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Capital gains tax is too high
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Yes, I think you should be entitled to 20000 tax free. That is just my opinion of a fair amount for the risk/reward involved.No I am not pro tax. Read back thru the posts. I said anyone that pays 30,000 in Capital Gains Tax is wealthy by definition. Because they just made a gain of €100,000.
Your father made 4,000 and paid 1,000. How much should he pay in your opinion -zero?0 -
Yes, I think you should be entitled to 20000 tax free. That is just my opinion of a fair amount for the risk/reward involved.
Fair enough. We differ then.
Anyway if you could make 20,000 tax free everyone would think of a capital gain way to make money instead of a salary.
Just my tuppence worth.0 -
Let's say I make 15k per year after income tax. I have 50k that I earned/saved in the boom, but the odds of me being able to earn/save that money again are slim because of the economy-I invest in the stock market, I'm shrewd and make some money, 10% per year, so now, I pay 1300 CGT on my investment-and that is fair? even though I have a low salary?
I know people that have dual citizenship and move here, but invest in America because the taxes here are too hint, they pay the taxes there no problem and they are low, because these people are investors, not traders, they hold and sell on for value.
That is what's wrong with this country. no incentive….0 -
KomradeBishop wrote: »Capital Gains are income - there is no reason they should have special treatment, relative to normal income - in fact, given that Capital Gains are unearned income, they should have significantly harsher treatment than normal income.
So following your logic, I would expect you would be in favour of allowing losses to be deducted against tax on earned income. After all they are both "taxes on income".
Let us know how that works out for you.0 -
I didn't argue that. If that were the case though, what exactly do you think would be bad about it?0
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What do you think would happen to income tax returns in a downturn? A good percentage will lose their jobs, => income tax reduces, another percentage will have wage cuts => more income tax reduction, Any investment losses would then be crystallized against income tax => even more income tax reduction. It wouldn't be far fetched to see the governments tax take half or more in a recession.KomradeBishop wrote: »I didn't argue that. If that were the case though, what exactly do you think would be bad about it?
The simple fact is that investment income is massively important to grow an economy. How do you think companies invest millions/billions in the next cancer drug / iphone / car / google / ryanair ? Disincentivizing such investment by taxing it at penal rates is foolish and short sighted. Not surprising SF and the alphabet parties are for it. What is surprising is that someone frequenting an Investment and Markets discussion group can't see that.0 -
You're just throwing out wild speculation there really, with totally imaginary pulled-from-a-dark-hole figures. You pay Capital Gains when you cash out, so it's not as simple as tax returns tracking market conditions...especially given that the tax base is fairly diverse, with (in the example discussed) CGT not having an opportunity to cut into Income Tax, for a wide portion of the tax base.
Government Spending isn't solely made up of income tax either - a reduction in tax revenue doesn't mean a negative feedback loop in relation to Government Spending.
To you, 'discincentivizing' is any tax above 0%, or above *insert present tax rate* - so lets discard with the hyperbole, thanks - I don't believe your use of the term 'disincentivize' there is anything other than utter propagandistic bollocks.
Most investment comes from banks giving loans. They have more than enough firepower to provide investment money, wherever it's likely to generate a profit.0 -
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What do you think would happen to income tax returns in a downturn? A good percentage will lose their jobs, => income tax reduces, another percentage will have wage cuts => more income tax reduction, Any investment losses would then be crystallized against income tax => even more income tax reduction. It wouldn't be far fetched to see the governments tax take half or more in a recession.
The simple fact is that investment income is massively important to grow an economy. How do you think companies invest millions/billions in the next cancer drug / iphone / car / google / ryanair ? Disincentivizing such investment by taxing it at penal rates is foolish and short sighted. Not surprising SF and the alphabet parties are for it. What is surprising is that someone frequenting an Investment and Markets discussion group can't see that.
There can be, and are, seperate taxes on venture and entrepreneurial investments.
Most people who make money on shares or property are neither.0 -
KomradeBishop wrote: »
To you, 'discincentivizing' is any tax above 0%, or above *insert present tax rate* - so lets discard with the hyperbole, thanks - I don't believe your use of the term 'disincentivize' there is anything other than utter propagandistic bollocks.
Most investment comes from banks giving loans. They have more than enough firepower to provide investment money, wherever it's likely to generate a profit.
