It’s Time for a Personal Taxes Campaign

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Gordon Gekko

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Ireland is a ridiculously high-tax jurisdiction, unless you’re a corporate. Yet nobody really speaks about it because of the lurch to the left politically. It’s time for people to start raising it with politicians as a key issue.

- The disparity between self-employed (55%) and employed (52%) is crazy
- Being a minority partner with the government in terms of any bonus or additional income (i.e. 45%/48% vs 55%/52%) is crazy
- The €1,270 CGT exemption is crazy (£11,300 in the UK)
- Branding people on €70k plus “high earners” is crazy
- Taxing deceased foreigners on their worldwide assets once they’ve been here 5 years is crazy
- Chargeable Excess Tax on pensions >€2m is crazy in the current low interest rate environment
- 41% tax on many investments is crazy
- Restricting interest deductions on rental properties is crazy
- Pitching Entrepreneur Relief at €1m when it’s £10m 90 minutes up the road is crazy
- The pension levy was crazy
- The rates of CGT and CAT (33%) are crazy
- The CAT thresholds are crazy

More people should highlight these issues, otherwise nothing will ever happen
 
Brendan

I'm amazed that you are continuing to repeat this untruth every time the word "self-employed" is mentioned.

It is simply untrue that 14.75% of any employee's income is paid to State to fund their pension.

You can certainly argue that the balance between employer PRSI contributions, on the one hand, and employee/self-employed PRSI contributions, on the other, should be changed but that's a different argument.

In any event, that has absolutely nothing to do with the 5% USC surcharge imposed on the sef-employed, which is completely unjustifiable.
 
Sarenco said:
It is simply untrue that 14.75% of any employee's income is paid to State to fund their pension.
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It goes into the social insurance fund, most of which is spent on the contributory pension.

I would be happy to see complete equality between the self-employed and the PAYE sector. Both should have 14.75% PRSI contributed on their behalf. Then charge them the same USC and give them the same benefits.

The simplest of all would be to do as I have proposed and set up a personalised account for everyone and put the PRSI into that and pay out dole and pension and sick pay based on what is in the fund.

But it's really annoying to hear the self-employed claiming that they are getting a bad deal, when they are getting a great deal.



Brendan
 
I don’t think it’s valid to compare the two (and I’m not self-employed).

10.75% Employer PRSI should not arise in respect of self-employed people.
 
Hi Gordon

The cost of providing the benefits should be linked to the benefits provided.

There is no way that a PRSI rate of 4% on self-employed pays for a pension for life.

There is no reason to distinguish between the employed and the self-employed, either in terms of contributions or benefits.

Brendan
 
I’m not convinced Brendan. The people most affected by the 55% rate tend to be high-earning professionals whose 4% is enough to pay their pension and a few other people’s too. But I agree with your point that benefits and contributions should be linked. The Partner on €1m a year should get more than €12k a year for his massive PRSI contributions.
 
Gordon Gekko said:
The Partner on €1m a year should get more than €12k a year for his massive PRSI contributions.
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He pays €40k a year

An employee on "only" €275k contributes the same amount of PRSI and gets the same pension.

Social insurance should be roughly speaking you get out what you put in allowing for some insurance element.

We should deal with inequality through the taxation system.

Brendan
 
Brendan Burgess said:
He pays €40k a year

An employee on "only" €275k contributes the same amount of PRSI and gets the same pension.

Social insurance should be roughly speaking you get out what you put in allowing for some insurance element.

We should deal with inequality through the taxation system.

Brendan
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But the employee doesn’t contribute it...his/her employer does!

They’re not comparable.
 
They are directly comparable.

They are contributions to a fund which is supposed to fund the social welfare and pensions system.

It's like saying that an employer's contributions to an employee pension scheme are not comparable to a self-employed person's contributions.

If I am being paid €40k and my employer is contributing €4k to a pension fund, it's the equivalent of a salary of €44k. Which is the same as a self-employed person earning €44k who puts €4k in a pension scheme.

I acknowledge that the link between contributions in and benefits out has been lost. But it should be restored.

Your partner on €1m should get a higher pension than a taxi driver on €30k. But an employee on €30k should get more than a taxi driver on €30k.

Brendan
 
HI Gordon

To get back to your original point. I agree with it.

But to cut a specific tax e.g. the 33%CGT rate, we would need to either
  • raise some other tax
  • cut expenditure
  • borrow the money
While I would like to see taxes cut, I do not want to do so at the expense of increasing our borrowings even further.

Would you think that there is scope for increasing taxes elsewhere?

What about increasing property taxes, if that would result in a reduction in income taxes?

What about removing the CGT exemption on death? When I die, if I have unrealised capital gains, they should be taxed as if they were a disposal.

What about Business Relief from CAT?

In general, Ireland is a very low tax country for the lower paid and for married couples on average incomes. But if we increase the taxes on the lower paid, the incentive to work would be reduced as social welfare rates would be so high.

Brendan
 
There's scope for actually collecting 12.5% of corporate profits...not 1% or 2% or 0.0001% as happenes in 1 well publicised case.

There's also scope for taxing those on incomes sub 20k. Right now, they are paying little to nothing in income related taxes in real terms and in comparitiv terms to other EU countries.
 
