Entitlement Culture killing the will to work in Ireland

Geuze

The MTR marginal tax rate of 52% on income over 32,800 is indeed crazy.

I have been saying this over and over.


Mind you, it's also true that couples on 900pw can pay 5-10% average effective income tax. That's too low.


So we have the odd situation where the MTR facing average workers is too high, yet the ATR paid by many people is too low.

Godge

Geuze wrote: »

The MTR marginal tax rate of 52% on income over 32,800 is indeed crazy.

I have been saying this over and over.


Mind you, it's also true that couples on 900pw can pay 5-10% average effective income tax. That's too low.


So we have the odd situation where the MTR facing average workers is too high, yet the ATR paid by many people is too low.

Absolutely correct, but the solution involves reducing social welfare, taxing low-paid workers, widening tax bands and reducing/amalgamating higher rates of tax, PRSI and USC. None of which will be done under the current government.

Idbatterim

Absolutely correct, but the solution involves reducing social welfare, taxing low-paid workers, widening tax bands and reducing/amalgamating higher rates of tax, PRSI and USC. None of which will be done under the current government.

Absolutely, no chance as you say, that anything will be done on these fronts, certainly not so close to an election. They will probably be frozen for another few years, in effect they are being devalued all the time by inflation anyway, its very easy politically. Income taxes will be dropped, sooner rather than later I hope.

AlekSmart

Potatoeman wrote: »

That link takes me to a brief profile of her. I dont see the story. How do they breakdown that figure because minimum wage is just under 9 euro an hour so about 360 per week.

Apologies Potatoeman......here's the correct link....

http://www.irishtimes.com/news/social-affairs/food-poverty-affects-457-000-people-across-the-state-1.1630073

The_Honeybadger

srsly78 wrote: »

You miss the point. Why bother to do extra work/overtime if you know you will only get <50% of the benefit?

I started a thread about this not long ago. I have an opportunity to earn an extra 10k on top of my paye income, only catch is it will all be taxed at the marginal rate. Still debating it in my head but I'm leaning towards not bothering and spending the extra time with my family. Too much effort for so little return. If the rate was more sensible it'd be a no brainer.

Farmer Pudsey

AlekSmart wrote: »

Apologies Potatoeman......here's the correct link....

http://www.irishtimes.com/news/social-affairs/food-poverty-affects-457-000-people-across-the-state-1.1630073

Aleck you asked for observations on this They are paying 110/week to a money lender maybe for last 18 months for TV and furniture. That is 8580 euro. They also are paying 50/week for gas and electricity again it is substancial I wonder is this winter only. If all year around it is 2.5K. These two items knock a 160/week hole in there weekly income.

I do not know the solution but the figures are stark

Idbatterim

I started a thread about this not long ago. I have an opportunity to earn an extra 10k on top of my paye income, only catch is it will all be taxed at the marginal rate. Still debating it in my head but I'm leaning towards not bothering and spending the extra time with my family. Too much effort for so little return. If the rate was more sensible it'd be a no brainer.

would you have to work more hours or take on more responsibility or both? The rate will probably be cut 2/3% in a year or two, but its nearly rearranging deck chairs on the titanic...

creedp

mickeyk wrote: »

I started a thread about this not long ago. I have an opportunity to earn an extra 10k on top of my paye income, only catch is it will all be taxed at the marginal rate. Still debating it in my head but I'm leaning towards not bothering and spending the extra time with my family. Too much effort for so little return. If the rate was more sensible it'd be a no brainer.

Given the financial difficulties many workers/unemployed people currently find themselves in you should take comfort in the fact that you have a choice to forego earning €5k in cash.

srsly78

Free time has an opportunity cost associated with it, unless you are on the dole. People are under no obligation to work 365 days a year to fund the welfare state.

Lots of money is lost because the 52% rate disincentivises extra work - no matter if you think these people are lucky or not.