How much do you know about venture capital? I assume not a whole load, as most banks will not invest in high risk, high reward companies. Banks give loans, they dont invest in companies. We would not have Facebook, Google, Uber etc without venture capital. Most major companies founded within the last 10 years were funded with venture capital and not from banks
Actually most investment was not coming from banks between 2009 - now. The banking system collapsed and people had to turn to non bank lenders eg American hedge funds, US PLC's etc to fund business ventures here. Even now where property is relatively low risk, high return. Irish Banks are still not funding developers. Irish lending has reduced every quarter for nearly a decade ie more loans are being repaid than issued.
Whether you like to believe it or not, banks are not investors in most start up business ventures. They arent even giving loans to well established safe firms in Ireland. It is people risking their own money to get a high return. If they are risking their money to pay 55% on the return. They will not invest in it. They might actually invest using an offshore company and pay 0% CGT. Would it be better for people to avoid CGT altogether than pay it at a reduced rate than vanilla income?
There is a thing called the Laffer Curve in economics. It explains the relationship between tax rates and revenue. It shows the disincentive work varies on the rate of taxation0 -
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You are right about bank lending in Ireland since the crisis, but you are wrong about the role of bank lending - in the US, business loans are bigger than venture capital loans, by almost 30x.
$1.6 trillion in commercial/industrial loans:
https://research.stlouisfed.org/fred2/graph/?g=Fhs
$58 billion in venture capital:
http://nvca.org/pressreleases/58-8-billion-in-venture-capital-invested-across-u-s-in-2015-according-to-the-moneytree-report-2/
Even at the low point, it was still 20x.
The Laffer Curve is merely a theory, and a pretty bad one - it's in pretty high dispute, seeing as there isn't any solid empirical evidence for it...
Can you show any evidence that combining CGT and Income Tax, would result in the nonsensical idea of an apocalyptic tax falloff? Anything at all, other than just wind?0 -
KomradeBishop wrote: »You are right about bank lending in Ireland since the crisis, but you are wrong about the role of bank lending - in the US, business loans are bigger than venture capital loans, by almost 30x.
$1.6 trillion in commercial/industrial loans:
https://research.stlouisfed.org/fred2/graph/?g=Fhs
$58 billion in venture capital:
http://nvca.org/pressreleases/58-8-billion-in-venture-capital-invested-across-u-s-in-2015-according-to-the-moneytree-report-2/
Even at the low point, it was still 20x.
The Laffer Curve is merely a theory, and a pretty bad one - it's in pretty high dispute, seeing as there isn't any solid empirical evidence for it...
Can you show any evidence that combining CGT and Income Tax, would result in the nonsensical idea of an apocalyptic tax falloff? Anything at all, other than just wind?
We haven't reached the low point of bank lending yet. The Basel III framework is resulting banks cutting back on lending to get their ratios in check. Major European Banks have loan books that are mess and need to get in order. I cant see bank lending growing in the next 10 years significantly. But I can see venture capital growing dramatically. Vanilla lending by banks is great for cars, houses, daily spending. But without venture capital, most major companies in the last 10 years wouldnt exist
The Laffer curve is a theory. But it is partially expected. If tax rates are too high, people will choose to spend more time enjoying leisure ie not working. You dont need a ton of studies to realise that if you are paying 60% tax, that you will value more family time over working to pay the Government for their inefficient use of limited resources
Dude you dont need a solid academic paper to realise someone isn't going to spend 3 months of their time and risk hundreds of thousands of euro to build a house to pay 55% on the profit. If your friend told you they had an investment opportunity. You could pay him €300k for 2 envelopes. In one envelope was € 250k ie you lose €50k. In the other envelope €400k but you are taxed 55% on the profit. Would you risk it? No, replace the envelopes with a property development and you can see why no one would bother investing over putting their money in a low risk, low return and less heavily taxed savings account.
