McWilliams: "Nepo-babies" are creating a two-tier housing system

arbitron said:
Yes, the working middle class are undermined by the government competing to buy private homes. I don't see anyone disagreeing with that statement.

But those people are further penalised by wealthier middle class families being allowed to give thousands of euro in tax-free gifts to their kids.

Imagine the following scenario:

Mary is a guard and her husband John is a cleaner who is studying to become a teacher. They have saved €50k for a house in Dublin. Their families have no money so they are getting no gift/inheritance. They have the 10% deposit and will get a nice 3-bed with a hefty mortgage. They feel lucky.

Their neighbour Jill is a dog whisperer and her husband Jack is a TikTok influencer. They have saved €2k for a house but they will probably spend that on a trip to Ibiza. Their families have a bit of cash so they get €300k from each side and buy a house outright with no mortgage.

Of course this is exaggerated but the fact that the above nonsense is 100% possible should set anyone's teeth on edge. This is not equitable and it is poor public policy. We should not have a system that rewards the transfer of wealth with no productivity.

We can and should tackle the government's mess when it comes to social housing but that doesn't stop us addressing the anomalies that some middle class families can take advantage of.

There may well be an entitlement culture for people at one end of the spectrum but there is a similar one at the other end.


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Why is it wrong to transfer wealth? This wealth has been earned at some point in the past. Should those who earned that wealth not be allowed to use it to benefit their families?

Or should that wealth be taxed again and again and again? To bring this to its conclusion then why bother trying to better oneself to accumulate wealth at all?

Which then brings us back to an "entitlement culture" are those who accumulated wealth not entitled to do with it as they want?
 
The Horseman said:
Why is it wrong to transfer wealth? This wealth has been earned at some point in the past. Should those who earned that wealth not be allowed to use it to benefit their families?
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They can, but why should my mum be able to give me €100,000 tax free but she can't give her sister €50,000 tax free? There is no good reason. People should be able to give money to whomever they like, but if you receive wealth/income you should pay tax on it.

The Horseman said:
Or should that wealth be taxed again and again and again?
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Every euro is taxed again and again. If you work for a company they pay corporation tax, etc. on income, then they pay you, you pay income tax, you buy stuff, you pay VAT, the shop pays taxes, they pay their workers, they pay tax, they buy goods from your employer...

The Horseman said:
To bring this to its conclusion then why bother trying to better oneself to accumulate wealth at all?
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This is a strawman argument. People can and do work more and accumulate wealth even when it is at the marginal rate.

The Horseman said:
Which then brings us back to an "entitlement culture" are those who accumulated wealth not entitled to do with it as they want?
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They are but why are the people receiving the money entitled to a tax break? If my best friend gives me €100k she doesn't pay any tax on it, I do.
 
BillTaxman said:
What would be the point of working hard and contributing all your life if you can't even help your own children?
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Well you could spend it on yourself. Or you could give it to your children and they pay tax on it. Just like they do on the income they get from actually contributing to the economy.
 
arbitron said:
They can, but why should my mum be able to give me €100,000 tax free but she can't give her sister €50,000 tax free? There is no good reason. People should be able to give money to whomever they like, but if you receive wealth/income you should pay tax on it.


Every euro is taxed again and again. If you work for a company they pay corporation tax, etc. on income, then they pay you, you pay income tax, you buy stuff, you pay VAT, the shop pays taxes, they pay their workers, they pay tax, they buy goods from your employer...


This is a strawman argument. People can and do work more and accumulate wealth even when it is at the marginal rate.


They are but why are the people receiving the money entitled to a tax break? If my best friend gives me €100k she doesn't pay any tax on it, I do.
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They do pay tax on it that's why we have the three thresholds A,B & C.

You dont pay corporation tax. People forego spending to save/invest to better their and their families future.

When people accumulate wealth they by and large are not a burden on the State and are net contributors to the State rather than net beneficiaries from the State.

What happens if people decide not to accumulate any wealth at all and spend all their income and don't purchase property etc? Who looks after them if they fall on hard times and have no assets or accumulated wealth to fallback on?
 
The Horseman said:
They do pay tax on it that's why we have the three thresholds A,B & C.
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But why do we have those thresholds? A genuine question because I don't see why (adult) children should be favoured to such an extent over any other relationship.

The Horseman said:
When people accumulate wealth they by and large are not a burden on the State and are net contributors to the State rather than net beneficiaries from the State.
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That is a very broad statement and for families with multiple children it is often the opposite.

The Horseman said:
What happens if people decide not to accumulate any wealth at all and spend all their income and don't purchase property etc? Who looks after them if they fall on hard times and have no assets or accumulated wealth to fallback on?
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Are you suggesting that a child having to pay 33% on all gifts/inheritance is going to result in the above?