AlekSmart

Farmer Pudsey wrote: »

Aleck you asked for observations on this They are paying 110/week to a money lender maybe for last 18 months for TV and furniture. That is 8580 euro. They also are paying 50/week for gas and electricity again it is substancial I wonder is this winter only. If all year around it is 2.5K. These two items knock a 160/week hole in there weekly income.

I do not know the solution but the figures are stark

Stark for sure Farmer Pudsey.

That "Money Lender" reference set my antenna a quiver,and I'm surprised the Writer did'nt delve in a bit deeper.

For what it's worth,I regard the current Government attitude towards the Credit Union movement to be verging on Treasonous.

We know that some CU's are in difficulties.
We also know that MOST CU's are not.
It is true to say that most CU's have a far better day to day relationship with their "customers" via the Common Bond than ANY of our topdrawer Banks,many of whom have PROVENLY engaged in dubious business practices of the highest order.

Why exactly it is now Government policy to significantly restrict the ability of the well run CU's to operate in the manner they were designed for is,to me,worth further investigation.

Are there Members of the Oireachtas with connections,even familial,to the Licenced Moneylending industry ?

Is there cause to investigate whether Members of the Oireachtas have connections to the ILLegal Moneylending industry ? (I ask this because it appear TOTALLY Illogical for ANY Government to be directing,or facilitating in any way, it's citizens to Moneylenders WHEN A VIABLE REGULATED ALTERNATIVE ALREADY EXISTS )

However,this is a totally seperate issue to the thread topic.

My gut feeling on the figures as revealed here is that €362.60 as a take-home,in the pocket figure for a couple and one child, is not breadline.

A working person in the same category would have some difficulty reaching that take-home figure particularly when the Medical Card is factored in.

The_Honeybadger

Idbatterim wrote: »

would you have to work more hours or take on more responsibility or both? The rate will probably be cut 2/3% in a year or two, but its nearly rearranging deck chairs on the titanic...

I'm on a fixed salary, the extra work would be private as a sole trader in a semi related sector. It would involve probably ten hours a week give or take. By the time I'd have deducted expenses and paid tax it doesn't really make sense. To be fair the expenses are minimal, it's the tax that is the killer. And yes I do appreciate that I am in a lucky position, that doesn't justify the insane rate however.

Idbatterim

I'm on a fixed salary, the extra work would be private as a sole trader in a semi related sector. It would involve probably ten hours a week give or take. By the time I'd have deducted expenses and paid tax it doesn't really make sense. To be fair the expenses are minimal, it's the tax that is the killer. And yes I do appreciate that I am in a lucky position, that doesn't justify the insane rate however.

just clarifying, Im not that said you were in a lucky position. To me, this would come down to ho much you need the extra money, i.e. if your worrying about the bills at the end of the month, its a no brainer, if you are already comfortable and not wanting for anything, it becomes a different matter... Unless you can pay yourself some of it in cash, that becomes a different matter

creedp

mickeyk wrote: »

I'm on a fixed salary, the extra work would be private as a sole trader in a semi related sector. It would involve probably ten hours a week give or take. By the time I'd have deducted expenses and paid tax it doesn't really make sense. To be fair the expenses are minimal, it's the tax that is the killer. And yes I do appreciate that I am in a lucky position, that doesn't justify the insane rate however.

By the way I fully agree with you, the MRT is too high and it kicks in too early. Maybe if there was an additional lower rate of tax so that the MR doen't kick in until a higher level of income is reached it might soften the blow for the middle income worker. Currently, though taxation is all about maximising revenue in the short term - no long term view being taken of the disincentives it might create - that's for the next Govt to worry about or maybe the one after that, or ...........

