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

[faketales]

If, instead of stamp duties, we'd had an annual property tax, like a grown-up country, the fall would have been nothing like 60% (though it would still have been more than 7.4%).

Where does the 7.4% come from.

In most places property tax rate is set of what budget is required from it.

If a city needs €1bn from property tax, has 1m residents with an average home value of €100,000 then you set property tax a 1%.

If there is a cash, the average property value drops to €50,000 but you still need €1bn you set the rate to 2%.

You basically start with what you need and figure out how to get it as opposed to setting tax rates and seeing what happens.

Earnings can change quickly but you house value will be based on a known previous date.

 

[TomEdison]

Where does the 7.4% come from.

It was the fall in income tax receipts in the year after the 2008 crash.

If a city needs €1bn from property tax, has 1m residents with an average home value of €100,000 then you set property tax a 1%.

If there is a cash, the average property value drops to €50,000 but you still need €1bn you set the rate to 2%.

You basically start with what you need and figure out how to get it as opposed to setting tax rates and seeing what happens.

That's politicallly difficult; you're putting up taxes (doubling them!) at a time when people are already in economic shock. So the politicians will look at alternatives like, e.g., borrowing more, cutting back on spending and services, putting put different taxes. etc. But, yeah, you're basically right; the authorities will generally respond with some combination of more borrowing, less spending and a mix of increases, including some increaase in property tax.

(One other factor: putting up property taxes makes the crisis worse. The more burdensome the ownership of property is, the more property values decline.)

 

[Purple]

For 50 somethings, it depends when houses were purchased. A lot of people bought houses in 2004-2008 that are only now (in Dublin) just about worth more than we paid - and we paid 9% stamp duty. Everyone looks at property price increases from 2012, the low of the market. Some of us have not had huge net worth benefit from property price increases (although did benefit from low interest rates).

If you bought then and there was no QE and bail out then you’d still be in negative equity.