I have heard it argued that income tax should be abolished and replaced with very high expenditure taxes which are much more difficult to avoid.Remember that they'll pay VAT on what they spend and other taxes.
An interesting idea. I feel the boat really rocking.
I have heard it argued that income tax should be abolished and replaced with very high expenditure taxes which are much more difficult to avoid.
However, wealthy people spend far more of their income on imported goods, so I don't think that this would work in an open economy like Ireland.
Income tax is progressive. Expenditure taxes are not.
I think that the current balance is about right.
Definition of Progressive from Dictionary.com:
favoring or advocating progress, change, improvement, or reform, as opposed to wishing to maintain things as they are
.
Definition of 'Progressive Tax'
A tax that takes a larger percentage from the income of high-income earners than it does from low-income individuals.
If there was a cap I don't think those on very high incomes would pay much less, they would just not pay their accountants and solicitors as much to avoid paying their income tax.
The solution to that is to simplify the tax system.
Definition of "Progressive Tax" from Investopedia
And what would be simpler than a flat rate tax?
Not sure about a cap, but a low flat rate would beis good start. Read a good comment a while back from the US, where similar to Ireland 50% of people don't pay income tax. It went something like "50% of people pay no income tax, let's work towards making that 100%."
http://abcnews.go.com/Politics/OTUS/mitt-romneys-47-percent-pay-income-taxes/story?id=17263629Only 18 percent of tax filers did not have to pay either income tax or payroll taxes.
The Economist Intelligence Unit has already issued a strong cautionary message for Ireland on this very issue. Its 2012 report, Investing in Ireland – A Survey of Foreign Direct Investors, praises our pool of domestic and foreign workers, but says income taxes could be discouraging senior talent. Investors are concerned about what they see as imbalances in our personal tax system; a large gap between the average all-in tax rate paid by the typical worker, which is among the lowest in the OECD, and the marginal tax rate for top earners, which is among the highest. They believe that these high marginal rates will make it less attractive for senior executives to settle here.
The Department of Finance, in its own published review of the USC in November 2011, said that the abolition of the PRSI ceiling, together with the introduction of the USC, brought about a more progressive and equitable combination of charges. The tax reforms of recent years mean that Ireland now has the most progressive tax system in the European Union.
USC is at such a low threshold that I dont think your quote that 50% of people in ireland dont pay taxed
As long as we have such an unbalanced system where a small proportion of earners pay the lions share of income taxes our average will be below the OECD average.New OECD data on income tax paid across countries:
http://www.oecd.org/tax/oecd-tax-burdens-on-wages-rising-without-tax-rate-increases.htm
http://www.oecd.org/tax/taxing-wages-20725124.htm
The "tax wedge" on an average single worker ranges from 10-55% across the OECD.
The average is 36% of labour cost.
Irl, as expected, is below average, at just over 30%.
I agree but employers PRSI used to cover the cost of redundancy but now the employer gets nothing for it so it's no longer social insurance, just an employment tax. It could also be viewed as income tax which is deducted before employees are paid as it is a slice from the available funds that are used to pay employees.Also note from the OECD data that it's employers PRSI that is particularly low in Ireland.
OK, so it's around 10% up to €72'600 and another 10% up to 49'500. Their total liability will never exceed €12'500.Yes, it many countries they are income ceiling for social insurance.
Here is the German rates:
18.7% pension, split 50/50 between ee and er, up to 72,600
14.6% health ins, split 50/50 up to 49,500
3% UI, split 50/50
2.35% long-term care insurance up to 49,500
So we are now at 38.65% of wages, split 50/50
The employer pays an extra 1.25% accident insurance.
So employers pay 20.5% soc ins, much more than here.
Thanks for the link. Do you know what the employer in Germany gets for their contribution?Have a look here:
http://www.kpmg.com/global/en/issue...s-flash-alerts-2014/flash-alert-2015-022.aspx
10.85% on pension / UI up to 72,600 = max 7877
Also 8.475% up to 49,500 = 4195 max
So 12,072 for a worker earning 72,600 paid by the employer.
That's 16.6% er soc ins.
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