Tax system fair?

Wompa1

There was no real incentive to work in Ireland. If I worked overtime in my job I got hammered for it. After my first raise on my salary I ended up only making a few hundred euro extra a year and this was on the back of being moved into a management role. It was a relatively sizable raise but because of the extra taxes it ended up not being worth it at all. Extra pressure with no extra money.

I got a couple more raises and got put on pretty good money. Then my taxes were through the roof. After all of my taxes were paid by the end of the year I was paying just shy of what I earned as a yearly salary in my first 2 years in my full time 'skilled' job.

Like others have said, the biggest pill to swallow isn't even the high taxes, it's how it's squandered away through corruption and incompetence. I love Ireland but I had to ask myself the question, was it worth paying 83 euro a day in taxes to live there...

Gannicus

Ush1 wrote: »

As far as I know money paid to lower earning classes usually stays in the country, same goes for money paid in social welfare.

I disagree to a point. I know a lot of people who live on the border counties within the ROI (who are on low earnings or social welfare) and they have a tendancy to cross the border and do their shopping. I don't mean the weekly shop. I mean they go shopping maybe every 2 or 3 weeks and buy in a decent bulk to save money but at the same time they can afford shopping holidays to New York or hit Continental Europe a couple of times a year. Now it doesn't really bother me with my friends that work as they do pay tax on their earnings, but my friends on the social welfare books, almost all of that money leaving the country. They even have a quick nip across the border to filll the car with petrol for the week..

It's about time the Government, The Welfare, Revenue commission and anyone else in the middle sit down, cut the bureaucratic bull**** and red tape and revamp the ENTIRE system and make it fair for everyone on every level and see where this country can save money and keep the money here in Ireland.

get_even

im still waiting for someone to explain to me why a flat tax isnt fair and equitable

Gannicus

Shenshen wrote: »

22%?
Not really.

"Singles pay on income above EUR 250,731 (couples, on income above EUR 501,462) income tax of 45% before 5.5% solidarity tax and 8%-9% church tax."

When I was still living in Germany, I paid nearly 60% on an income under 30k.
That's why I'm not really even concerned yet with the tax rates here...

Apologies,

I am open to correction. The website said nothing about church or solidarity taxes. I was unaware of these taxes. I said "it seems to operate on a sliding scale".

Grayson

summerskin wrote: »

No, I'm saying that everyone should pay the same % in taxes, otherwise there is no incentive to work harder and earn more money.

I would have no problem paying the same rate of tax as someone earning 10x my salary, or with someone earning 10% of my salary.

See, according to your logic there is absolutely no incentive for someone on 20k a year to try and get a job that pays 40k a year because they would be on a higher tax bracket.

You seem the be ignoring a very obvious fact. We live in a country where people are taxed at a higer rate on higher earnings and there's a huge variety of wages out there. From people on 16k a year to 100k+ a year.

By your logic, there's no incentive for anyone in this country to work anything other than a minimum wage jobe because it's pointless.

okedoke

Big Steve wrote: »

The current tax system is completely flaud. I got a small promotion and a very minute pay rise recently. This put me just over the standard cut off point into the higher tax brand. As a result with the tax and the social levy I have lost 52% of my pay rise. more than half of my menial payrise is gone. I'm honestly tempted to step down from the position as I'm working longer hours and losing just over half of the extra income I earn. It's really really not worth it to me.

The taxation system needs to be completely revamped to make it fairer on people on every level. I don't mind paying my way but.

that's exactly the same system as you are saying operates in Germany i.e. it's progressive

Big Steve wrote: »

. If you have Private Health Insurance and are paying a private pension these should be more deductable from tax as you are reducing your burden on the state but the tax bands should be lowered at the bottom and slowly inclined at multiple levels of earning to best make sure everyone is paying a fair amount and an appropriate amount based on their income at that time. as I've said in a previous post maybe have 5 or 6 or even 7 tax bands.

pension contributions are given tax relief at the higher rate already - if you pay €100 into your pension, it costs you €58.

private health insurance premiums are deductible at the standard rate - €100 premium costs you €80

smash

summerskin wrote: »

If people do not contribute to society then they can remain poor. I'm sick of working my arse off to make sure the "divide" between rich/hard working and poor erodes over time.

This is it in a nutshell really. I wish we could go back to survival of the fittest.

gobnaitolunacy

Wompa1 wrote: »

Like others have said, the biggest pill to swallow isn't even the high taxes, it's how it's squandered away through corruption and incompetence. I love Ireland but I had to ask myself the question, was it worth paying 83 euro a day in taxes to live there...

+1,000.