People will not take risk if there is no reward to compensate them for the risk. Heavily taxing return reduces the incentive to risk your money0 -
Another reason investment disposals shouldn't be taxed like income is they are "earned" over many years. A 100k gain over 10 years would be treated as 10k per year, not 100k in one year. Investors could strategically divest over many years to avoid taxes by selling bit by bit and keeping income below certain thresholds to minimize taxes.0
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Why is anything from the Laffer Curve 'expected', if it has no empirical backing? Either it has evidence backing it, or it doesn't - and it's completely illogical to presuppose it's true, given the conflict regarding it's applicability, and lack of evidence.newacc2015 wrote: »We haven't reached the low point of bank lending yet. The Basel III framework is resulting banks cutting back on lending to get their ratios in check. Major European Banks have loan books that are mess and need to get in order. I cant see bank lending growing in the next 10 years significantly. But I can see venture capital growing dramatically. Vanilla lending by banks is great for cars, houses, daily spending. But without venture capital, most major companies in the last 10 years wouldnt exist
The Laffer curve is a theory. But it is partially expected. If tax rates are too high, people will choose to spend more time enjoying leisure ie not working. You dont need a ton of studies to realise that if you are paying 60% tax, that you will value more family time over working to pay the Government for their inefficient use of limited resources
Dude you dont need a solid academic paper to realise someone isn't going to spend 3 months of their time and risk hundreds of thousands of euro to build a house to pay 55% on the profit. If your friend told you they had an investment opportunity. You could pay him €300k for 2 envelopes. In one envelope was € 250k ie you lose €50k. In the other envelope €400k but you are taxed 55% on the profit. Would you risk it? No, replace the envelopes with a property development and you can see why no one would bother investing over putting their money in a low risk, low return and less heavily taxed savings account.
People will not take risk if there is no reward to compensate them for the risk. Heavily taxing return reduces the incentive to risk your money
Reciting a theory without evidence, is just reciting a belief - not a representation of how things actually work - your claims about taxing profits, are nothing more than unsubstantiated beliefs.
If you can't cite any real world evidence of high CGT 'dissuading' investment - and by that, I mean it actually happening, not just fictional/made-up examples suiting your argument - then you're just talking bollocks really.0 -
KomradeBishop wrote: »You're just throwing out wild speculation there really, with totally imaginary pulled-from-a-dark-hole figures. You pay Capital Gains when you cash out, so it's not as simple as tax returns tracking market conditions...especially given that the tax base is fairly diverse, with (in the example discussed) CGT not having an opportunity to cut into Income Tax, for a wide portion of the tax base.
Here's the historical data on US capital gains. They seem fairly correlated to market conditions to me. There's a drop off for the Great Recession, the early 00s/dot com bubble recession, the early '90s recession. Capital Gains slowed significantly during the early 1980s recession. Dropped again in the '73-'75 recession and '69-'70 and '57.
http://www.taxpolicycenter.org/statistics/historical-capital-gains-and-taxes
Are you also engaging in wild speculation? Making assumptions based on nothing?0 -
If you're trying to back that persons argument, you need figures on Capital Losses - otherwise you can't show that eating into Income Tax significantly, if such a combined tax system were put in place - which is what the line of discussion you're quoting is about.0
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KomradeBishop wrote: »Why is anything from the Laffer Curve 'expected', if it has no empirical backing? Either it has evidence backing it, or it doesn't - and it's completely illogical to presuppose it's true, given the conflict regarding it's applicability, and lack of evidence.
Reciting a theory without evidence, is just reciting a belief - not a representation of how things actually work - your claims about taxing profits, are nothing more than unsubstantiated beliefs.
If you can't cite any real world evidence of high CGT 'dissuading' investment - and by that, I mean it actually happening, not just fictional/made-up examples suiting your argument - then you're just talking bollocks really.
There is research on the Laffer Curve and it is statistically significant ie it has some hard evidence to back up that it actually occurs. Researchers looked at several decades of the US economy and found the ideal tax rates
http://www.sciencedirect.com/science/article/pii/S105353579690013X
Explain to me why a middle aged man with young children would want work overtime at 55% marginal rate tax? For every €1 he earns, 55 cent is going to the collector general. He may work overtime, but would he work more overtime if he was paying only 20% tax. Absolutely. What is ridiculous IMO, is your belief that someone will not alternative how much they work or invest depending on their marginal tax rate
The amount of companies paying dividends in America has declined from around 85% in the 1980s to 55% in 2006. Why? CGT is taxed far less in the US, meaning investors would receive value from the company in the form of less heavily taxed capital appreciation ie a higher share price than from dividends. If that is not evidence of companies being aware people making investment decisions based on tax implications, I dont know what is.0 -
I think the current rate is definitely too high. The common myth in Ireland is that capital gains is only for 'the rich'. This mainly stems from the poor levels of financial literacy in Ireland where the average Joe will balk at the thought of investing a few grand in a successful business or fund because it's too complicated or risky but at the same time will have no issue taking out a 300k loan to buy a house because that's what all their mates are doing.
