Make mortgage interest payments and childcare costs tax deductible while at the same time increasing property tax on PPR's

[Purple]

So there are barriers to entry.

I never said there weren’t.

I never mentioned the net cost to the State.

I know.

I have no particular opinion either way on that, although the Irish experience has generally been that tax reliefs are temporary and tax hikes are permanent.

Yep, I agree.

 

[Purple]

But that 'wave' of purchasers will give way to those who paid much higher and didn't benefit and then you have caused the same impact to them!?

Yep, taxes are never fair to everyone but the latter group of people will get tax relief on their mortgage interest which will be greater than their property tax.

Also, not sure destabilising older people's housing situation is a good idea at any time but with the oncoming energy crisis!?

Who’s talking about destabilising older people? They are the richest cohort in the country with the most wealth and the highest disposable income.
If they really can’t afford to pay the tax just let it roll up and take it from their estate when they die.

 

[Purple]

I fall into the first category and don't feel wealthy, rich or even well off. I fear that a left leaning government would see me as all 3 and treat me accordingly.

The current one sees you as all three and treats you accordingly. The next further left government will only make it worse.

 

[Bow tie]

I have fallen into the first cohort but usually with less income for most years since having a house and kids. Income usually rises over a lifetime.
I am hopeful I will then be at a stage where I arrive at cohort 2, and am allowed to live a smaller income life with whatever I have built up which was already taxed.
After paying throughout life over and over, you also want to penalise a person who makes it to cohort 2. I would say that they should be allowed benefit from a lifetime of work- this is the notion that I was raised with, if I worked hard I would benefit.

Take that couple who now live in a more expensive house through inflation/time, or an older person who was never high income and inherited a family home in a now gentrified town location. You are now levying a penal property tax which will either have them deciding between necessities or moving at a time in their life when they shouldn't have to.

 

[Purple]

I have fallen into the first cohort but usually with less income for most years since having a house and kids. Income usually rises over a lifetime.
I am hopeful I will then be at a stage where I arrive at cohort 2, and am allowed to live a smaller income life with whatever I have built up which was already taxed.
After paying throughout life over and over, you also want to penalise a person who makes it to cohort 2. I would say that they should be allowed benefit from a lifetime of work- this is the notion that I was raised with, if I worked hard I would benefit.

Who says every retired person worked hard all their life? Many did but plenty didn't.
A tripling of the property tax rates would still constitute a small tax. If the pensioner happened to not be able to afford it then it could be deferred until they die.

Take that couple who now live in a more expensive house through inflation/time, or an older person who was never high income and inherited a family home in a now gentrified town location. You are now levying a penal property tax which will either have them deciding between necessities or moving at a time in their life when they shouldn't have to.

See above and do remember that children are far more likely to live in poverty than retirees. As for deciding between necessities or moving, if you are living on your own in a house worth a €750k to million euro and you are just about getting by then you should downsize.

 

[odyssey06]

Who says every retired person worked hard all their life? Many did but plenty didn't.
A tripling of the property tax rates would still constitute a small tax. If the pensioner happened to not be able to afford it then it could be deferred until they die.

See above and do remember that children are far more likely to live in poverty than retirees. As for deciding between necessities or moving, if you are living on your own in a house worth a €750k to million euro and you are just about getting by then you should downsize.

But in terms of your specific proposal... you're not comparing 'children'. Your creche proposal will benefit families who are paying creches fees and paying tax. Are they more likely to be in poverty than retirees on state pension in their own homes? Than all retirees owning their own home? Possibly but it's not as clear cut.

 

[Bow tie]

Who says every retired person worked hard all their life? Many did but plenty didn't.
A tripling of the property tax rates would still constitute a small tax. If the pensioner happened to not be able to afford it then it could be deferred until they die.

See above and do remember that children are far more likely to live in poverty than retirees. As for deciding between necessities or moving, if you are living on your own in a house worth a €750k to million euro and you are just about getting by then you should downsize.

But downsizing should be a personal decision not a necessity at the oldest point in your life. This forcing of hand and the state with their hand in everything... we purport to be a socially democratic state but not communist.
Leaving it til I die is another argument, but similar, again not a fan of the state getting it's grab on everything in life (sometimes for a second and third time).