Zab

get_even wrote: »

proportinatley speaking , a flat tax is fair and much less open to loopholes

I see no merit to that statement.

get_even wrote: »

a disparity of wealth is unavoidable and where do you draw the line when it comes to deciding what a narrow enough margin between the top and bottom is

a flat tax levels the playing pitch , its in keeping with the idea of equal opportunity , not equal outcome

Draw the line? I don't see why we have to predict the future. The disparity now is ridiculous, and that's all that's required. Your changes make the disparity worse, not better.

the main reason no one proposes it is that it would make a tonne of politican and civil servants obsolete , a complicated system provides jobs and slogans like " raise taxes on the wealthy " keep a sizeable number of politican in votes , a flat tax is logical but has no value to populist politics

I don't agree with what you're saying here, although I will say that my preference would be to replace the bulk of our tax and charges system with direct progressive tax against income combined with a series of excess charges on bins water etc (i.e. no charge unless you go over a certain amount).

get_even

Zab wrote: »

I see no merit to that statement.


Draw the line? I don't see why we have to predict the future. The disparity now is ridiculous, and that's all that's required. Your changes make the disparity worse, not better.



I don't agree with what you're saying here, although I will say that my preference would be to replace the bulk of our tax and charges system with direct progressive tax against income combined with a series of excess charges on bins water etc (i.e. no charge unless you go over a certain amount).

compared to most western nations, the gap between the top and the bottom in ireland is not particulary wide and the level of taxation on low earners is very low compared to the likes of sweeden etc , something the likes of v browne conveniently ignores but thats beside the point

a flat tax is a seperate issue , unless you whole aim centres around narrowing the gap between the so called rich and poor , mine does not , i see a flat tax as an entirely logical and open approach to the tax system

and to reiterate what i said earlier , id raise corporation tax to 20% aswell

summerskin

Grayson wrote: »

See, according to your logic there is absolutely no incentive for someone on 20k a year to try and get a job that pays 40k a year because they would be on a higher tax bracket.

You seem the be ignoring a very obvious fact. We live in a country where people are taxed at a higer rate on higher earnings and there's a huge variety of wages out there. From people on 16k a year to 100k+ a year.

By your logic, there's no incentive for anyone in this country to work anything other than a minimum wage jobe because it's pointless.

Nope, quite the opposite, how can you not see that???? I'm saying there should be a flat tax rate on ALL earnings.Why should a 100k earner pay a higher %age than a 20k??? If I make 100k and was taxed at 35% i'd pay €35k p.a. in tax, and the 20k earner would pay €7k. Sounds fair enough to me....

I'm saying that the current system of tax bands dis-incentivises anyone from getting a pay rise, as they will pay a higher rate. think you have your wiores crossed, or just don't understand taxation...

get_even

summerskin wrote: »

Nope, quite the opposite, how can you not see that???? I'm saying there should be a flat tax rate on ALL earnings.Why should a 100k earner pay a higher %age than a 20k??? If I make 100k and was taxed at 35% i'd pay €35k p.a. in tax, and the 20k earner would pay €7k. Sounds fair enough to me....

I'm saying that the current system of tax bands dis-incentivises anyone from getting a pay rise, as they will pay a higher rate. think you have your wiores crossed, or just don't understand taxation...

the present system often unfairly benefits the super wealthy who can pay acccountants to take advantage of various complicated loopholes

a flat tax is simple and straightforward , none of this business of finding your paying an extra 10% more in tax just because you creeped across a threshold

Gannicus

okedoke wrote: »

that's exactly the same system as you are saying operates in Germany i.e. it's progressive



pension contributions are given tax relief at the higher rate already - if you pay €100 into your pension, it costs you €58.

private health insurance premiums are deductible at the standard rate - €100 premium costs you €80

They give you relief on the pension but there is a pension levy still there. Have you read my original post regarding tax on a sliding scale as opposed to a specifically defined bracket with a massive jump in the amount of tax you pay as soon as you cross it regardless of how much you pass it. I have no problem paying more tax when I make more money but I think the way the system works is antiquated and I am offering a suggestion on how I think it could be improved.

get_even

okedoke wrote: »

that's exactly the same system as you are saying operates in Germany i.e. it's progressive



pension contributions are given tax relief at the higher rate already - if you pay €100 into your pension, it costs you €58.

private health insurance premiums are deductible at the standard rate - €100 premium costs you €80

tax deduction on pension contributions have been greatly reduced , thier now around 27%

awec

Not fair in my opinion. Sick of getting shafted every pay day by the tax man.