Under this chilling draconian nightmare tax regime if your dad gave you a cheque for €100k I suspect the vast majority of people would accept the €100k, pay the €33k in tax and enjoy the remaining bonanza of €67k.
 
arbitron said:
Under this chilling draconian nightmare tax regime if your dad gave you a cheque for €100k I suspect the vast majority of people would accept the €100k, pay the €33k in tax and enjoy the remaining bonanza of €67k.
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I'd hope my dad would be smart enough to give me the €100k in a nice bin bag so I could enjoy the full €100k.
 
arbitron said:
But why do we have those thresholds? A genuine question because I don't see why (adult) children should be favoured to such an extent over any other relationship.
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People favour their lineal descendants for obvious evolutionary reasons so it should be no surprise that the tax system designed by humans follows basic human principles.
 
The Horseman said:
Why is it wrong to transfer wealth? This wealth has been earned at some point in the past. Should those who earned that wealth not be allowed to use it to benefit their families?
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BillTaxman said:
What would be the point of working hard and contributing all your life if you can't even help your own children?
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I'd like to explore the proposition that all wealth is earned unless it is inherited. This idea doesn't stand up to the most basic scrutiny.
I've been working full time since I was 17. For the first 15 years of my working life I did an average of over 60 hours a week and usually worked 6-7 days a week. I'm 50 now and well off so I fall into the "I've worked hard all my life" category. But... but, most of my actual wealth is unearned. Over the last 12 years, due entirely to the results of Quantitative Easing, the value of my pension has doubled and the value of my property assets has also doubled. I have only a token tax liability on the property assets and no liability on by pension until I draw it down.

So plenty of rich older and middle aged people have worked hard all their lives (and plenty haven't) and plenty of them are rich (rich means you have wealth, not necessarily a high income) but most of them didn't earn their wealth, it's just due to housing and pension values inflating.

I have a very good income on which I pay over 50% in tax.

The tax rate on the creation of wealth is 50%. The tax rate on the accumulation of wealth through inheritance and asset value inflation is extremely low. That doesn't make for an egalitarian society. Either does our welfare system.

The problem is that we over tax earned income and under tax wealth while having amongst the highest rates of welfare in the world.

My problem with McWilliams is that he's a populist and doesn't have the backbone to say that if we want lower housing costs and less nepotism we need significantly higher property taxes and a ban on the State funding the purchase of any private house.
 
arbitron said:
People should be able to give money to whomever they like, but if you receive wealth/income you should pay tax on it.
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The problem with high inheritance taxes is that it makes the inheritance of family farms and family businesses almost impossible. Most people work in those businesses. That poses it's own problem in a conversation around an equitable society.

In general I'm more in favour of higher taxes on wealth retention by the owners of that wealth than a higher tax when that wealth changes hands.
 
Purple said:
The problem is that we over tax earned income and under tax wealth while having amongst the highest rates of welfare in the world.
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This is it. There's no political party saying that but that's the main problem in Ireland. Penal income taxes, no interest in taxing wealth, an extremely narrow tax base & very high welfare rates. Very depressing for the 30-something year old that is a "high earner" but does not come from money, competing with the State and intergenerational wealth for housing.
 
arbitron said:
If my best friend has saved €100k and gives it to me she won't pay tax on that transfer.

I will pay the tax.

And that will be the first time I pay tax on that unearned monetary gift.

So there is no "again".
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she will have paid tax, the money transferred will be net of tax, most likely 48% of what it was originally. How much more should the state be given to squander?
 
Blackrock1 said:
she will have paid tax, the money transferred will be net of tax, most likely 48% of what it was originally. How much more should the state be given to squander?
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Pretty much every time money moves it is taxed, not sure what your point is exactly. Should it just be taxed once and then exempt forever more? The money I paid for my coffee this morning has already been subject to income tax, so by your logic the coffee shop should not levy VAT on it.
 
Blackrock1 said:
she will have paid tax, the money transferred will be net of tax, most likely 48% of what it was originally.
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Not if she inherited it. If that happened she may have paid no tax on it but at most she paid 33%. If it's from the sale or stock or shares then she'll have only paid 33%.
If she worked and actually created wealth through her labour then she will probably have paid over 50% on it. I've a problem with that imbalance.
Blackrock1 said:
How much more should the state be given to squander?
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That's a different question. In my opinion the State already receives more than enough to provide every service and support and build every piece of infrastructure than is needed. It, and the people who work for it, just choose to waste it.
 
24601 said:
Pretty much every time money moves it is taxed, not sure what your point is exactly. Should it just be taxed once and then exempt forever more? The money I paid for my coffee this morning has already been subject to income tax, so by your logic the coffee shop should not levy VAT on it.
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did i argue it should be exempt? the poster is asking for an increase in the CAT rate. i disagree.
 
I worked with a gent who had a sister who nursed in London for over 40yrs. She had a property in the city which developers were chasing for years.
She passed and the property was sold for 12million sterling. It all came to her only brother who had only one son here in Ireland. Patrick the gent died only months after monies from London came his way. Son only heir. There was no planning in place from lady in London or Patrick in Dublin.
 
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