Income tax increase for super rich - Can i hear a coherent argument against?

veryangryman · 02-12-2011 09:54AM #1

The idea of people over 100K having the balance taxed heavier (say 10% more) has been mooted and poo-poo'd in equal measure. However as an alternative to making people struggle on the low ends, id definitely be in favour of this idea.

What i cannot understand is those who are knocking it - i have yet to hear one good reason why we shouldn't put such a tax in. Can somebody (break it down for me cos im no expert in fairness) explain why its more progressive to stick it to the man, woman and child.

No im not saying that welfare system cant be changed etc but really when people are being screwed every six way from Sunday, surely this extra tax from the richer would go a long way to protecting them.

No, instead the PAYE higher rate has already been made kick in at 32K, so the average middle income worker has to foot the bill.

massiveattack · 02-12-2011 09:56AM

No, but you can hear my renditition of the late late show theme

Dah dah dah dah daaaa

Dahh dahh dah da dah daa

Dah de da de de

DE DE DE DA DAAAA

DAA DA DAAAA

veryangryman · 02-12-2011 09:58AM

massiveattack wrote: »

No, but you can hear my renditition of the late late show theme

Dah dah dah dah daaaa

Dahh dahh dah da dah daa

Dah de da de de

DE DE DE DA DAAAA

DAA DA DAAAA

I think youll find you missed 3 Daa's there.

Whose yer Daddy!

foxyboxer · 02-12-2011 10:00AM

I like this analogy....

Suppose that every day, ten men go out for beer and the bill for all ten comes to €100…
If they paid their bill the way we pay our taxes, it would go something like this…
The first four men (the poorest) would pay nothing.
The fifth would pay €1.
The sixth would pay €3.
The seventh would pay €7..
The eighth would pay €12.
The ninth would pay €18.
The tenth man (the richest) would pay €59.
So, that’s what they decided to do..
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by €20″. Drinks for the ten men would now cost just €80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the €20 windfall so that everyone would get his fair share?
They realized that €20 divided by six is €3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid €2 instead of €3 (33% saving).
The seventh now paid €5 instead of €7 (28% saving).
The eighth now paid €9 instead of €12 (25% saving).
The ninth now paid €14 instead of €18 (22% saving).
The tenth now paid €49 instead of €59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
“I only got a euro out of the €20 saving,” declared the sixth man. He pointed to the tenth man,”but he got €10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a euro too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get €10 back, when I got only €2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

orourkeda · 02-12-2011 10:00AM

veryangryman wrote: »

The idea of people over 100K having the balance taxed heavier (say 10% more) has been mooted and poo-poo'd in equal measure. However as an alternative to making people struggle on the low ends, id definitely be in favour of this idea.

What i cannot understand is those who are knocking it - i have yet to hear one good reason why we shouldn't put such a tax in. Can somebody (break it down for me cos im no expert in fairness) explain why its more progressive to stick it to the man, woman and child.

No im not saying that welfare system cant be changed etc but really when people are being screwed every six way from Sunday, surely this extra tax from the richer would go a long way to protecting them.

No, instead the PAYE higher rate has already been made kick in at 32K, so the average middle income worker has to foot the bill.

What is argument for it? Taxing the well off isnt going to save this country

veryangryman · 02-12-2011 10:03AM

foxyboxer wrote: »

I like this analogy....