Farmer Pudsey

Idbatterim wrote: »

just clarifying, Im not that said you were in a lucky position. To me, this would come down to ho much you need the extra money, i.e. if your worrying about the bills at the end of the month, its a no brainer, if you are already comfortable and not wanting for anything, it becomes a different matter... Unless you can pay yourself some of it in cash, that becomes a different matter

creedp wrote: »

By the way I fully agree with you, the MRT is too high and it kicks in too early. Maybe if there was an additional lower rate of tax so that the MR doen't kick in until a higher level of income is reached it might soften the blow for the middle income worker. Currently, though taxation is all about maximising revenue in the short term - no long term view being taken of the disincentives it might create - that's for the next Govt to worry about or maybe the one after that, or ...........

This is not just an issue for workers it causes havoc for employers and sole traders as well. For an employers the net gross cost is 12% extra on wages in PRSI and maybe 13% VAT. If an skilled employee will not take on extra responsbility or work because of tax he may have to pay extra on top he is caught by a 25% levy on top of this. This encourages the black economy in that this employer may be tempted to break the rules and pay his skilled worker cash. It is the same with a sole trader he may be inclined to take Cash jobs rather than work within the system.

Not much leeway on an intermediate tax rate, present rate's are effectivity about 30 and 52% inc PRSI and USC. An intermediate rate would be above 40% and as another poster pointed we have the issue with lower paid workers paying little or no tax and we are unable to increase it as UA compete with it as an income and lifestyle choice.

Potatoeman

AlekSmart wrote: »

Apologies Potatoeman......here's the correct link....

http://www.irishtimes.com/news/social-affairs/food-poverty-affects-457-000-people-across-the-state-1.1630073

Seems like half a story, its missing some pretty big details.

sarumite

creedp wrote: »

Given the financial difficulties many workers/unemployed people currently find themselves in you should take comfort in the fact that you have a choice to forego earning €5k in cash.

The poster did say that instead of the additional earnings, they would spend the time with their family, so it seems clear that they woudl be required to work additional hours. It could be argued that anyone who is not actively looking for another job working a few extra hours a week on top of a 40 hour a week job can take comfort in the fact they have the choice of forgoing earning additional cash.

Icepick

Godge wrote: »

Absolutely correct, but the solution involves reducing social welfare, taxing low-paid workers, widening tax bands and reducing/amalgamating higher rates of tax, PRSI and USC. None of which will be done under the current government.

There is no room for higher income taxes for low-paid workers. There are substantial flat taxes that low-paid workers cannot or it's very hard for them to avoid.
The other suggestions are sound, but balanced budget must come from lower expenditure and there is a lot of stuff that can be cut or made more efficient still.

creedp

sarumite wrote: »

The poster did say that instead of the additional earnings, they would spend the time with their family, so it seems clear that they woudl be required to work additional hours. It could be argued that anyone who is not actively looking for another job working a few extra hours a week on top of a 40 hour a week job can take comfort in the fact they have the choice of forgoing earning additional cash.

Which is my point .. its good to have a job which pays a decent wage affording a standard of living that gives the opportunity to decide I don't have to work extra hours to make ends meet, whether ie be in the form of overtime in the current job or an alternative job/business. I agree that a significant factor in the decison not to work those extra hours is the MTR - the payoff is just not sufficient to outweigh the cost to the quality of family life.

jimb43

yoloc wrote: »

Havent been in his forum in awhile but i see everyone still crying about getting shafted here and tgere. Let me let you in on a wee secret you might not know. You are going to be shafted from all angles untill they day you die. Sad but true so sit back and enjoy folks.

WELL SAID ! ! ! thats the best bit of writing i ever seen, but the annoying bit is the people who ( fortunately ) have a job, are all banging on about the unemployed on welfare. WELFARE IS A DISGRACEFUL THING TO BE HAVING TO DEPEND ON . Welfare is something you get after fighting the state for 9 months, without having a penny to live on.

