Debunking Irish income tax myths

Zander1983

Just read this study (google "ibec debunking irish tax myths" - its the top link). It reaches the conclusion that Ireland is a low tax country when it comes to low income earners, but high tax country for middle income earaners and the taxes high income eraners (85k plus) more than any country in Europe. Here's a quote:


"Tax on work is now completely out of line with our international competitors; despite regular claims that Ireland is a low tax economy detailed analysis shows that this is only true for lower income earners. Our analysis shows that for middle and higher income earners Ireland is a medium or high tax country. At average earnings Ireland now has the highest marginal income tax rate in the OECD. In addition, individuals enter the top marginal tax band at just below the average wage the lowest entry point in the OECD bar certain countries which operate a
flat tax and Belgium."


Why is it that people take to the streets over water charges, when the taxation on middle and high income eaners in this country is a far far greater scandal?

We're constantly fed this guff about "tax the wealthy" and "stop taxing the poor" when ANY investigation whatsoever shows we tax low income earners at one of the lowest rates in the EU and high income earners at the highest rates in the EU. Why is there so little said about this? Why are there people put on the streets over water charges when this issue is clearly far far more scandalous?

2ndcoming

Frankly most of it isn't true. Our system has been craftily adjusted and set up over the past few years with a plethora of stealth taxes so we can still bandy about statistics referring only to income tax when actual income tax is only a part of the whole picture. The USC is a good example.

A single man earning €70,000 p.a. with basic credits will pay €18,512 income tax.

A single man earning €20,000 p.a. will pay €700 income tax.

The introduction of the USC saw an extra €4000 added to Mr 70k's bill. Bummer, but it saw €720 being added to Mr 20k's bill. So while Mr. 70k saw a 22% increase in his effective tax rate Mr. 20k got an over 100% increase. If his water charge is 400 a year that's another 60% thrown on. The problem with hammering lower earners like this is it disincentivises work which adds to the social welfare bill and leaves less money out there for business owners and retailers to earn (ie Mr 20k's wages).

In general Mr 20k's full pay packet will come back into the economy. He's living week to week while Mr 70k more than likely has a savvy financial advisor minimising his exposure to tax and getting him the best bang for his buck anyway.

Also the thing about us being the highest rate for anyone is blatantly false. France, Germany the UK and all the Scandy countries have higher tax rates than us, albeit they're more transparent about their figures.

vibe666

2ndcoming wrote: »

while Mr 70k more than likely has a savvy financial advisor minimising his exposure to tax and getting him the best bang for his buck anyway.

i think your idea of what Mr 70k gets to do with his money is a little skewed. there are plenty of people earning decent wages in this country who don't get to see most of it.

Zander1983

2ndcoming wrote: »

A single man earning €70,000 p.a. with basic credits will pay €18,512 income tax.

A single man earning €20,000 p.a. will pay €700 income tax.

The introduction of the USC saw an extra €4000 added to Mr 70k's bill. Bummer, but it saw €720 being added to Mr 20k's bill. So while Mr. 70k saw a 22% increase in his effective tax rate Mr. 20k got an over 100% increase.

What a clever way of spinning that. The fact that mr. 20k pays a tiny amount of income tax in comparison to any other country in Europe on the same wages of course means that, relatively speaking, the USC is higher for mr 20k. It's a nasty little way of looking at things.

By the way, lets not ignore other taxes. Mr 70k pays a total €25,531 in total leaving a take home pay of 44k. Compare this to ANY other country in Europe and you'll find this is the worst take home pay for someone on 70k (and then you go on to consider the exorbitant living expenses of day-to-day life in Ireland) bar Denmark (but you get free healthcare and many other benefits there).

As that paper clearly showed, Ireland is, without a shadow of a doubt, a low tax (well-below EU average) contry for low earners but exorbitantly high tax for anybody earning over the average national income.

An incredible statistic to come from that study was the fact that 82.5% of all income tax comes from workers earning above the average national wage.

Your point about Germany, France etc is a typical one that further obfuscates the truth. In Ireland, you start paying 41% income tax after 32k. In Germany, you hit the 41% tax band on anything after a quarter of a million. That's a quarter of a million!! I can quote very similar tax bands in France, Scandanavian countries etc.

How has seemingly the majority of the country come to the conclusion we need to tax middle to high income earners more? We're now at the point where Independents and Sinn Fein, both looking to increase the high rate of tax, are in a majority? It absolutely beggars belief.

AlexisM

2ndcoming wrote: »

Frankly most of it isn't true. ... we can still bandy about statistics referring only to income tax when actual income tax is only a part of the whole picture. The USC is a good example.

IBEC's analysis includes USC as an income tax. It is rare to see an analysis of income tax in Ireland that does not look at all 'taxes on income' - pure income tax, USC and PRSI.

hmmm

Zander1983 wrote: »

Why is it that people take to the streets over water charges, when the taxation on middle and high income eaners in this country is a far far greater scandal?

The middle and high income earners are too busy working and contributing to society to have time to spend 3 hours intimidating ministers and throwing rocks at the Guards. The people complaining about Irish water include some people who object to government waste, but the vast majority as represented by the politicians on the front line are clearly those who take take take from society and contribute little in taxes.

Zander1983

hmmm wrote: »

The middle and high income earners are too busy working and contributing to society to have time to spend 3 hours intimidating ministers and throwing rocks at the Guards. The people complaining about Irish water include some people who object to government waste, but the vast majority as represented by the politicians on the front line are clearly those who take take take from society and contribute little in taxes.

100% agree. If the government got rid of water charges and moved the tax to middle income earners (yet again), there would be no protests on the streets cos we're too busy worked 70 hour weeks.