Suppose that every day, ten men go out for beer and the bill for all ten comes to €100…
If they paid their bill the way we pay our taxes, it would go something like this…
The first four men (the poorest) would pay nothing.
The fifth would pay €1.
The sixth would pay €3.
The seventh would pay €7..
The eighth would pay €12.
The ninth would pay €18.
The tenth man (the richest) would pay €59.
So, that’s what they decided to do..
The ten men drank in the bar every day and seemed quite happy with the arrangement, until one day, the owner threw them a curve ball. “Since you are all such good customers,” he said, “I’m going to reduce the cost of your daily beer by €20″. Drinks for the ten men would now cost just €80.
The group still wanted to pay their bill the way we pay our taxes. So the first four men were unaffected. They would still drink for free. But what about the other six men? The paying customers? How could they divide the €20 windfall so that everyone would get his fair share?
They realized that €20 divided by six is €3.33. But if they subtracted that from everybody’s share, then the fifth man and the sixth man would each end up being paid to drink his beer.
So, the bar owner suggested that it would be fair to reduce each man’s bill by a higher percentage the poorer he was, to follow the principle of the tax system they had been using, and he proceeded to work out the amounts he suggested that each should now pay.
And so the fifth man, like the first four, now paid nothing (100% saving).
The sixth now paid €2 instead of €3 (33% saving).
The seventh now paid €5 instead of €7 (28% saving).
The eighth now paid €9 instead of €12 (25% saving).
The ninth now paid €14 instead of €18 (22% saving).
The tenth now paid €49 instead of €59 (16% saving).
Each of the six was better off than before. And the first four continued to drink for free. But, once outside the bar, the men began to compare their savings.
“I only got a euro out of the €20 saving,” declared the sixth man. He pointed to the tenth man,”but he got €10!”
“Yeah, that’s right,” exclaimed the fifth man. “I only saved a euro too. It’s unfair that he got ten times more benefit than me!”
“That’s true!” shouted the seventh man. “Why should he get €10 back, when I got only €2? The wealthy get all the breaks!”
“Wait a minute,” yelled the first four men in unison, “we didn’t get anything at all. This new tax system exploits the poor!”
The nine men surrounded the tenth and beat him up.
The next night the tenth man didn’t show up for drinks, so the nine sat down and had their beers without him. But when it came time to pay the bill, they discovered something important. They didn’t have enough money between all of them for even half of the bill!

Im fairly sure that despite any bickering like above, the 6 men would all survive with the arrangement when you substitute beer for food in the above.

Thoie · 02-12-2011 10:05AM

The main argument I've always heard is that if you over-tax the rich they have the resources available to them to just up sticks and move elsewhere, or just move their money elsewhere.

If you keep the taxes "fair" (ie, everyone pays 40%), you get a lot more money from the 100k earners than you do from the 40k earners. In the UK at the moment (I can't find the Irish figures, but the principle holds true), the top 1% of earners fund 27% of the country's tax take. If you scare away that top 1%, you lose out on an awful lot of income.

veryangryman · 02-12-2011 10:05AM

orourkeda wrote: »

What is argument for it? Taxing the well off isnt going to save this country

Argument for is simple: Save a hospital wing, help keep some families off the street, I could go on.

If you keep pushing people into poverty, eventually this will hit breaking point. 100K is more than well off. If you earned 110K for instance, and i took 10% of the 10K, im pretty sure youll still be able to afford that ivory backscratcher

orourkeda · 02-12-2011 10:07AM

veryangryman wrote: »

Im fairly sure that despite any bickering like above, the 6 men would all survive with the arrangement when you substitute beer for food in the above.

Through necessity

Tom · 02-12-2011 10:09AM

100k is Super Rich???

orourkeda · 02-12-2011 10:11AM

veryangryman wrote: »

Argument for is simple: Save a hospital wing, help keep some families off the street, I could go on.

If you keep pushing people into poverty, eventually this will hit breaking point. 100K is more than well off. If you earned 110K for instance, and i took 10% of the 10K, im pretty sure youll still be able to afford that ivory backscratcher

Saving hospital wings does has little or nothing to do with how much tax you charge high earners. Again keeping families off the street isnt going to save Ireland.

Prudent management of the health budget should see to that (which it isnt at the moment)

Homelessness happened during the boom

Wibbs · 02-12-2011 10:12AM

Thoie wrote: »

The main argument I've always heard is that if you over-tax the rich they have the resources available to them to just up sticks and move elsewhere, or just move their money elsewhere.

If you keep the taxes "fair" (ie, everyone pays 40%), you get a lot more money from the 100k earners than you do from the 40k earners. In the UK at the moment (I can't find the Irish figures, but the principle holds true), the top 1% of earners fund 27% of the country's tax take. If you scare away that top 1%, you lose out on an awful lot of income.

This. Plus you risk not encouraging the entrepreneur sector of society. The people who create jobs in the first place. If they see that the harder they work and the more successful their company becomes the more they'll have to pay, it becomes a stick not a carrot. It might also dissuade international companies while its at it.

irelandrover · 02-12-2011 10:17AM

Thoie wrote: »

The main argument I've always heard is that if you over-tax the rich they have the resources available to them to just up sticks and move elsewhere, or just move their money elsewhere.