WELFARE SUCKS if only the people who have a job "where on the other foot, that would be great !!!" it would be a different story then. i have sent over 500 cv out and had 3 responses , been looking for work for nearly a year. there is no work about. Jobs are being lost all over , people are being made redundant , and the way things are it all seems to be the unemployed people who are to blame ( well i feel sorry for ya , keep moaning about your taxes, keep crying about your 10% of this and your 50 p cent sliding scales of your tax bracket this and that . ) i just hope you find yourselves on the pile yourselves real soon OK. then you will get to see the real world.
OH and by the way " i am still fighting the state and have been doing for 7 months, just for something to survive. its not my fault i have no job. "

Potatoeman

jimb43 wrote: »

WELL SAID ! ! ! thats the best bit of writing i ever seen, but the annoying bit is the people who ( fortunately ) have a job, are all banging on about the unemployed on welfare. WELFARE IS A DISGRACEFUL THING TO BE HAVING TO DEPEND ON . Welfare is something you get after fighting the state for 9 months, without having a penny to live on.

WELFARE SUCKS if only the people who have a job "where on the other foot, that would be great !!!" it would be a different story then. i have sent over 500 cv out and had 3 responses , been looking for work for nearly a year. there is no work about. Jobs are being lost all over , people are being made redundant , and the way things are it all seems to be the unemployed people who are to blame ( well i feel sorry for ya , keep moaning about your taxes, keep crying about your 10% of this and your 50 p cent sliding scales of your tax bracket this and that . ) i just hope you find yourselves on the pile yourselves real soon OK. then you will get to see the real world.
OH and by the way " i am still fighting the state and have been doing for 7 months, just for something to survive. its not my fault i have no job. "

Most people dont begrudge giving others a helping hand but its pretty clear there are major problems.
Welfare should decrease overtime and not increase. Even a minimum wage job should be more attactive than benefits. Most people here are moaning about half of their overtime and bonuses being taken. These are earned through working extra hours on top of the normal work week.

Idbatterim

One thing I will say about FG (this is not aimed at those who have been made redundant or are actively looking for work) it looks like its going to continue to pay less and less not to work, unlike under FF. The first sector that looks like they will receive a break is the PAYE one. PAYE and the unemployed i.e. job creation are priority number 1 IMO...

chopper6

Has anybody else heard talk of the PS Pension Levy being withdrawn?

StigmaMan

Icepick wrote: »

There is no room for higher income taxes for low-paid workers. There are substantial flat taxes that low-paid workers cannot or it's very hard for them to avoid.
The other suggestions are sound, but balanced budget must come from lower expenditure and there is a lot of stuff that can be cut or made more efficient still.

Of pure interest what would you cut or privatize?

Count Dooku

StigmaMan wrote: »

Of pure interest what would you cut or privatize?

Bureaucracy for beginning, voluntary redundancies was easiest but inefficient way to reduce numbers, because you can ask to retire only those who was about to retire, not extra staff which has nothing important to do

golfwallah

StigmaMan wrote: »

Of pure interest what would you cut or privatize?

With public sector pay protected and “ring fenced” by the Croke Park and Haddington Road Agreements, the room for quick fix cuts is very limited, politically at least. That is unless there is another major war, world economic or currency crisis.

That leaves us with more long term solutions to be looked at. Problem is that long term solutions take time and won’t be capable of being implemented before the next local or general elections.

The biggest savings / efficiencies that could be made are in the biggest budget areas, i.e. Health and Social Welfare. But these would require a long term approach towards educating the public on the issues and choices involved, getting a broad consensus on the solutions and then implementing them. None of this would be easy, but could include, for example:

Health:
We’ve almost reached a tipping point in health spending – we simply can’t just throw more money at the problem (increased spending over the years isn’t working anyway) and need to put much more effort into finding smarter ways of doing things. This includes making much more effective use of information to target and reduce costs (i.e. the “Big Data” concept). This would require much more effective data collection and mining to help find what treatments are most effective for different conditions and in different situations – just like big Retailers, Google, Facebook, etc. do to target and sell to their customers. For more info., see: http://www.mckinsey.com/insights/health_systems/~/media/7764A72F70184C8EA88D805092D72D58.ashx

I’m sure others can suggest more ways of reducing costs, such as more effective use of generic medicines (even though progress has been made, more focus is required to produce better results).