I'd like to see something along the lines of the Australian system. All gains are counted as income and charged at your marginal rate (32 or 37% for most people) however if you've held the asset for 12 months or more you get a 50% discount. They also have favourable tax treatment for dividends from Australian companies so a large amount of investment stays in the country helping to fund indigenous business. That's massively needed in Ireland due to the crippled banks and the fact that the Government are only interested in rolling out the red carpet for foreign multinationals.
It makes no sense for the investor to take 100% of the risk but only get 66% of the benefit while the government takes 33% for no risk at all. It absolutely is discouraging people from investing more. There seems to be a lot of begrudgery on this thread against people who have generated wealth through investing as if its some kind of crime. Investment can benefit everyone. If the investor benefits then that means the company is successful. A successful Irish company will hire Irish people, pay corporation tax, avail of other Irish companies' services etc.0 -
Yes and you're cherry-picking your research there, to suit your argument - as you're ignoring all of the evidence out there, which casts doubt on the Laffer Curve - for example:newacc2015 wrote: »There is research on the Laffer Curve and it is statistically significant ie it has some hard evidence to back up that it actually occurs. Researchers looked at several decades of the US economy and found the ideal tax rates
http://www.sciencedirect.com/science/article/pii/S105353579690013X
Explain to me why a middle aged man with young children would want work overtime at 55% marginal rate tax? For every €1 he earns, 55 cent is going to the collector general. He may work overtime, but would he work more overtime if he was paying only 20% tax. Absolutely. What is ridiculous IMO, is your belief that someone will not alternative how much they work or invest depending on their marginal tax rate
http://america.aljazeera.com/opinions/2014/12/laffer-curve-taxcutshikeseconomics.html
All it takes, is one exception to disprove a theory, unless that exception can be incorporated into a new theory - and evidence against the Laffer Curve abounds.
You should spend less time absorbing debunked theories - people are not robotically minded individuals, who make decisions based on pre-calculated Marginalist views and supply/demand graphs, as most economic theory presents.
People don't think in terms of 'marginal' tax rates, for deciding when they are going to stop working - they think based upon their work/life balance, and their financial obligations e.g. debts/bills - and if they enjoy their job, more money is still more money, even if it crosses a higher tax threshold.
This just shows your poor grasp of what constitutes 'evidence' - since you haven't shown anything drawing a connection between the stats your quoting there, and your conclusion.newacc2015 wrote: »The amount of companies paying dividends in America has declined from around 85% in the 1980s to 55% in 2006. Why? CGT is taxed far less in the US, meaning investors would receive value from the company in the form of less heavily taxed capital appreciation ie a higher share price than from dividends. If that is not evidence of companies being aware people making investment decisions based on tax implications, I dont know what is.0 -
There seems to be a lot of begrudgery from people, who think that others should pay their way in life, instead of them paying their fare share just like everyone else - simply because they derive their income, from a different source than everyone else.FernandoTorres wrote: »I think the current rate is definitely too high. The common myth in Ireland is that capital gains is only for 'the rich'. This mainly stems from the poor levels of financial literacy in Ireland where the average Joe will balk at the thought of investing a few grand in a successful business or fund because it's too complicated or risky but at the same time will have no issue taking out a 300k loan to buy a house because that's what all their mates are doing.
I'd like to see something along the lines of the Australian system. All gains are counted as income and charged at your marginal rate (32 or 37% for most people) however if you've held the asset for 12 months or more you get a 50% discount. They also have favourable tax treatment for dividends from Australian companies so a large amount of investment stays in the country helping to fund indigenous business. That's massively needed in Ireland due to the crippled banks and the fact that the Government are only interested in rolling out the red carpet for foreign multinationals.
It makes no sense for the investor to take 100% of the risk but only get 66% of the benefit while the government takes 33% for no risk at all. It absolutely is discouraging people from investing more. There seems to be a lot of begrudgery on this thread against people who have generated wealth through investing as if its some kind of crime. Investment can benefit everyone. If the investor benefits then that means the company is successful. A successful Irish company will hire Irish people, pay corporation tax, avail of other Irish companies' services etc.
If you're benefiting from unearned income (and taking 'risks' doesn't equate to earning...), why in fúck should you be treated as special in any way?
The big picture of what you want, is to make investors a special class of people, who don't have to abide by the same tax treatment as the rest of society - and this leads to a society, which promotes the accelerated growth of inequality, like we've been seeing over the decades.