Delboy said:
There's scope for actually collecting 12.5% of corporate profits...not 1% or 2% or 0.0001% as happenes in 1 well publicised case.
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Hi Delboy

David McWilliams made the same point in the Irish Times recently. Here is the letter I sent to the editor to correct it, but they did not publish it. Seamus Coffey writes very well on the topic here: http://economic-incentives.blogspot.ie/2017/10/effective-tax-rates-in-c-report.html

Brendan


Sir

It’s a pity that David McWilliams’ first article for your paper on Saturday 18th and his grand solution to solve all our problems were based on a fundamental misunderstanding of how the tax system works. He has trotted out this grand solution for years: If only the US multinationals would pay us tax at 12.5% instead of 3.38% on the profits they make here, then we would have an additional €9billion a year which would solve all our problems.

Ireland is already getting a disproportionately large tax take from US multinationals in Ireland – there is no scope for tripling it overnight through some stroke of David McWilliams’ pen.

In simple terms, companies pay tax in Ireland based on the profits they make from their activities in Ireland. Companies which are incorporated in Ireland but which make their profits in some other countries pay corporation taxes in those other countries. That is as it should be.

American companies in Ireland did not make €96 billion profits in Ireland in 2014 as McWilliams claimed. American companies incorporated in Ireland did make €96 billion profits, but only about €25 billion of that was made from their activities in Ireland and it was properly taxed in Ireland. It’s not popular to say so, but American companies pay an effective Corporation Tax rate of close to 12.5% on the profits they make from their activities in Ireland. It would be wrong to levy tax on companies incorporated in Ireland which carry out their business overseas, just as it would be wrong to levy Irish Income Tax on Irish citizens working in Saudi Arabia.

Much of the profits made by these American companies is made in countries such as Bermuda where they pay no Corporation Tax at all. Ireland could well have a role in working with the United States and the EU to make sure that every multinational pays its fair share of corporation taxes somewhere. But that somewhere is unlikely to be Ireland.

Yours sincerely





Brendan Burgess
 
If MNC's or any other company want to channel their profits through Ireland and the rules allow it, than so be it (though I feel that will change soon under pressure from our EU colleagues as a payback for their support on Brexit this past week).
But thats not the issue I was referring to but does seem to be the nub of your letter.

I am referring to the various loopholes,knowledge boxes , whatever your having yourself which allows them to pay a fraction of the 12.5% rate we brag about on their profits, be they Irish or foreign generated.
Thats my gripe.
 
Hi Delboy

Irish incorporated companies do not pay taxes on profits generated outside Ireland.

Irish citizens working in Saudi or the UK do not pay income tax on their foreign earnings.

Do you think that they should?

Brendan
 
Brendan Burgess said:
.....
Would you think that there is scope for increasing taxes elsewhere?

What about increasing property taxes, if that would result in a reduction in income taxes?

What about removing the CGT exemption on death? When I die, if I have unrealised capital gains, they should be taxed as if they were a disposal.

....
Click to expand...


Hello Mr. Burgess,

I would be happy to see some form of tax introduced on the sale of principal private residences, above a certain threshold.

Obviously, it would need to be a reasonably high threshold to be fair to people living in the cities and Dublin in particular, so perhaps on house sales above €800k - €900k ?

I am not in favour of increasing property taxes overall, as I think they already discriminate against those living in the cities (again, particularly Dublin), unless perhaps it was an increase on particularly valuable properties.

I also think it is long past time that the government increased the tax on diesel engines (and preferably reduce the cost of petrol engines), given it has become very cleat that diesel engines are doing our environment no favours.


Now for some slightly controversial suggestions ;) .....

I would like to see prostitution legalised, so that the revenue generated by the industry could be taxed. Obviously, legalising it would also result in some improvements in health and safety for all concerned.

I would further like to see anyone convicted of a crime heavily fined and then taxed at higher rates across the board, for an appropriate period (the fine and period for the higher taxes to apply, could be linked to the severity of the crime).

I would also like to see the tax incentive offered through employers to encourage people to purchase bikes discontinued. I think it has been responsible for dramatically increasing the average cost of a bike and at this stage, anyone who was going to avail of the scheme has long since done so.
 
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Brendan Burgess said:
Hi Delboy

Irish incorporated companies do not pay taxes on profits generated outside Ireland.

Irish citizens working in Saudi or the UK do not pay income tax on their foreign earnings.

Do you think that they should?

Brendan
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No, they should pay taxes at the local rate. Whether there is one or not.

But MNC's or Irish firms at home should pay Corporation tax on the profits made in/channeled through this jurisdiction at the going rate of 12.5%. A very generous rate. And not at 0.0001% or thereabouts.
And if they don't want to pay 12.5% tax on the profits made abroad, then they shouldn't channel them through here. Too much unwanted attention brought to bear on us.
 
Gordon Gekko said:
Ireland is a ridiculously high-tax jurisdiction, unless you’re a corporate. Yet nobody really speaks about it because of the lurch to the left politically.
Click to expand...

Note that the overall level of taxation in Ireland is not high. It is low-to-middling.

I will reply later with all the data, but note that there is no debate here: the overall level of taxation is not high.

Now, there are many problems with the tax system, and your list is a good list of them.
 
How to measure the overall level of taxation

2016 taxes and social conts = 64,887m

The tax to income ratio is complicated by the choice of denominator.

Tax to GDP will be low in Ireland, as our GDP is inflated by MNC activities.

2016 GDP = 275,567m

So tax to GDP is approx 24%, this is obviously very low compared to other countries.
Total_tax_revenue_by_Member_States_and_EFTA_countries%2C_2015_and_2016%2C_%25_of_GDP.png
 
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