The problem is the marginal tax rate. That is what acts as a disincentive to work. At over 50% who would people with the capacity to create wealth bother doing so since it would inevitably be done at the expense of other things?
The problem is the marginal tax rate. That is what acts as a disincentive to work. At over 50% who would people with the capacity to create wealth bother doing so since it would inevitably be done at the expense of other things?Someone on €200,000 is liable to USC, PRSI and Income tax of €87,706. An effective tax rate of 43.85%.
Someone on €40,000 suffers deductions of €6,428. An effective tax rate of 16.07%.
So the person earning 5 times as much income as the other, pays 13.6 times as much Income tax.
One could argue that being able to pass on wealth to your family tax free would be a really strong incentive to work and generate that wealth in the first place. I know when I am making financial decisions the next generation is at the forefront of anything I do. I am much less concerned about myself and more concerned about how I can generate and retain wealth and give my kids a leg up.
Totally agree. While I think they might resent that fact and have a good or even close relationship with nieces and nephews, very few would be in a situation where nieces and nephews would have been their absolute priority during their lifetime.Being a little blunt I think they might see them as a convenient way to pass on what they don’t need at the end of life as opposed to revenue getting their hand on it.
Wow, what an awful way to think. Would you not prefer it if your children were able and empowered to make their own way in the world without parental oversight and support? Do you want your children to live in a country where inherited wealth and not hard work is the main deciding factor in socioeconomic positioning?One could argue that being able to pass on wealth to your family tax free would be a really strong incentive to work and generate that wealth in the first place. I know when I am making financial decisions the next generation is at the forefront of anything I do. I am much less concerned about myself and more concerned about how I can generate and retain wealth and give my kids a leg up.
Wow, what an awful way to think. Would you not prefer it if your children were able and empowered to make their own way in the world without parental oversight and support? Do you want your children to live in a country where inherited wealth and not hard work is the main deciding factor in socioeconomic positioning?
Family wealth is already a deciding factor way before it's inherited.Do you want your children to live in a country where inherited wealth and not hard work is the main deciding factor in socioeconomic positioning?
I would also think so.One could argue that being able to pass on wealth to your family tax free would be a really strong incentive to work and generate that wealth in the first place
That's how it should be but increasingly the bottom third live off the State, the top Third inherit wealth and the middle third are screwed. We will see decreasing levels of social mobility and the corresponding fracturing of society and the problems associated with that.How you bring up your children, the values you teach them and hopefully the work ethic they see from you and decide to copy, will decide how they fair in life, not if you have a few spare quid to give them.
I agree. Do you think it is socially desirable that we further incentivise and promote that?Family wealth is already a deciding factor way before it's inherited.
Living in a western capitalised society, that is the way it is always going to be. It is obviously what the majority of people in the country want, as they elect people who keep the status quo. Tweaking limits/allowance is really just shuffling desk chairs on the Titanic.That's how it should be but increasingly the bottom third live off the State, the top Third inherit wealth and the middle third are screwed. We will see decreasing levels of social mobility and the corresponding fracturing of society and the problems associated with that.
I know when I am making financial decisions the next generation is at the forefront of anything I do. I am much less concerned about myself and more concerned about how I can generate and retain wealth and give my kids a leg up.
How you bring up your children, the values you teach them and hopefully the work ethic they see from you and decide to copy, will decide how they fair in life, not if you have a few spare quid to give them.
I personally think that the current system is very generous. Most of people are not even concerned with the current higher limit as they will not reach it.Do you think it is socially desirable that we further incentivise and promote that?
That's a bit below the belt tbh and it feels like you are trying to take the moral high ground and look down your nose at me for wanting my kids to be advantaged in life. Of course my children are more important to me than society at large. You can't suppress millions of years of evolution.Wow, what an awful way to think
I'm not getting into a sociological argument but the fact that we don't actually think that way as a species is the reason that a weak hairless ape has come to dominate the world.That's a bit below the belt tbh and it feels like you are trying to take the moral high ground and look down your nose at me for wanting my kids to be advantaged in life. Of course my children are more important to me than society at large. You can't suppress millions of years of evolution.
Those countries generally have more and higher forms of wealth tax.Let's not forget that Ireland is already at the "very high tax on inheritances" level compared to even countries with more of a "socialist" outlook.
I agree.I personally think that the current system is very generous. Most of people are not even concerned with the current higher limit as they will not reach it.
Perhaps the fact that parents working to create wealth for their offspring is not good for society but it's still a motivating factor to create wealth and work. If wealth was not transmitted at all, I think it would be a disincentive to even take care of oneself. Why provide for your old age if the state take care of the bill if you don't have the means and your children don't inherit anything?
Yes.What is the purpose of high inheritance taxes? To "punish" the children of the better off? To force their kids to "learn the hard way"? To incentivise work/wealth generation?
No.To just take money from the better off and give it to the less well off?
That happens to a far greater extent with income taxes. Half of everything you earn over around €50k is taken from you. If you have an issue with money flowing to welfare recipients then look at that first... but do temper your outrage with the realisation that the vast majority of welfare going to people who work.Some of these things appear paradoxical. How can transfering wealth from those who have (potentially) worked hard for it to those who have (potentially) been on benefits all their lives incentivise wealth creation? Why should the kids of better off parents be told they have to pull themselves up by their bootstraps while lifelong welfare recipients pass that ethos on to their kids and those kids come with the hand out as soon as they turn 18? This does happen.
Good idea. I'm all for reductions in income tax and far less double taxation.If the state feels it is entitled to share in the windfall when property prices increase in value, why does it not share in the loss when they decline and a sale is forced? Why aren't people in negative equity who are forced to sell given some compensation by the state (by allowing the loss to be offset the loss against income tax), the same state that would tax a gain in the value of the very same property? Another paradox.
Okay, only around 3% of people ever pay any inheritance tax and most of them pay a very small amount. If someone receives €500,000 in wealth do you think that they should pay any tax? At the moment if they earn the money they pay half it in tax. If they don't earn it but get it from their parents (who didn't earn it either as it's due to house price appreciation) they pay 6% of it in tax. Is that fair?The thresholds are so low that it is entirely possible that middle class kids will be hit by CAT. A single dwelling in Dublin could certainly be over the 400k cat A threshold.
They can. If it's the Primary Place of Dwelling for 3 years before they inherit then they are exempt.Children should be allowed to move back in to the family home at least to take advantage of the family home exemption, like in Germany.
Only if you have no desire to actually make your own way in the world. A marginal income tax rate of over 50% is more of a disincentive to working hard than a possible future tax bill of 30% of free money.It's a disincentive to moving out of the family home and moving on up in the world if you know that in doing so, the family home becomes fair game for Revenue.
Really? Germany, which is the country I am at least as familiar with compared to Ireland has no wealth tax. It also charges no CGT on property as long as it is held for at least 10 years. Taxes on investments are all way lower than Ireland too. nominal 18.5% on gains made on shares but with a tax free allowance of 1k per year, 2k for couples. I'm not really familiar with other countries' wealth tax regimes.Those countries generally have more and higher forms of wealth tax.
No - it’s stop punishing the children of the worse off who are in no way responsible for the deck of cards being stacked against them and to stop rewarding the children of the better off who are in no way responsible for the deck of cards being stacked for them.What is the purpose of high inheritance taxes? To "punish" the children of the better off?
Yes it does; property taxes, which are the only form of wealth tax that works, are much higher in Germany.Germany, which is the country I am at least as familiar with compared to Ireland has no wealth tax.