Are income tax rates really too high in Ireland

[Purple]

Who do you see as middle income people?

The Gross median household income in Ireland in 2024 was around €62,000 but that's probably low for the purposes of this conversation.

I'm working on the basis of two people earning the average wage with 2 school aged children. That's a gross household income of around €100,000-€110,000. They pay around €20,000-€25,000 in payroll taxes. They have around €18,000 spent educating their child, plus €3,360 in child benefit, plus free GP access for their children, plus an accumulating State pension. Without paying for any roads, police, Public Sector, water infrastructure or any of hundreds of other things that is funded by the State they are already getting more back than they put in.

 

[galway]

I'm working on the basis of two people earning the average wage with 2 school aged children. That's a gross household income of around €100,000-€110,000. They pay around €20,000-€25,000 in payroll taxes. They have around €18,000 spent educating their child, plus €3,360 in child benefit, plus free GP access for their children, plus an accumulating State pension. Without paying for any roads, police, Public Sector, water infrastructure or any of hundreds of other things that is funded by the State they are already getting more back than they put in

Seeing you cannot come up with a better argument than above you lost trying to back up your side of the argument,

state support for children more than likely has not come out of income tax since before they were born and possibly their mothers and fathers before them,
just because you fall into a certain income range has no bearing on the amount of other taxes generated from the wealth created in other areas that get taxed their is every chance that the work of someone on 40,000 could be responsible for generate more tax for the state than someone on 140,000, not to go down a rabbit hole someone sitting at a checkout with a family of 4 with 2 school kids to look after will bring in more Vat to the state than someone who has no children who works in an area that brings in very little tax,

So the next time you go into a Business have a good look around to see can you spot who's work is really paying for your children's education the one thing I am fairly sure of it is not your Income tax and it is not related to any pay scale,

Not to mention the paid income tax before they had children in education paid income tax while they have children in education and will still be paying income tax after the children leave education,


so according to you everything health care water infrastructure police public sector and the hundreds of other services are funded by the state out of Income tax,

 

[Sister Sara]

Apple pays over a million dollars per employee in corporation tax here. Microsoft pays around $800,000 per employee

This is interesting, and interesting discussion with many perspectives.

And I do think a lot of this is about perspective.

My perspective, if Apple and MS are paying that much CT per employee, then how much profit per employee are they making? I'd imagine it runs into the several millions per employee?

Then calculate, how much wages per employee do Apple and MS et al pay?

So is it reasonable to suggest employees are broadly net recipients?

I understand that the profits are legally the profit of the corporation, but those profits don't simply fall out of the sky.

I think the value of CT generated here, via real and productive activity of providing goods and services and excluding name plate companies, should be in no small part considered in evaluating the actual and real contribution of those who go to work and actively produce and serve, generating the profits for businesses.

So in terms of the wider discussion on 'widening the tax base', and references to USC, Water Charges etc, why is the holy grail of CT rate rarely discussed?

The tax base for most people is Income Tax, PRSI, USC, VAT, Motor Tax, TV Licence, Standing charges on Electricity, carbon taxes on fossil fuels, LPT etc.
It is true that they are balanced with Income credits, employee credits, dodgy boxes , fuel allowances, etc .

But outside of water, and oxygen, what is there left to tax?

 

[Protocol]

why is the holy grail of CT rate rarely discussed?

Due to the OECD's BEPS project, there was a lot of discussion.

As a result of BEPS, the rate was increased from 12.5% to 15% for qualifying large firms.

 

[Protocol]

TV Licence, Standing charges on Electricity

These two aren't taxes.

But outside of water, and oxygen, what is there left to tax?

If you are asking for possible tax refoms, then the general suggestion is to move taxes away from labour, and towards property / wealth / carbon.

 

[_OkGo_]

No, they are not gaming the system but they are receiving more for their taxes than a family with fewer children.
A single person earning €100,000 a year with no children and no health issues is a massive net contributor to the exchequer. A person with four children earning €100,000 a year probably isn't a net contributor to the exchequer.

Now I understand, you don't actually have a point.

Following your logic, we should all be single childless adults and everything would be rosy. Who needs future generations...