I fail to see why I should contribute more to prop up the lifestyle of people earning less than me.

Do I get value for money for the tax I pay? No chance.

Flat rate please.

okedoke

Big Steve wrote: »

They give you relief on the pension but there is a pension levy still there. Have you read my original post regarding tax on a sliding scale as opposed to a specifically defined bracket with a massive jump in the amount of tax you pay as soon as you cross it regardless of how much you pass it. I have no problem paying more tax when I make more money but I think the way the system works is antiquated and I am offering a suggestion on how I think it could be improved.

The pension levy is only for public sector workers and that plus public sector pensions contributions combined do not come near to paying for the pensions of those workers.

I don't understand your point about the sliding scale, the Irish system is a sliding scale i.e. if you earn €32K, you pay 20% tax, if you earn €32,001, you pay 20% tax on the €32K and 42% on the €1.

Scanlas The 2nd

Zab wrote: »

We have a progressive tax system (the more you earn the higher a % of your income you pay) and I fully support this and believe a change to a flat or regressive system would be a disaster. I don't agree that there isn't an incentive to earn more in the higher brackets, although obviously I agree that there's less of an incentive than there would be if you weren't paying tax (keep in mind pay increases tend to be in proportion to the size of your salary to begin with).

To people who want a flat or regressive tax system: base capitalism virtually ensures disparity of wealth. Measures to counteract this fact are one of the reasons why our current versions have merit, and they still have a long way to go.

Why is a disparity of wealth necessarily a bad thing?

Gannicus

get_even wrote: »

tax deduction on pension contributions have been greatly reduced , thier now around 27%

I think there are plans to reduce it further.

Grayson

summerskin wrote: »

Nope, quite the opposite, how can you not see that???? I'm saying there should be a flat tax rate on ALL earnings.Why should a 100k earner pay a higher %age than a 20k??? If I make 100k and was taxed at 35% i'd pay €35k p.a. in tax, and the 20k earner would pay €7k. Sounds fair enough to me....

I'm saying that the current system of tax bands dis-incentivises anyone from getting a pay rise, as they will pay a higher rate. think you have your wiores crossed, or just don't understand taxation...

I think you don't understand numbers. If I get a pay rise of 5k (which I did last year), even if I'm taxed at 42%, i still take home an extra 2,900 a year.

According to the way your thinking, I'm actually not getting any pay raise. Because there's absolutely no incentive for me to try and get it.

I also think you don't understand numbers because you want a universal tax rate of 35%. Which is just less than the maximum of 42%. This means that those earning less than about 60-70k a year would all end up paying more tax.

Zab

get_even wrote: »

compared to most western nations, the gap between the top and the bottom in ireland is not particulary wide and the level of taxation on low earners is very low compared to the likes of sweeden etc , something the likes of v browne conveniently ignores but thats beside the point

a flat tax is a seperate issue , unless you whole aim centres around narrowing the gap between the so called rich and poor , mine does not , i see a flat tax as an entirely logical and open approach to the tax system

and to reiterate what i said earlier , id raise corporation tax to 20% aswell

Compared to most western countries? We look much worse in the group of western countries than we do in the rest of the world. Particularly the bulk of Europe does this better than we do.

A flat tax is not a separate issue. You seem to think that people have some sort of naturalistic right to own, earn and control as much as possible. They don't, the only thing that gives then this right is a human devised system. I believe that this system should be devised for the betterment of all, and that that should be its number one priority. You believe its first priority to be to ensure fairness via its own internal scoring system (i.e. you're not arguing that effort x time = wage). I also believe in fairness, I just think there're more factors at play.

a flat tax is simple and straightforward , none of this business of finding your paying an extra 10% more in tax just because you creeped across a threshold

A progressive tax system is also simple and straightforward. What you're talking about has nothing to do with flat vs progressive and therefore can't be given as a reason to change to a flat system.

Gannicus

okedoke wrote: »

The pension levy is only for public sector workers and that plus public sector pensions contributions combined do not come near to paying for the pensions of those workers.

I don't understand your point about the sliding scale, the Irish system is a sliding scale i.e. if you earn €32K, you pay 20% tax, if you earn €32,001, you pay 20% tax on the €32K and 42% on the €1.

I know but if you earn 42k you pay 42% on the extra 10k over the 32k. my suggestion is.

20k to 30k is at 25%
30k to 40k is at 30%
40k to 50k is at 35%

so it works up slowly the more you earn and you not just thrust across one line and that's it from then on out on incentivising you to earn a little bit more each time without fear of the big bad tax man taking your hard earned euros.

bluecode

Fair? No, Just sent in my annual tax return. I pay tax, the universal social charge and PRSI. Even though my last year's income was less than the lower limit for the minimum wage. This year's income is even less yet I have to pay tax based on the previous year. I'll get some of it back but I need it now not next year.