If you keep the taxes "fair" (ie, everyone pays 40%), you get a lot more money from the 100k earners than you do from the 40k earners. In the UK at the moment (I can't find the Irish figures, but the principle holds true), the top 1% of earners fund 27% of the country's tax take. If you scare away that top 1%, you lose out on an awful lot of income.

https://www.youtube.com/watch?v=716qbOv3a4M

Sorry about poor quality.

sbsquarepants · 02-12-2011 10:20AM

Won't someone please think of the brain drain!
I'm sick of hearing this shít, like the "cream of the crop" we had before done such a great job. Brain drain my arse, if you don't want to be here, fúck off!!

seamus · 02-12-2011 10:21AM

veryangryman wrote: »

help keep some families off the street

Very few people on the street who don't choose to be there. The figure would be in the tens, nationally, not the hundreds. The rest are there because they have booze or drugs problems or because they don't want to abide by hostel rules or they're fighting with their families, etc.

If there's one good thing we can say about Ireland, it's that we're very strong on ensuring that no-one will go without a roof over their head if they can help it.

Anyway, on the original argument, there's this fallacy in Ireland that wealthy people pay no tax and get away with murder. Of course, it's the opposite that's true. Wealthy people pay most of the tax, those less well off pay nothing and consume more public services.

So there's no good argument why wealthier people should have to pay even more. This isn't a socialist country where the wealthy have some obligation to those less well off. If anything we should be arguing for low rates of taxation for those currently outside the tax loop. There are millions of them, take a few euro off them and you instantly bring in a tonne of tax revenue.

sbsquarepants · 02-12-2011 10:22AM

Tom wrote: »

100k is Super Rich???

It's 3 times the average wage. It's hardly poor now is it?

markpb · 02-12-2011 10:22AM

Tom wrote: »

100k is Super Rich???

I think people underestimate how much the Irish super-rich really earn

100k would be quite common.

foxyboxer · 02-12-2011 10:24AM

What is rich? What is wealth?

Enda Kenny would earn a bigger salary than a Bill Gates would draw. Yet Gate's is a billionaire due to having 'assets'.

Rich = accumulated assets not a big salary.

Tom · 02-12-2011 10:25AM

sbsquarepants wrote: »

It's 3 times the average wage. It's hardly poor now is it?

Far from poor - but hardly super rich.

sbsquarepants · 02-12-2011 10:27AM

Tom wrote: »

Far from poor - but hardly super rich.

Super rich? No
Rich? Yes

atila · 02-12-2011 10:28AM

Does a super tax rate not disproportionatly tax wealth obtained through income. Unless there are similar measures applied to all forms of wealth accumulation it would distort things even more then they are already within the tax code.

Blazer · 02-12-2011 10:29AM

Amazing that plenty of people on here bitch about social welfare and how it discourages people from getting off their holes and finding a job due to the tiny gap between minimum wage and someone on the dole.:rolleyes:
For instance 2 people I know are getting around €22k a year on social welfare between dole/rent allowance/children's allowance and every other thing they can claim for.
Both have estimated that they would need to earn approx 30k to make it worth their while to work and even then this would only match what they're getting after paying taxes etc to on the dole.
The fact that both are unskilled means they haven't a snowball's chance in hell of getting a job that pays this currently.
I've absolutely no objections to richer people paying a bit more but remember 14% of taxpayers here pay nearly 80% of the tax revenue on PAYE...
I'm paying over 30K a year on tax and it sickens me to see my P60 every year....basically I'm paying for one of my mates to sit on their holes at home in their council house which they pay a miniscule amount of rent for while I'm working hard.
Yes I wouldn't object to paying 1-2% more tax but only if the money went towards hospitals and front line services, not ensuring Johnny gets to go to the pub a few nights a week or that the public sector ensure they get cushy pensions or TD's lining their pockets.

And as someone say,,if you tax the super wealthy too much they will move to another country...look at U2 etc.

That's why I've a lot of respect for Michael O'Leary in spite of his many faults...he's staying put in this country and paying his considerable tax bill.

So rather than imposing a 10% on high earners the government needs to reform public sector wages + pensions/ TD salaries and pensions as well as the ridiculous amount of administration in the HSE and other PS bodies.

We're supposed to reward people for being successful, not penalize them because of mob mentality and government PR deflection campaigns.