Social Welfare:
It should be more financially rewarding to work rather than make a lifestyle choice of depending on welfare. They started working on this issue in the UK some time ago and now have the “welfare cap”. There seems to be broad Government and opposition agreement on the need to cut the welfare budget in the UK – but not on how it’s being done. I believe, we need to start facing up to the same issues and choices in Ireland.

Geuze

golfwallah wrote: »

With public sector pay protected and “ring fenced” by the Croke Park and Haddington Road Agreements, the room for quick fix cuts is very limited, politically at least.

Just a quick point - some people may read this as saying "public service pay is protected and so has not fallen", when there have been three paycuts.

Just to clarify.

Idbatterim

Havent been in his forum in awhile but i see everyone still crying about getting shafted here and tgere. Let me let you in on a wee secret you might not know. You are going to be shafted from all angles untill they day you die. Sad but true so sit back and enjoy folks.

thats little consolation. some get much more shafted than others!

Potatoeman

golfwallah wrote: »

With public sector pay protected and “ring fenced” by the Croke Park and Haddington Road Agreements, the room for quick fix cuts is very limited, politically at least. That is unless there is another major war, world economic or currency crisis.

That leaves us with more long term solutions to be looked at. Problem is that long term solutions take time and won’t be capable of being implemented before the next local or general elections.

The biggest savings / efficiencies that could be made are in the biggest budget areas, i.e. Health and Social Welfare. But these would require a long term approach towards educating the public on the issues and choices involved, getting a broad consensus on the solutions and then implementing them. None of this would be easy, but could include, for example:

Health:
We’ve almost reached a tipping point in health spending – we simply can’t just throw more money at the problem (increased spending over the years isn’t working anyway) and need to put much more effort into finding smarter ways of doing things. This includes making much more effective use of information to target and reduce costs (i.e. the “Big Data” concept). This would require much more effective data collection and mining to help find what treatments are most effective for different conditions and in different situations – just like big Retailers, Google, Facebook, etc. do to target and sell to their customers. For more info., see: http://www.mckinsey.com/insights/health_systems/~/media/7764A72F70184C8EA88D805092D72D58.ashx

I’m sure others can suggest more ways of reducing costs, such as more effective use of generic medicines (even though progress has been made, more focus is required to produce better results).

Social Welfare:
It should be more financially rewarding to work rather than make a lifestyle choice of depending on welfare. They started working on this issue in the UK some time ago and now have the “welfare cap”. There seems to be broad Government and opposition agreement on the need to cut the welfare budget in the UK – but not on how it’s being done. I believe, we need to start facing up to the same issues and choices in Ireland.

The problem with many of these ideas is that they are impossible to implement without the ability to fire people. They can just fight changes and get away with it.

Idbatterim

The problem with many of these ideas is that they are impossible to implement without the ability to fire people.

People can be fired though, it just doesnt happen very often...

golfwallah

Idbatterim wrote: »

People can be fired though, it just doesnt happen very often...

Ahhh, yes, in theory at least, public servants can be sacked (or more correctly, made redundant), but this seems not to happen in practice.

The French Government, under Francois Mitterrand as far back as 1982, had the power to dismiss heads of nationalised industries.

After 2 years in power and despite all the talk of reform, our own Brendan Howlin is only thinking about bringing in powers to sack bad public servants – but these reforms are on hold until 2016:
http://www.independent.ie/irish-news/politics/brendan-howlin-sanctions-firing-of-bad-civil-servants-but-reforms-on-hold-until-2016-29903865.html

Meanwhile, the taxpayer is being screwed with higher and higher taxes and now water charges (the head of Irish Water, it seems, can’t be sacked either).