Inequality in itself isn't necessarily bad, but when we're promoting conditions that accelerate the growth of inequality, that's bad for society overall - and when you look at the CGT debate from a macroeconomic and societal perspective like this, that's exactly what's being advocated here.
Separate your advocation of an individualistic view of CGT, and look at what you advocate on a macroeconomic/societal scale.0 -
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It is pretty outrageous to dismiss the Laffer Curve. Clearly people will not risk investing money if they have almost nothing to gain. Now there is a real and stimulating debate to be had on what tax rate achieves the highest revenue, but that is a separate argument. A libertarian might push for a low rate of capital gains tax while a socialist might push for 80% capital gains but both agree with the Laffer Curve.KomradeBishop wrote: »Yes and you're cherry-picking your research there, to suit your argument - as you're ignoring all of the evidence out there, which casts doubt on the Laffer Curve - for example:
http://america.aljazeera.com/opinions/2014/12/laffer-curve-taxcutshikeseconomics.html
All it takes, is one exception to disprove a theory, unless that exception can be incorporated into a new theory - and evidence against the Laffer Curve abounds.
You should spend less time absorbing debunked theories - people are not robotically minded individuals, who make decisions based on pre-calculated Marginalist views and supply/demand graphs, as most economic theory presents.
People don't think in terms of 'marginal' tax rates, for deciding when they are going to stop working - they think based upon their work/life balance, and their financial obligations e.g. debts/bills - and if they enjoy their job, more money is still more money, even if it crosses a higher tax threshold.If you're benefiting from unearned income (and taking 'risks' doesn't equate to earning...), why in f ck should you be treated as special in any way?
The only person arguing that capital gains should be treated in a special way is you by insisting firstly that there should be no tax free allowance like income has, and secondly by implying that they should be taxed higher than income.
I am going to show you a chart showing the actual income tax paid by Irish people from 2015, in it you will see that Irish income earners are actually getting a free ride on the backs of Irish investors because most Irish income earners pay less than the 33% tax rate that investors pay.
[th]Country[/th]
[th] 18,000 [/th]
[th] 35,000 [/th]
[th] 75,000 [/th]
[th] 150,000[/th]
1. Germany
27.03%
36.43%
43.81%
44.06%
2. Netherlands
20.3%
31.72%
40.11%
47.21%
3. Spain
18.8%
26.06%
34.86%
41.26%
4. Sweden
17.24%
22.74%
38.63%
47.75%
5. United States
14.7%
19.12%
26.31%
28.57%
6. United Kingdom
12.33%
22.10%
30.52%
39.45%
7. Switzerland
6.45%
18.9%
29.17%
34.55%
8. Ireland
3.5% (8th)
19.82% (6th)
36.5% (4th)
44.6% (3rd)
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Not really - economists have been dismissing supply-siders and their propaganda-piece Laffer Curve, since its inception...It is pretty outrageous to dismiss the Laffer Curve. Clearly people will not risk investing money if they have almost nothing to gain. Now there is a real and stimulating debate to be had on what tax rate achieves the highest revenue, but that is a separate argument. A libertarian might push for a low rate of capital gains tax while a socialist might push for 80% capital gains but both agree with the Laffer Curve.
Weasel words like 'clearly' and such, don't do anything do bolster your claims - they're still based on debunked nonsense - and trying to pretend there is 'nothing to gain' is also unsubstantiated.
There isn't even any evidence showing the shape of the Laffer Curve - so the whole argument about finding the 'correct rate' is nonsense - there's even potential evidence that the speculated laffer curve may go up, not down...the whole idea is a useless theory, with no real world consistency.
The main pushers of the Laffer Curve are Neoliberals and Libertarians - it's been a staple of right-wing/supply-side economic propaganda since Reagan.
I never insisted there should be no tax free allowance - someone posited a speculative system, where income and CGT are combined and treated as the same - and I asked "what would be so bad about that, exactly?", and that's where the whole current debate came from (and inherently, since it's a discussion about combining the two taxes, I'm not talking about taxing CGT higher than income - that's a separate argument, and one I would make though, seeing as it's unearned income...).The only person arguing that capital gains should be treated in a special way is you by insisting firstly that there should be no tax free allowance like income has, and secondly by implying that they should be taxed higher than income.