Thoie · 02-12-2011 10:30AM

veryangryman wrote: »

If you keep pushing people into poverty, eventually this will hit breaking point. 100K is more than well off. If you earned 110K for instance, and i took 10% of the 10K, im pretty sure youll still be able to afford that ivory backscratcher

We already take proportionally more from the higher earners, due to the way our tax system works.
Take three earners:
Adam earns 100k
Bob earns 40k
Charles earns 20k

Assuming they're all single PAYE employees you can use http://taxcalc.eu/ to work out how much tax they're paying as a percentage of their income.
Including PAYE, PRSI, USC:
Adam pays 41% of his income in tax
Bob pays 24% of his income in tax
Charles pays 10% of his income in tax

www.revenue.ie has more information on tax bands and credits if you're interested.

professore · 02-12-2011 10:33AM

Considering that it's possible for a family with one child to claim 90K in benefits with no tax and free medical expenses:

http://www.examiner.ie/ireland/call-for-welfare-pay-cap-as-couple-claim-90k-a-year-168808.html

then someone on 100K in the same situation is below the poverty line since they will pay quite a bit of tax.

seamus · 02-12-2011 10:33AM

foxyboxer wrote: »

What is rich? What is wealth?

Enda Kenny would earn a bigger salary than a Bill Gates would draw. Yet Gate's is a billionaire due to having 'assets'.

Rich = accumulated assets not a big salary.

Wealthy == Someone who has enough money that they can afford to buy luxuries and never has to worry about having money for the essentials.

Any single person earning above €30/35k in this country would fall into that bracket.

Super Rich == Someone who never has to worry about having enough money to buy anything.

That's talking about people earning €500k+

Liam Byrne · 02-12-2011 10:33AM

Wibbs wrote: »

Thoie wrote: »

The main argument I've always heard is that if you over-tax the rich they have the resources available to them to just up sticks and move elsewhere, or just move their money elsewhere.

If you keep the taxes "fair" (ie, everyone pays 40%), you get a lot more money from the 100k earners than you do from the 40k earners. In the UK at the moment (I can't find the Irish figures, but the principle holds true), the top 1% of earners fund 27% of the country's tax take. If you scare away that top 1%, you lose out on an awful lot of income.

This. Plus you risk not encouraging the entrepreneur sector of society. The people who create jobs in the first place. If they see that the harder they work and the more successful their company becomes the more they'll have to pay, it becomes a stick not a carrot. It might also dissuade international companies while its at it.

Depends on what motivates the entrepreneur - I'm one who would (a) want to earn my own wages and (b) hopefully hire a few people some day.

Making silly money isn't a measure of success in my book.

Tom · 02-12-2011 10:34AM

sbsquarepants wrote: »

Super rich? No
Rich? Yes

Compared to the average wage then you could class it as rich - compared to the 225 highest earners in a report from last year it's a drop in the ocean

http://www.independent.ie/business/rich-list/irelands-rich-list-201225-2117809.html

I'd be more than happy to be earning 100k myself but if I had any ambitions to be rich - 100k would be a very low ambition.

StephenHendry · 02-12-2011 10:35AM

i would be in favour of the super rich having a wealth or an expenditure tax

psychward · 02-12-2011 10:35AM

How about we just stop subsidizing the pretend rich through abominations such as NAMA etc and hence enable the poor and the middle to exercise the true value of their money and spending power at cheaper hence realistic prices. It would also reduce upward demand pressures on wages etc, a reduction which is good for MNC investment. Tax breaks should only go to exporting and long term job creating industries, not to estate agents.

Liam Byrne · 02-12-2011 10:37AM

Thoie wrote: »

veryangryman wrote: »

If you keep pushing people into poverty, eventually this will hit breaking point. 100K is more than well off. If you earned 110K for instance, and i took 10% of the 10K, im pretty sure youll still be able to afford that ivory backscratcher

We already take proportionally more from the higher earners, due to the way our tax system works.
Take three earners:
Adam earns 100k
Bob earns 40k
Charles earns 20k

Assuming they're all single PAYE employees you can use http://taxcalc.eu/ to work out how much tax they're paying as a percentage of their income.
Including PAYE, PRSI, USC:
Adam pays 41% of his income in tax
Bob pays 24% of his income in tax
Charles pays 10% of his income in tax

www.revenue.ie has more information on tax bands and credits if you're interested.

Does that take into account all the stealth taxes and levies ? And VAT ?

Because I reckon you'll find that a lot more of Charles' cash goes in tax than the others, even before the lawyers and advisors and the like find all the loopholes.

Wile E. Coyote · 02-12-2011 10:42AM

sbsquarepants wrote: »

Super rich? No
Rich? Yes

€100k a year isn't even close to being rich or super rich. It works out at €61k a year take home. If the person earning that is the sole income earner in a household with a couple of kids they've less disposable income than a couple both on the average wage with no kids.

And another arguement against OP is that one day I'm going to be SUPER SUPER RICH and I don't want my money going to feed you peasants

Income tax increase for super rich - Can i hear a coherent argument against?

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