 

[Bow tie]

But in terms of your specific proposal... you're not comparing 'children'. Your creche proposal will benefit families who are paying creches fees and paying tax. Are they more likely to be in poverty than retirees on state pension in their own homes? Than all retirees owning their own home? Possibly but it's not as clear cut.

And it doesn't consider transfers back for children- take ECCE and child benefit at these stages.

 

[Purple]

But in terms of your specific proposal... you're not comparing 'children'. Your creche proposal will benefit families who are paying creches fees and paying tax. Are they more likely to be in poverty than retirees on state pension in their own homes?

I don't know. It's a proposal for discussion. Do remember that the property tax can be deferred if they can't pay it. Also remember that every property owner would be paying it, not just pensioners.

I'm aware that the proposal will benefit families that are paying tax. That's the objective. Despite high incomes many are struggling and have much lower levels of real disposable income because of the high cost of housing and the high cost of childcare. The bottom line is that wealth retention is not taxed but wealth acquisition (and therefore creation) is taxed very heavily. I find that inequitable. The State is rubbish at delivering services so the last thing we need is a state run after school service. This is an alternative.

Than all retirees owning their own home? Possibly but it's not as clear cut.

If they don't own their home they won't be paying the tax. If they still have a mortgage then they'll be benefitting from the interest tax relief. They could get the latter and defer the former if necessary.

 

[Purple]

But downsizing should be a personal decision not a necessity at the oldest point in your life. This forcing of hand and the state with their hand in everything... we purport to be a socially democratic state but not communist.

I'm not a communist and I'm not a social democrat in the Irish context. I believe in equality of opportunity but that means taxing those who work less, taxing those with inherited and accumulated wealth a bit more and giving less to those who choose not to work. For example someone who is of sound mind and body who can work and chooses not to should get nothing. I would literally let them starve. That's not the Irish definition of social democracy.
I do think that someone who has accumulated a large amount of wealth due to Quantitative Easing and Government debt should have to pay more of it in tax. We're all talking about windfall taxes on energy companies at the moment but we're ignoring that us home owners made a killing due to QE because that's what's driven house price inflation.

Leaving it til I die is another argument, but similar, again not a fan of the state getting it's grab on everything in life (sometimes for a second and third time).

This proposal would mean the State gets a grab on less during life.

 

[odyssey06]

I don't know. It's a proposal for discussion. Do remember that the property tax can be deferred if they can't pay it. Also remember that every property owner would be paying it, not just pensioners.

I'm aware that the proposal will benefit families that are paying tax. That's the objective. Despite high incomes many are struggling and have much lower levels of real disposable income because of the high cost of housing and the high cost of childcare. The bottom line is that wealth retention is not taxed but wealth acquisition (and therefore creation) is taxed very heavily. I find that inequitable. The State is rubbish at delivering services so the last thing we need is a state run after school service. This is an alternative.


If they don't own their home they won't be paying the tax. If they still have a mortgage then they'll be benefitting from the interest tax relief. They could get the latter and defer the former if necessary.

It's an interesting proposal. I think another objection is how does this play out if property prices drop significantly? Is the property tax income expected to drop - you are tying is to the asset value of the property.

 

[Purple]

It's an interesting proposal. I think another objection is how does this play out if property prices drop significantly? Is the property tax income expected to drop - you are tying is to the asset value of the property.

Yes, it has to. If it's a progressive tax it would, hopefully, act to reduce prices anyway. A tax tied to the site value, or weighted towards the site value, would be best.

 

[T McGibney]

If it's a progressive tax it would, hopefully, act to reduce prices anyway.

Why and how would it do that? There are already a lot of costs involved in owning and maintaining a house or apartment. Marginal increases in these costs never seem to dampen demand for them.

 

[Purple]

Why and how would it do that? There are already a lot of costs involved in owning and maintaining a house or apartment. Marginal increases in these costs never seem to dampen demand for them.

Have bands, say nothing on the fist €250k, 0.5% on the next 250, 0.75% on the next 250, 1% on the next 250 etc. The hope is that would put a few speed ramps in to house price inflation. My figures are just to illustrate the point.