I am going to show you a chart showing the actual income tax paid by Irish people from 2015, in it you will see that Irish income earners are actually getting a free ride on the backs of Irish investors because most Irish income earners pay less than the 33% tax rate that investors pay.
Nobody has shown that it would be bad.
Your table is broken by the way - and it doesn't matter either, because the entire concept behind the debate is that income/CGT were merged, i.e. that there'd be progressive taxation - with those who benefit more, having to pay more to pay their way.0 -
Is Stamp Duty and Solicitors fees offset against Capital Gails.
Eg
House : 400,000
Stamp : 4,000
Solicitor: 1,500
Total: 405,500
Is the Capital gains based on an initial price of 400,000 or 405,500?0 -
The point of the theory is that there is a point where raising tax no longer raises more tax. There is more that the one reason why that might happen, less investment or tax avoidance. It sounds as if you accept this pattern although you question the shape.KomradeBishop wrote: »
Not really - economists have been dismissing supply-siders and their propaganda-piece Laffer Curve, since its inception...It is pretty outrageous to dismiss the Laffer Curve. Clearly people will not risk investing money if they have almost nothing to gain. Now there is a real and stimulating debate to be had on what tax rate achieves the highest revenue, but that is a separate argument. A libertarian might push for a low rate of capital gains tax while a socialist might push for 80% capital gains but both agree with the Laffer Curve.
Weasel words like 'clearly' and such, don't do anything do bolster your claims - they're still based on debunked nonsense - and trying to pretend there is 'nothing to gain' is also unsubstantiated.
There isn't even any evidence showing the shape of the Laffer Curve - so the whole argument about finding the 'correct rate' is nonsense - there's even potential evidence that the speculated laffer curve may go up, not down...the whole idea is a useless theory, with no real world consistency.
The main pushers of the Laffer Curve are Neoliberals and Libertarians - it's been a staple of right-wing/supply-side economic propaganda since Reagan.
I never insisted there should be no tax free allowance - someone posited a speculative system, where income and CGT are combined and treated as the same - and I asked "what would be so bad about that, exactly?", and that's where the whole current debate came from (and inherently, since it's a discussion about combining the two taxes, I'm not talking about taxing CGT higher than income - that's a separate argument, and one I would make though, seeing as it's unearned income...).The only person arguing that capital gains should be treated in a special way is you by insisting firstly that there should be no tax free allowance like income has, and secondly by implying that they should be taxed higher than income.
I am going to show you a chart showing the actual income tax paid by Irish people from 2015, in it you will see that Irish income earners are actually getting a free ride on the backs of Irish investors because most Irish income earners pay less than the 33% tax rate that investors pay.
Nobody has shown that it would be bad.
Your table is broken by the way - and it doesn't matter either, because the entire concept behind the debate is that income/CGT were merged, i.e. that there'd be progressive taxation - with those who benefit more, having to pay more to pay their way.
the table is not mangled.0 -
No actually, I don't accept the theory, I was pointing out how it's internally inconsistent. If real world results can show the Laffer Curve going up instead of down, that actually disproves the entire idea.The point of the theory is that there is a point where raising tax no longer raises more tax. There is more that the one reason why that might happen, less investment or tax avoidance. It sounds as if you accept this pattern although you question the shape.
the table is not mangled.
Economies are dynamic systems, with very unpredictable elements within them - and the idea of the Laffer Curve, actually barely rises the to point of being labelled a 'theory', as it's so simplistic and unsupported, that it's pretty much impossible to use it for predicting the economic outcome of policy decisions - and it has the track record to suit.
When theories make predictions and fail, they are done. Except in the field of economics, where propagandists will just zombify dead theories, and keep on sending them back into public debate - purely because they are useful rhetorical tools.0 -
BrokenArrows wrote: »Is Stamp Duty and Solicitors fees offset against Capital Gails.
Eg
House : 400,000
Stamp : 4,000
Solicitor: 1,500
Total: 405,500
Is the Capital gains based on an initial price of 400,000 or 405,500?
Yes, you can deduct them from the "gain" then charge at 33%. Advertising, valuation and commission costs are also allowed.
In your example if the sale is for 600k, profit is 200k, the chargeable gain is 194.5k @ 33%. You've worded it funny because you shouldn't add the costs to the initial price.0 -
Banks deposits don't "sit", they get invested.I pay income tax on my income, then decide to invest in an Irish company (rather than leave it sitting in a bank), actually invest in something that will grow Irish business...
