What is the squeezed middle?

stuffit said:
Here's Michael Tafts' s definition of the squeezed middle http://notesonthefront.typepad.com/
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I read the article, but it's not clear to me, is he actually saying he thinks that an income of €50,000 a year (whether joint or single) means you are *not* in the squeezed middle?
So Unite think that a couple on €50,000 a year are high earners? If so, it would be good if they came out and called it that way next time they look for higher taxes. Make it clear they want to see higher taxes on a family on €50,000 a year more.

It seems a bit disengenous to include pensioners in the total distribution, surely when people are talking about the squeezed middle, they are talking about middle income *earners*?
 
The simple fact is the ratio of taxpayers will move from 5-1 to 2-1 in less than 30 years. The media seems to think the golden goose will continue to thrive. In reality the golden goose is a long time gone. We are entering an era where money becomes real again or it becomes just coloured paper. The notion that people can leave school at 16 live on welfare for ever more is long gone. I also sometimes laugh at the notion of pensioners who are labeled with the catch all "they worked all their lives and deserve some reward!". This is simply false, a significant number of pensioners never had a job ever, a significant number particularly farmers, self employed avoided tax in a major way to a point where the PAYE worker paid up to 65% tax in the 80's. There are also the people who worked in England in construction sent money home - whats available for them, very little it seems.
There is no appetite for realism at the moment - the notion is trumpeted that alls great we are removing the budget deficit. We are 200 billion in a hole with a rapidly decreasing tax payer pool. Job loss through technology displacement will further increase the challenges.
The balls up was made not ring fencing the money held on deposit in the banks and linking that to outstanding loans in those institutions. A decision that has never been properly discussed, how people with large borrowing but also money on deposit were able to remove funds from failed banks.
But the corruption within NAMA will never be truly uncovered.
 
The Irish Tax Institute are to high earners what the CIF are to builders or the Iona Institute are to religious people.

Its members tend to be well paid and its members' clients tend to be well paid.

Their utterances shouldn't be viewed as unbiased.

It doesn't mean they're wrong, but it's worth pointing out that they're not exactly honest brokers in all of this.
 
Whatever about the rights/wrongs of the ITI, that stat is fairly telling.
As are these

At the height of the crazy Celtic Tiger boom, a whopping 42pc of workers paid no income tax.
This fell to 12pc with the introduction of the USC - as one of the core principles of that levy was that everyone should contribute something.
We are now back to a situation where 29pc paid no direct income taxes.
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Delboy said:
Not sure if this stat has been thrown into the debate yet
http://www.independent.ie/business/...ea-that-everyone-pays-something-35132547.html
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And yet at the same time there is a call to take more income earners out of the top rate of tax.

But there was no move to cut the income tax bands - the income levels you pay at different rates.

Workers will still move into the higher 40pc band on income over €33,800.

The failure to raise the bands will mean that any promotions or wage rises middle-income workers get will be eaten up by higher taxes"

This would also add to the burden of resourcing taxes from higher earners. But that does not seem to bother the advocates.
The 0.5% cut in USC also comes under attack in percentage terms. Despite it meaning the exact monetary equivalent for everyone (if lucky enough to earn the qualifying incomes), the message is that it is imbalanced in favour of low income earners.
In percentage terms,yes, in monetary terms, no.
So which world do we live in? How do we pay for the groceries, the bills, the rent, mortgage etc? Is it monetary amounts from our incomes or as a percentage of our incomes?

What appears to be advocated somewhat on this site, is ironically, a system of fairness in terms of our the tax contributions from each individual - very socialist indeed.
But when it comes to value of contribution to each in terms of labour it is very much each to his own.
 
TheBigShort said:
What appears to be advocated somewhat on this site, is ironically, a system of fairness in terms of our the tax contributions from each individual - very socialist indeed.
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I'm in favour of a flat rate of tax. Everyone pays the same tax rate. Is that socialist? Am I a socialist? Dear God, does Mom know?

What we have currently is a system where some 700,000 do not pay income tax at all. When you start to earn more your lashings get progressively more severe. The phrase ("Lashings will continue until morale improves" comes to mind). I think that's a lot closer to socialism if you ask me. In fact, we are probably close to becoming a poster boy of socialism in the developed world!
 
Firefly said:
I'm in favour of a flat rate of tax. Everyone pays the same tax rate. Is that socialist? Am I a socialist?
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Sounds good to me. If we were to abolish the current PAYE, PRSI, USC system and simply apply a rate of 33.33% on all income would that sound fair?

