ridiculous that a temporary PS worker needs to pay the pension levy even though they aren't entitled to a pension.

MrsNY

@Head the Wall

On taxcalc they add the pension levy into pension deductions which I as a private worker (even though I have a company pension) dont pay which is why a public worker on the same gross salary even after the 5% cut is still earning less than me in Net wages.

OMD

MrsNY wrote: »

@Head the Wall

On taxcalc they add the pension levy into pension deductions which I as a private worker (even though I have a company pension) dont pay which is why a public worker on the same gross salary even after the 5% cut is still earning less than me in Net wages.

You miss the point that if the average private sector worker put the same amount into their pension as the public sector worker then the tax would be the same.

Obviously if the private sector wanted the same pension as the public sector worker he would have to invest substantially more.

MrsNY

OMD wrote: »

You miss the point that if the average private sector worker put the same amount into their pension as the public sector worker then the tax would be the same.

Obviously if the private sector wanted the same pension as the public sector worker he would have to invest substantially more.

Yeah thats grand but the "pension levy" does not go into their pension. At least whatever I pay in thats it - I dont have to pay an extra tax to the govt/Anglo/Nama whoever just for having a pension!

Head The Wall

All pensions are not equal though, they may be paying more because they will be recieving more. Look at the figures I posted from the Taxcalc, the pensions & deductions are the same. I calculated out the PS one and just replicated it for the private sector staff €1162

OMD

MrsNY wrote: »

Yeah thats grand but the "pension levy" does not go into their pension. At least whatever I pay in thats it - I dont have to pay an extra tax to the govt/Anglo/Nama whoever just for having a pension!

You still don't get it. To get the same pension a private sector worker would have to pay much more into their private sector pension. It doesn't matter what the government does with the money.

In actual fact the money is used to pay current pensioners (not NAMA or Anglo) but that is a different point.

Head The Wall

Does any of it go into their pension. The way their pension works is different to most others. Thats not our problem per se (although we eventually end up contributing to it) thats theirs. In my eyes it all goes into the current spending pot and it all comes out of the current spending pot. Call it what they may, it's a pension payment

MrsNY

Head The Wall wrote: »

Does any of it go into their pension. The way their pension works is different to most others. Thats not our problem per se (although we eventually end up contributing to it) thats theirs. In my eyes it all goes into the current spending pot and it all comes out of the current spending pot. Call it what they may, it's a pension payment

True, true.
But it all goes into the pot - PAYE, PRSI , income levies etc - all to be mis-handled by our lovely Government.....
I think we are all being "had" as my Granny would say.