Interest on deposits are taxed at 41%
Dividends are taxed like earned income.
CGT is 33%
Setting aside pensions and other loopholes, capital gains seem like the most tax-efficient way for Irish residents to show a profit. I don't see much sense in sweetening the pot any further.0 -
daveharnett wrote: »Banks deposits don't "sit", they get invested.
Interest on deposits are taxed at 41%
Dividends are taxed like earned income.
CGT is 33%
Setting aside pensions and other loopholes, capital gains seem like the most tax-efficient way for Irish residents to show a profit. I don't see much sense in sweetening the pot any further.
His point is he is only getting the capital gain by investing his already taxed income rather than consuming it, therefore it's like a double tax.
We don't tax winnings on gambling yet we do tax people who engage in sensible gambling in businesses, this country really makes you wonder sometimes.0 -
KomradeBishop wrote: »
There seems to be a lot of begrudgery from people, who think that others should pay their way in life, instead of them paying their fare share just like everyone else - simply because they derive their income, from a different source than everyone else.FernandoTorres wrote: »I think the current rate is definitely too high. The common myth in Ireland is that capital gains is only for 'the rich'. This mainly stems from the poor levels of financial literacy in Ireland where the average Joe will balk at the thought of investing a few grand in a successful business or fund because it's too complicated or risky but at the same time will have no issue taking out a 300k loan to buy a house because that's what all their mates are doing.
I'd like to see something along the lines of the Australian system. All gains are counted as income and charged at your marginal rate (32 or 37% for most people) however if you've held the asset for 12 months or more you get a 50% discount. They also have favourable tax treatment for dividends from Australian companies so a large amount of investment stays in the country helping to fund indigenous business. That's massively needed in Ireland due to the crippled banks and the fact that the Government are only interested in rolling out the red carpet for foreign multinationals.
It makes no sense for the investor to take 100% of the risk but only get 66% of the benefit while the government takes 33% for no risk at all. It absolutely is discouraging people from investing more. There seems to be a lot of begrudgery on this thread against people who have generated wealth through investing as if its some kind of crime. Investment can benefit everyone. If the investor benefits then that means the company is successful. A successful Irish company will hire Irish people, pay corporation tax, avail of other Irish companies' services etc.
If you're benefiting from unearned income (and taking 'risks' doesn't equate to earning...), why in f ck should you be treated as special in any way?
The big picture of what you want, is to make investors a special class of people, who don't have to abide by the same tax treatment as the rest of society - and this leads to a society, which promotes the accelerated growth of inequality, like we've been seeing over the decades.
Inequality in itself isn't necessarily bad, but when we're promoting conditions that accelerate the growth of inequality, that's bad for society overall - and when you look at the CGT debate from a macroeconomic and societal perspective like this, that's exactly what's being advocated here.
Separate your advocation of an individualistic view of CGT, and look at what you advocate on a macroeconomic/societal scale.
How is it some people 'paying the way' for others? You talk about inequality as if there's some kind of limitation on only rich people being allowed to invest. There is nothing stopping anyone going out and buying a few cheap books and learning the basics of investing. Some of the most successful investors of all time started out with pocket change.
You're talking about capital gains being the same as any other type of income. Do you honestly not see the difference between someone earning a guaranteed wage or rental income and someone risking their post-tax savings on investing in shares? I'll give you a clue. One of them you are risking 100% of your capital. Of course there should be less tax on it otherwise why would anyone do it?
You're telling me to look at it on a macroeconomic/societal scale but that's what I'm doing. Your fairytale world where nobody invests or tries to get ahead in life sounds like a recipe for disaster to me. I'm no rampant capitalist and can see many flaws in the system but curtailing investment is certainly not the answer.0 -
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Eh, no - it's a new income...and an unearned income too. Investing is not analogous to gambling in a casino (which is kind of its own tax on the stupid, given that the bad odds aren't exactly a secret).His point is he is only getting the capital gain by investing his already taxed income rather than consuming it, therefore it's like a double tax.
We don't tax winnings on gambling yet we do tax people who engage in sensible gambling in businesses, this country really makes you wonder sometimes.
It's funny the optics people use to try and present some taxes as unjust - pretty much every single economic transaction and source of income in the economy is taxed, yet in the one area of general taxes that most greatly contributes to growing inequality, people want special treatment in a way that guarantees the further accelerated growth of inequality.0
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