I am responsible for my children. It is up to me to ensure that they have shelter and food and it is up to me to make sure they receive an education. The State provides the education via a publicly funded system. That is something I get for my taxes. The more children I have the more the State spends educating my family.

No you don't, your kids get it, one education each like everyone else. How do you not see the distinction. More or less children makes absolutely no difference. It is completely pointless trying to include it at an individual level of net contributor/beneficiary.

 

[galway]

If you are asking for possible tax refoms, then the general suggestion is to move taxes away from labour, and towards property / wealth / carbon

I cannot see any Government lowering income tax on labour for one very simple reason the Government has a very big public service wage bill with income tax they are able to claim back more from there own higher income employees if the lowered income tax above the marginal rate it would be like giving their employees a extra wage increase they did not ask for,

you also have to take into account lets say the put extra tax carbon quite a lot of new tax would be needed to make up the shortfall in income tax no longer coming back to them trough their own payroll,

also carbon tax is a straight increase in cost of living and is seen as a stealth tax affecting lower incomes the most,

I get a feeling most posters on hear see Income tax too high on higher incomes so the Government would be seen to be lowering tax on high incomes and applying a stealth tax to make up for the loss of income tax,

 

[ArthurMcB]

When you flush the toilet does your poo go away?

Sometimes

Do the streetlights come on when it's dark?

No, one of thems broke

Are there roads outside your house?

Yes, but with potholes

Are there emergency services you can call?
If you have children are there schools that they can go to?

Yes and yes

Are there hospitals you can go to if you are sick?

There is, but its got a poor reputation, wait lists etc.

 

[Protocol]

I cannot see any Government lowering income tax on labour

To be specific, I suggest reducing marginal income tax rates on average incomes, but not reducing the overall income tax yield.

I would compensate by:

(1) abolish the Age tax credit
(2) abolish the income tax exemption for people aged 66+
(3) restrict the usage of the PAYE tax credit only to people who work


(4) re-introduce the PRSI ceiling
(5) re-introduce the PRSI-free allowance, say €100pw
(6) increase the min earnings for PRSI credits from €38 to €100 pw
(7) abolish the PRSI exemption of €352 pw

 

[Purple]

Now I understand, you don't actually have a point.

My point is simply that people who claim to get nothing back for the taxes they pay are incorrect and in many cases they actually get more back than they contribute. It's just maths, it's not hard to understand.

Following your logic, we should all be single childless adults and everything would be rosy. Who needs future generations...

I have no idea where you get that notion from. We absolutely need future generations. We are a society before we are an economy but the latter has to work in order for the former to function. It is right and proper that we subsidise the raising of children and that is what we do.

No you don't, your kids get it, one education each like everyone else.

What's that got to do with the amount of tax money spent on those children?

How do you not see the distinction.

The distinction between what? Are you suggesting that I do not bear primary responsibility for my own children and so the money that the State spends on educating them is not a return on the taxes I pay?

More or less children makes absolutely no difference.

No difference to what?

It is completely pointless trying to include it at an individual level of net contributor/beneficiary.

Include what?

 

[Purple]

This is interesting, and interesting discussion with many perspectives.

And I do think a lot of this is about perspective.

My perspective, if Apple and MS are paying that much CT per employee, then how much profit per employee are they making? I'd imagine it runs into the several millions per employee?

Then calculate, how much wages per employee do Apple and MS et al pay?

The thing that you are missing from that equation is the amount of capital invested per employee.

 

[Purple]

Seeing you cannot come up with a better argument than above you lost trying to back up your side of the argument,

I don't understand you point.

state support for children more than likely has not come out of income tax since before they were born and possibly their mothers and fathers before them,

No, current expenditure is funded from current taxation.

just because you fall into a certain income range has no bearing on the amount of other taxes generated from the wealth created in other areas that get taxed their is every chance that the work of someone on 40,000 could be responsible for generate more tax for the state than someone on 140,000,

No, the income tax we pay is the income tax we pay. That contribution we may or may make to wealth creation by our employer or other people is irrelevant. Should every teacher that Michael O'Leary's ever had claim a portion of the wealth he has created? Should the guys who tarmac'd every runway that any Ryan Air plane ever landed on do the same? It is impossible to define such things so for the purposes of this discussion we have to limit ourselves to the taxes we pay and what we get back in return.

not to go down a rabbit hole someone sitting at a checkout with a family of 4 with 2 school kids to look after will bring in more Vat to the state than someone who has no children who works in an area that brings in very little tax,

Yes, I included VAT in my point above.

