Do high marginal income tax rates discourage full time skilled labour participation in the workforce?

Purple

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We have the highest gap in the OECD between our average and marginal income tax wedge.
Anecdotally I know a high number of skilled people who choose to work part time rather than fulltime.
With a marginal tax rate of over 50% and high childcare costs the net return for a parent working a full day rather than a half day is very small.
Does that contribute to the shortages we see in Medicine, Nursing, Speech Therapists etc?

A GP working morning only will earn €80-€100k a year. If they work a full day they'll earn an extra €80-€100k a year but will net €40-€50k a year. If they have 2 children their childcare costs will be around €20k a year. Why would they bother working full time?
 
We have the highest gap in the OECD between our average and marginal income tax wedge.
Anecdotally I know a high number of skilled people who choose to work part time rather than fulltime.
With a marginal tax rate of over 50% and high childcare costs the net return for a parent working a full day rather than a half day is very small.
Does that contribute to the shortages we see in Medicine, Nursing, Speech Therapists etc?

A GP working morning only will earn €80-€100k a year. If they work a full day they'll earn an extra €80-€100k a year but will net €40-€50k a year. If they have 2 children their childcare costs will be around €20k a year. Why would they bother working full time?
Ireland has had very high PAYE tax rates for modest salaries since the 1970's. So this is old news.
 
Ireland has had very high PAYE tax rates for modest salaries since the 1970's. So this is old news.
I’m the 70’s only one parent worked. The economy was much smaller and the government was smaller again. It’s a totally different scenario now.
 
Yes.
I work in an industry where due to increased requirement for resource and limited supply of skill, the hourly rate for the job has almost doubled in the last year. You may expect the current workforce to be asking for overtime and 'making hay whilst the sun shines' but actually people are doing the opposite and are thinking - "great, i can now in the same money if I drop down to 3 days a week and have a better life" and that's exactly what they are doing - making the supply problem worse and continuing the loop.
The marginal tax rate is one factor, but also it indicates that once people reach a wage above a certain amount, (hard to say the figure as it depends on location, life stage etc) they they can have the life they want without earning more money - something we should recognise as a positive about Ireland. More time with family and friends, more sleep, more time to do your hobbies, more time to enjoy the outdoors - is being recognised as more valuable than the difference between a good reliable car and a posh one, or a decent size house vs a huge one that has 5 bathrooms to clean.
 
But is this just a temporary phenomenon "the great resignmemt theme" i mean that people can afford to work less. Already the big tech companies are starting to cut back on recruitment and costs due to the sell off in their shares and the increased expense of everything with high inflation rates and rising interest rates. Things could be radically different in a years time especially as the cost of everything rises and the value of stock options, and pensions falls
Remember how things changed fast after the dot com bust in 2001, falling tech share prices rising energy prices, interest rates and inflation rates
 
The mooted 30% middle rate seems to have been put on ice

I thought it was a great idea. It's just disheartening that anything you earn over a relatively low amount is taxed at almost 50%.

With inflation playing a big part this year, it would be a time to introduce such a rate for a band of about 6k gradually increasing over 5 years so that you need to earn 55k+ for high rate.
 
The mooted 30% middle rate seems to have been put on ice

I thought it was a great idea. It's just disheartening that anything you earn over a relatively low amount is taxed at almost 50%.

With inflation playing a big part this year, it would be a time to introduce such a rate for a band of about 6k gradually increasing over 5 years so that you need to earn 55k+ for high rate.
We'd be back in the late 80s again with 3 bands , but I agree and my preference would be 15% first 20k, 30% to 70k and 45% above, I ran these figures years ago 14,13? and it didn't really change the overall take, but USC wasn't in the equation, and Prsi maximum at about €70k was also in those figures.

Additionally, I included all income including social welfare in the first tier but obviously that would need tweaking
 
We have the highest gap in the OECD between our average and marginal income tax wedge.
Anecdotally I know a high number of skilled people who choose to work part time rather than fulltime.
With a marginal tax rate of over 50% and high childcare costs the net return for a parent working a full day rather than a half day is very small.
Does that contribute to the shortages we see in Medicine, Nursing, Speech Therapists etc?

A GP working morning only will earn €80-€100k a year. If they work a full day they'll earn an extra €80-€100k a year but will net €40-€50k a year. If they have 2 children their childcare costs will be around €20k a year. Why would they bother working full time?
A gp has to run their office out of that money too - definitely a disincentive my business students are shocked that their teachers only get 0.40c out of every €1 once the pension leavy is added in at the higher tax rate - SEC can’t get staff to superintend or correct exams because of it also and contributes to being unable afford Life in Dublin too - conditions may also be a factor but definitely part of the reason there is a huge shortage in Dublin and many gone to Dubai etc
 
my business students are shocked that their teachers only get 0.40c out of every €1 once the pension leavy is added in at the higher tax rate
Imagine their shock when they realise you're on €275,000 a year, the income level at which you actually start to lose 0.50c out of every €1 (before pension levy) o_O
 
With inflation playing a big part this year, it would be a time to introduce such a rate for a band of about 6k gradually increasing over 5 years so that you need to earn 55k+ for high rate.
Would tax reductions not have the effect of accelerating inflation even further? Or is the proposal to increase the higher rate, so tax take is either neutral or higher but low-mid income households are sheltered somewhat?
 
Imagine their shock when they realise you're on €275,000 a year, the income level at which you actually start to lose 0.50c out of every €1 (before pension levy) o_O
Find me the teacher who is paid €275,000 we’re far from Robert watt - you wouldnt have a recruitment crisis then
 
Find me the teacher who is paid €275,000 we’re far from Robert watt - you wouldnt have a recruitment crisis then
It was tongue in cheek sorry. I was just making the point that people often say ‘I lose half my salary to the government’ when they don’t, a single person needs to be on €275k+ before they’re actually paying an effective tax rate of 50%. On €38k a year you’re paying 18c out of every €1 in tax.
 
We are a small open economy who need inward investment. This inward investment can be the location of labour and the associated income tax revenue.

We enter a high income tax level at a relatively low wage amount. Wage earners have the choices how they spend their wages reduced because the money is taken via tax before they get it.

We need to make work pay and I don't mean give people wage increase as this increases costs to a company and makes us uncompetitive (first para above).

By reducing taxes and by extension welfare payments more people will work and the revenue needed by the State to operate is spread over a wider base.
 
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