But I'm not entitled to the benefit or the dole.

All because I'm self employed.

I'd be better off in the black economy.

summerskin

Grayson wrote: »

I think you don't understand numbers. If I get a pay rise of 5k (which I did last year), even if I'm taxed at 42%, i still take home an extra 2,900 a year.

According to the way your thinking, I'm actually not getting any pay raise. Because there's absolutely no incentive for me to try and get it.

I also think you don't understand numbers because you want a universal tax rate of 35%. Which is just less than the maximum of 42%. This means that those earning less than about 60-70k a year would all end up paying more tax.

NO, ACCORDING TO MY FLAT RATE YOU WOULD BE TAXED AT 35% ON THE PAY RISE, MEANING YOU'D TAKE HOME €3250, making more incentive, duh.


And yes, I want low earners to pay more tax, i think they should pay the same percentage in tax(say 35%) as high earners pay.

What is confusing you so much????? I run a company with 195 employees, and it sickens me to see those on the lower incomes paying virtually no tax while those on higher pay have to pay 42% plus USC etc.

Gannicus

summerskin wrote: »

I run a company with 195 employees,

Any jobs going? :pac:

squod

get_even wrote: »

id raise corporation tax to 20% aswell

Corporation tax is running at about 6% in real terms in this country. A three fold increase in that tax would take a proper government to implement.

Here's the RTE rubbing your nose in it. I see Apple are down to 2% or something.

okedoke

Big Steve wrote: »

I know but if you earn 42k you pay 42% on the extra 10k over the 32k. my suggestion is.

20k to 30k is at 25%
30k to 40k is at 30%
40k to 50k is at 35%

so it works up slowly the more you earn and you not just thrust across one line and that's it from then on out on incentivising you to earn a little bit more each time without fear of the big bad tax man taking your hard earned euros.

I understand you now, more rates - fair enough

Zab

Scanlas The 2nd wrote: »

Why is a disparity of wealth necessarily a bad thing?

There will always be disparity of wealth with a capitalist system. Looked at one way, the possibility of disparity is the incentive at the heart of the whole system. On the other hand, too much disparity is a failing of the system.

awec

Raising corporation tax would be of no benefit to Ireland. Hence why it isn't done. There is a reason European leaders clamour over Ireland's rate, they know it's the only reason large companies invest here and if our rate is the same as theirs they'll be more attractive than we are by far. More money for them, less money for us.

"Hi, come to Ireland, low corporation tax. Bring all your highly paid, skilled jobs here."

"Ok, so now you're here, we're going to raise the tax."

"What?! You're leaving? But why?!"

V_Moth

Scanlas The 2nd wrote: »

Why is a disparity of wealth necessarily a bad thing?

In a nutshell, high levels of economic inequality would lead to a new form of feudalism, where a handful of extremely wealthy families control virtually everything, leaving a large caste of serfs.

It is also interesting that those countries with very low levels of inequality are doing quite well at the moment (Germany, Scandinavia), whereas those with higher levels are doing quite poorly (Greece, Ireland, Italy and to some degree the US).

Far more detailed information here:

http://en.wikipedia.org/wiki/Economic_inequality#Effects_of_inequality

Neewbie_noob

Ray Palmer wrote: »

As with most people I have friends and family with many different levels of income. Generally everybody thinks the tax system is unfair.
Those on lower income say tax those on higher incomes. Higher incomes say they are taxed too much and are paying more than their amount. They also complain they get very little benefit for taxes they pay.
On a general note if person A on 40k vs person B 80k. One friend insisted that meant person B had twice as much money as A. I explained that is not the case and person B got roughly 58% of the additional income difference. They also may have a higher standard of living that was not greed but living within their means.
I am also not talking about the people at the extremes who some how manage to pay little or no tax and be high earners. Or those with massive benefits. Both likely through fraud or playing the system.

Just generally is it a fair system?

10 OR 15 % across the board is fair (PAYE, VAT, Capital gains, etc) (NO TAX ON INHERITENCES THOUGH), those who even earn pittence are contributing as well. Why should you pay 42c in the Euro for each euro you earn in excess of 30 grand ... not fair at all.
Flat taxes are fair, you are then contributing proportionally, higher earners are losing a much bigger proportion of their income. Having a flat rate will also eliminate the need for loads of these so called "pen pushers" in offices too. It will be better for everyone in the end. Except for spongers of course :P