So the next time you go into a Business have a good look around to see can you spot who's work is really paying for your children's education the one thing I am fairly sure of it is not your Income tax and it is not related to any pay scale,

See above.

Not to mention the paid income tax before they had children in education paid income tax while they have children in education and will still be paying income tax after the children leave education,

Current taxation is used to fund current expenditure. When you are old you will probably consume vastly more health services etc.

so according to you everything health care water infrastructure police public sector and the hundreds of other services are funded by the state out of Income tax,

No, my point is exactly the opposite of that. Keep up.

 

[faketales]

I would compensate by:

A lot of sensible proposals.

Things will have to come to a head regarding how we support retirees but the numbers will be growing (more votes) as the cost continues to increase.

I didn’t realise they got the PAYE one.

A PRSI ceiling makes a lot of sense. Turn it back into an insurance as opposed to a tax.

 

[Premos]

abolish the income tax exemption for people aged 66+

Basically a tax cut for people earning 50k+ paid by people on very low income. The exemption is 18k for a single person. It's very low as it has never been indexed for nearly 20 years. If you abolish the paye tax credit, it means they would pay 1600 tax or live on a yearly income of less than 16.4k or 1.366 a month so that people earning 1k a week can pay less tax

 

[Premos]

Sorry duplicate

 

[Protocol]

Basically a tax cut for people earning 50k+ paid by people on very low income. The exemption is 18k for a single person. It's very low as it has never been indexed for nearly 20 years. If you abolish the paye tax credit, it means they would pay 1600 tax or live on a yearly income of less than 16.4k or 1.366 a month so that people earning 1k a week can pay less tax

My plan is aiming at getting people aged 66+ paying a bit more income tax, as they are pampered at the moment.

I see this every year as I do my parents income tax return. They pay 9% income tax on about €52k and in return they get:

full med cards
free travel
free TV licence
€35 pm / €420 pa off their elec bill

No other country in the world is as generous!!!


I am searching for ways to increase their income tax bill, without increasing the bill for workers under 66.

Restricting the PAYE tax credit to workers only, or turning it into a "travel to work costs" tax credit is one suggestion. I suggest increasing the regular tax credit at the same time, so as somebody with a the State Pension only remains untaxed.

 

[Premos]

travel to work costs" tax credit

That's going to be well received for people who work from home.

I didn't say that a couple on 52k retired should not pay as much tax as a couple working on 52k. However, the suppression of the exemption would also affect much lower paid retiree.
I also think that people should be encouraged to provide as much as they can for their older years and the more one tax their income, the more it creates a disincentive to save for the future.
Their income comes partly from decisions they made to provide for themselves.
They are comfortable as they probably own their own house, once again taking the decision to invest in the future. A couple of retired people renting might not feel so pampered.
Fuel allowance, free travel, tv licence should be mean tested.

 

[Protocol]

Fuel allowance, free travel, tv licence should be mean tested.

The HBP is means-tested from age 66-69, but from age 70 on it is universal.

As I feel it is politically impossible to cut benefits to the age 65+ group, due to their voting power, I am suggesting less obvious/overt income tax changes to get them to contribute more.

Abolishing or means-testing the FTP or HBP is surely more difficult than abolishing the Age tax credit?

 

[Premos]

Abolishing or means-testing the FTP or HBP is surely more difficult than abolishing the Age tax credit?

I don't know which would be easier.
What I think will happen is as already with the exemption, an erosion of the old age pension and the freebies compared to inflation and more strict criteria to reach the full pension or even the non-contributory pension or the dependant pension.
However, I don't personally think that income tax is high in Ireland for medium worker. Yes there is a high marginal rate but that's not the full picture.
I would be more for looking at other tax as LPT increase, water charges (I know, very unpopular but it's still a utility).

 

[joe sod]

That's going to be well received for people who work from home.

Being able to WFH is already a substantial benefit, its the people that are required to travel to work everyday that should be getting the tax credits as they bare the increased costs of fuel, and travel . That would then level the playing field a bit .