Indo - "Almost one in four Irish earners is paying no income tax, says Revenue"

[ClubMan]

Almost one in four Irish earners is paying no income tax, says Revenue

Almost four out of 10 Irish earners will pay no income tax this year, according to estimates from the Revenue Commissioners’ forecasting model.

m.independent.ie

 

[T McGibney]

Headline: Almost one in four Irish earners is paying no income tax.

First line: Almost four out of 10 Irish earners will pay no income tax this year.

Peak dopey.

 

[TomEdison]

The report is a bit confusing, for the reason pointed out by Tom. Also, there's much mention of "taxpayer units". Is that the same thing as taxpayers? If so, why not just say "taxpayers"? If not, then what does it mean?

The Commission's conclusion, that the tax base needs to be broadened, won't come as any suprise on AAM. An obvious combination of measures would be (a) cuts to income tax (which would obviously benefit the 63% of "taxpayer units" that do pay income tax, since it can't benefit those who don't) plus (b) an increase in property taxes (which would largely bear on homeowners and landlords). In a Venn diagram the circles of "taxpayer units actually paying income tax" and "property owners" would have a high degree of overlap, so the net effect on household disposable income might be modest.

 

[T McGibney]

I don't get the logic of hiking property taxes in a scenario where landlords are
- already paying more than their share of income tax, with no possible avoidance avenues.
- deserting the market in droves, partly because of the tax burden.

 

[Dr Strangelove]

Many of these people live in retired households whose sole or main income is the state pension.

 

[Dr Strangelove]

Headline: Almost one in four Irish earners is paying no income tax.

First line: Almost four out of 10 Irish earners will pay no income tax this year.

The CSO even runs courses for media outlets on how to report statistics.

But it’s hopeless.

I think journalism selects for the very small overlap in the Venn diagrams of people who are very good with words and very bad with numbers.

 

[TomEdison]

I think journalism selects for the very small overlap in the Venn diagrams of people who are very good with words and very bad with numbers.

Not defending it, but part of the explanation for errors like this is that the article and the headline are written by two different people. And the headline is written by someone who isn't a journalist, is often acting under enormous time pressure, and often hasn't read the article.

I don't get the logic of hiking property taxes in a scenario where landlords are
- already paying more than their share of income tax, with no possible avoidance avenues.
- deserting the market in droves, partly because of the tax burden.

I take your point. But you're going to have to finance income tax cuts somehow; what other tax would you expand? And the EC report itself makes the point that Ireland's property taxes are unusually low, so expanding them is an obvious thing to do if you want to make a more balanced tax system and avoid excessive concentration of the tax base.

(Plus, to the extent that landlords are deserting the market because of the tax burden, a reduction in income tax would tend to alleviate that problem.)

 

[Flybytheseat]

The report is a bit confusing, for the reason pointed out by Tom. Also, there's much mention of "taxpayer units". Is that the same thing as taxpayers? If so, why not just say "taxpayers"? If not, then what does it mean?

Presumably a couple who are jointly assessed are a taxpayer unit despite both being taxpayers.

 

[TomEdison]

Presumably a couple who are jointly assessed are a taxpayer unit despite both being taxpayers.

That possiblity occurred to me. But another possiblity that occurred to me is that a "taxpayer unit" is somebody with potentially taxable income who pays no tax because their credits or exemptions mean they have a nil liability.

But these are just guesses.

 

[ClubMan]

From Revenue via a Google search. Unfortunately I can't find a parent page containing this to link to.

Edit: oh, just did.

Income Tax distributions interactive tables

Income Tax distributions interactive tables

www.revenue.ie

 

[T McGibney]

I take your point. But you're going to have to finance income tax cuts somehow; what other tax would you expand?

There is no point in cutting one tax and imposing another, especially when the same people will by and large be shouldering both.

I'd instead cut public expenditure, mercilessly.

 

[TomEdison]

There is no point in cutting one tax and imposing another, especially when the same people will by and large be shouldering both.

Depends on what you're trying to do.

If your objective is to reduce the overall tax burden, then obviously balancing one tax reduction with another tax increase doesn't acheive.

But if your objective is to rebalance the tax system, to make it more resilient, less concentrated on a narrow tax base, then this could make perfect sense.

I'd instead cut public expenditure, mercilessly.

Politically very problematic, Elon. I think the alternative of increasing borrowing might be more palatable to an Irish electorate.

 

[T McGibney]

if your objective is to rebalance the tax system, to make it more resilient, less concentrated on a narrow tax base, then this could make perfect sense.

Not...

when the same people will by and large be shouldering both.

I think the alternative of increasing borrowing might be more palatable to an Irish electorate.

Shoving the cost of current largesse onto the shoulders of unborn generations is always electorally palatable. But long-term it's a recipe for messy outcomes.

 

[TomEdison]

Even if the same people are shouldering both, a more diverse tax system can still be more resilient.

• If people pay 100% of their tax as income tax and 0% as property tax, tax revenue will vary signficantly with changes in employment and in rates of pay increase, but won't vary at all with changes in property values or in levels of activity in the property markets.
• If they pay 0% as income tax but 100% as property taxes, then the other way around — tax revenue aren't affected at all by what happens in employment markets, but are hugely affected by what happens in property markets.
• But if its 50% each, then the revenue effects of what happens in each market are halved and overall, tax revenues will be more stable. The more diverse tax base delivers greater stability.

Shoving the cost of current largesse onto the shoulders of unborn generations is always electorally palatable. But long-term it's a recipe for messy outcomes.

That is no guarantee that politicians won't take the option, or that voters won't require them to.

 

[DannyBoyD]

landlords are
....
- deserting the market in droves

Paying tax wouldn't push me out of the market.

Being stuck with a non-rent paying overholding tenant & taking two years to get my property back, thats what scares me.

 

[T McGibney]

• If people pay 100% of their tax as income tax and 0% as property tax, tax revenue will vary signficantly with changes in employment and in rates of pay increase, but won't vary at all with changes in property values or in levels of activity in the property markets.
• If they pay 0% as income tax but 100% as property taxes, then the other way around — tax revenue aren't affected at all by what happens in employment markets, but are hugely affected by what happens in property markets.
• But if its 50% each, then the revenue effects of what happens in each market are halved and overall, tax revenues will be more stable. The more diverse tax base delivers greater stability.

The problem in Ireland is the historically and currently linear relationship between incomes and prosperity generally, and property values.

 

[TomEdison]

The problem in Ireland is the historically and currently linear relationship between incomes and prosperity generally, and property values.

Famously, that's not a stable relationship — residential property values, at least, have increased at a much faster rate than earnings (which a lot of people would say is the fundamental reason for the housing crisis we are now experiencing).

 

[T McGibney]

It's still linear, but it was more my point that when property values fall, incomes, prosperity and tax revenues take a bath.

 

[Protocol]

A married couple is one taxpayer unit.

 

[ClubMan]

A married couple is one taxpayer unit.

Revenue themselves seem confused about the term.

In the infographic that I posted/linked to above they say:

In the case of jointly assessed and separately assessed couples, these couple are classified as one taxpayer unit.

But elsewhere (see attached) they say:

Data are on a ‘tax unit’ basis. A taxpayer unit is either an individual with any personal status who is singly assessed or a couple in a marriage or civil partnership who have elected for joint assessment.

So, in one case they say a couple that are jointly or separately assessed, but in another only if they're jointly assessed...