 

[T McGibney]

Have bands, say nothing on the fist €250k, 0.5% on the next 250, 0.75% on the next 250, 1% on the next 250 etc. The hope is that would put a few speed ramps in to house price inflation. My figures are just to illustrate the point.

If you contrive to dampen headline prices by inflating costs of ownership, you're not solving house price inflation though, just moving costs around. You might as well increase stamp duty.

 

[Purple]

If you contrive to dampen headline prices by inflating costs of ownership, you're not solving house price inflation though, just moving costs around. You might as well increase stamp duty.

It broadens the tax base and it reduced the cost of purchase. Around 1% of our housing stock changes hands every year so a tax that is applied to all properties should provide a net cost benefit to the 1% who are buying.
It should be looked at as part of a broader strategy to lower the income tax burden on people earning up to €80-€100k a year. Taxing wealth creation reduced the incentive to create wealth. Taxing wealth retention doesn't.

We both know that probably won't happen and there's plenty of other ways of reducing the tax burden, the main one being the State wasting less money, but that won't happen either. Obesity costs us billions every year. If we could reduce the number of fatties back to 1980's levels we'd probably have €2-€3 billion a year more to spend on housing or, more likely, just waste elsewhere, but we have to aspire to better as a cynical shrug of the shoulders solves nothing.

 

[Bluefin]

I don't know. It's a proposal for discussion. Do remember that the property tax can be deferred if they can't pay it. Also remember that every property owner would be paying it, not just pensioners.

I'm aware that the proposal will benefit families that are paying tax. That's the objective. Despite high incomes many are struggling and have much lower levels of real disposable income because of the high cost of housing and the high cost of childcare. The bottom line is that wealth retention is not taxed but wealth acquisition (and therefore creation) is taxed very heavily. I find that inequitable. The State is rubbish at delivering services so the last thing we need is a state run after school service. This is an alternative.


If they don't own their home they won't be paying the tax. If they still have a mortgage then they'll be benefitting from the interest tax relief. They could get the latter and defer the former if necessary.

High cost of childcare is a very real issue but what I can never understand is why people believe they have a right to have large families (>2) and expect the rest of society to pay for this choice. I actually think it's grossly irresponsible where you cannot give each child the same opportunities out of your own resources... What's going to happen when they have 3 young adults in university... How are they going to fund this major expense? State pick up the tab again?

 

[T McGibney]

It broadens the tax base and it reduced the cost of purchase.

It doesn't reduce the cost of purchase, no more than a cheap printer deal tied to expensive ink use reduces the cost of purchasing a printer.

Around 1% of our housing stock changes hands every year so a tax that is applied to all properties should provide a net cost benefit to the 1% who are buying.
It should be looked at as part of a broader strategy to lower the income tax burden on people earning up to €80-€100k a year. Taxing wealth creation reduced the incentive to create wealth. Taxing wealth retention doesn't.

Why not just increase stamp duty instead? (At least if it backfires, it's easier to reverse than LPT).

 

[T McGibney]

High cost of childcare is a very real issue but what I can never understand is why people believe they have a right to have large families (>2) and expect the rest of society to pay for this choice. I actually think it's grossly irresponsible where you cannot give each child the same opportunities out of your own resources... What's going to happen when they have 3 young adults in university... How are they going to fund this major expense? State pick up the tab again?

The looming demographic crisis will be fun. Not.

 

[Purple]

High cost of childcare is a very real issue but what I can never understand is why people believe they have a right to have large families (>2) and expect the rest of society to pay for this choice. I actually think it's grossly irresponsible where you cannot give each child the same opportunities out of your own resources... What's going to happen when they have 3 young adults in university... How are they going to fund this major expense? State pick up the tab again?

Poor people have the most kids. It costs the State around €8k a year to educate each child so most people with children are net recipients. The point is that when they grow up they will become net contributors. We subsidise children because they will have an economic value just as we subsidise older people because they used to have an economic value.

If we are going to have less children then we have to have fewer retirees. That means they either work longer or we start killing them off. I'm okay with either option.