Firefly said:
What we have currently is a system where some 700,000 do not pay income tax at all.
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Or alternatively we have a system that, due to the application of personal tax credits to income, gives the distorted impression that the low earners are not contributing their fair share.
The reality is we have 2m+ income earners who pay relatively little tax on the first €18,000 or so of their income.
 
Purple said:
I don't understand this point. Can you elaborate please?
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It is to emphasis the imbalance of control on profits on earnings. Profits tend to be controlled by a small unit of workers (senior management) who will work to maximize those profits to the benefit of owners/shareholders in return for an excessive return on their own labour and to the detriment of the real value attributable to other workers (not in control of the wealth) labour.
 
TheBigShort said:
It is to emphasis the imbalance of control on profits on earnings. Profits tend to be controlled by a small unit of workers (senior management) who will work to maximize those profits to the benefit of owners/shareholders in return for an excessive return on their own labour and to the detriment of the real value attributable to other workers (not in control of the wealth) labour.
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I think Carl Marx covered most of that. He got it wrong but don't let that stop you heading down the same path.
 
TheBigShort said:
Or alternatively we have a system that, due to the application of personal tax credits to income, gives the distorted impression that the low earners are not contributing their fair share.
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The application of personal tax credits is the REASON low earners are not contributing their fair share.
TheBigShort said:
The reality is we have 2m+ income earners who pay relatively little tax on the first €18,000 or so of their income.
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Yes. And that's the problem right there. To rebalance our taxation system so that we do not have the most skewedly progressive system in the world, we need to change this. Lower tax credits and lower tax rates would broaden our tax base and move us more into line with international norms.
 
TheBigShort said:
How do you figure he got it wrong? Such ideas have never been applied.
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The Soviet Union and the Eastern Block countries, China up to 20 years ago, Vietnam up to 20 years ago, Parts of Central America etc. They all tried it. It doesn't work.
 
TheBigShort said:
Sounds good to me. If we were to abolish the current PAYE, PRSI, USC system and simply apply a rate of 33.33% on all income would that sound fair?
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I couldn't comment on the 33.33% bit - an exercise would need to be undertaken by the Dept of Finance to ensure they get the same revenue after the change, but yes, I would be in favour of a flat rate and (a basic income) to replace the minefield we currently have.
 
Purple said:
The Soviet Union and the Eastern Block countries, China up to 20 years ago, Vietnam up to 20 years ago, Parts of Central America etc. They all tried it. It doesn't work.
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I'm reminded of when the Berlin wall came down and with tears in their eyes, people flocked in one direction...West.

North Korea anyone?
 
orka said:
The application of personal tax credits is the REASON low earners are not contributing their fair share.
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orka said:
Lower tax credits and lower tax rates would broaden our tax base and move us more into line with international norms.
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I have no problem with this, its only taken about three weeks for this proposal to be made, so well done! Id actually be in favour of abolishing the personal tax credits altogether, just not for the purposes of providing tax cuts to wealthier people.

Firefly said:
but yes, I would be in favour of a flat rate and (a basic income) to replace the minefield we currently have.
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I suggested a 33.3% tax rate for all. Going by revenue figures this would bring in some €13bn extra in revenue. It would of course send thousands of low income earners further into poverty as now out of €10,000 income they would have less than €7,000 to survive on, disincentivising thousands from bothering to enter the workforce. So I suppose the extra €13bn could be used as additional welfare supports for these people?
If you want to apply a fixed rate and take in the current equivalent you would be talking about a 21% tax rate on all income (€104bn). That way an income earner on €20,000 will pay €4,200 in taxes while someone on €100,000 will pay €21,000.
Which is all well and good until you factor in the cost of living - rent or mortgage, groceries, energy bills, childcare, petrol, motor tax, insurance, house insurance, life assurance, property tax, bin charges etc....not much change (if at all) out of €16,000
My childcare costs €11,000 alone. So it would appear to me that such a system will go from assisting low income earners to get by, to absolutely crushing them. And in turn the whole economy.
 
Purple said:
The Soviet Union and the Eastern Block countries, China up to 20 years ago, Vietnam up to 20 years ago, Parts of Central America etc. They all tried it. It doesn't work.
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They all took measures to do it, but none actually succeeded in doing so. In the end all they had was State controlled command economies. Instead of private ownership, it was State ownership.
Marx envisaged ownership in the hands of society using the State as the vehicle to achieve it, not State ownership as the end result.
 
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