The top 6% pay 49% of all income tax and USC

TheBigShort said:
I stand to be corrected, what does the headline stat mean to you?
Click to expand...

It means that almost half of all income tax and USC receipts are generated from a very small percentage of income earners.

That is meaningful as it tells us that the bulk of the income tax burden falls on a relatively small % of income earners.
 
Sarenco said:
That is meaningful as it tells us that the bulk of the income tax burden falls on a relatively small % of income earners.
Click to expand...

Yes, by virtue of their high incomes and nothing else. So what? What is the purpose of focusing on this particular stat?
 
TheBigShort said:
Yes, by virtue of their high incomes and nothing else. So what? What is the purpose of focusing on this particular stat?
Click to expand...
To show the over-reliance of the country's economy on a small group of people - some of whom will be mobile and/or many of whom will have more variable incomes than lower earners? This is a bad thing as it leaves the country's finances susceptible to more variation than if there was a more stable base. You might understand the issue better looking at corporation tax: the 'equivalent' headline is '10 firms pay nearly 40% of corporation tax' (close to €3B between them). What do you think happens if just one of these firms leaves or relocates their financial base? (Clue: it's not good...)

On a smaller scale, over-reliance for income tax on a small group of high-income earners is less stable than a broader tax base.
 
TheBigShort said:
€3 a week to a family trying to keep the lights on would certainly be putting their shoulders to the wheel.
I'm not sure a high income family would consider an extra €3 a week in the same vein.
When you say "we should all" put our shoulders to the wheel with an extra €3 a week, it doesn't really stack up, does it?
Click to expand...

Hmm, for all the spoof about austerity, very little has been contributed by those on lower incomes.

The same spin that worked against water charges works against a cut to the PAYE and Single Person credits.

Cut them by €150 each, and take in an extra €500-600m a year.
 
orka said:
To show the over-reliance of the country's economy on a small group of people - some of whom will be mobile and/or many of whom will have more variable incomes than lower earners? This is a bad thing as it leaves the country's finances susceptible to more variation than if there was a more stable base.
Click to expand...

So the idea is to increase taxes on the low without increasing taxes any further on the high paid?
One proposal made here is to reap in €500m extra by reducing tax credits, at €3 a week.
But that €3 a week will be payable by all income earners. For sure, the top 6% will only contribute 48.5% ( guesstimate) of the tax now, but they might be peeved off that they still has this enormous burden to carry and are also out of pocket by €3 a week. And it hardly addresses the point you raised, does it?
Other alternatives are to cut the marginal rate, leaving a deficit in public finances to be made up elsewhere through VAT, motor tax, property tax, bin charges, CGT, etc...etc..., invariably impacting those that hold the greatest wealth more so than those whose income is limited, no car etc...etc...
Another alternative is increase the standard rate...see above.
Another alternative is to cut tax credits, putting pressure on wage demands from those at the lowest end of the scale.
Another alternative, not yet mentioned is, cut the incomes of the highest earners. That way, the % contribution of the top 6% will fall dramatically. Except, if you are concerned about their mobility, cutting their incomes is one way to see them flee.
Other than all that, I haven't seen one logical proposal to resolve the issue (if there actually is one) of the top 6%.
 
TheBigShort said:
Yes, by virtue of their high incomes and nothing else.
Click to expand...

No, by virtue of the level of tax levied on their income.

You can debate whether that level of taxation is appropriate or excessive (have you heard of the Laffer curve?) but continuing to deny that it is a meaningful statistic is getting you nowhere.
 
Here's a puzzle. The top 6% (roughly 120,000 workers) earn roughly on average €175,000 pa, contributing some 49% of income and USC tax.
If the top 6% were offered pay rises that doubled their salaries (with everyone else's remaining the same) then what % of the income tax take would the top 6% be contributing? Is it
A) more than 49%
B) other

2nd question

If the answer is A) then

1) do you think anything should be done about it? If so, what?
 
Sarenco said:
Yes. That should be obvious.

How else would they end up paying 49% of all income tax and USC?
Click to expand...

By virtue of their high incomes.

What tax rates do you think are levied on their incomes?
Last I checked it was 20% up to €33,500 and 40% thereafter for EVERYONE.
Are you seriously suggesting that the top 6% are subject to a different tax code?
 
Gordon Gekko said:
Hmm, for all the spoof about austerity
Click to expand...

Who was spoofing?

Gordon Gekko said:
very little has been contributed by those on lower incomes.
Click to expand...

How much would you have them contribute? Considering their LOW incomes, how much should they contribute?

Gordon Gekko said:
Cut them by €150 each, and take in an extra €500-600m a year.
Click to expand...

That's called austerity. And who exactly do you mean by 'them'? Your €500-€600m is actually a tax increases on all income earners. The struggling middle class will be delighted with your proposal, not!
 
TheBigShort said:
Are you seriously suggesting that the top 6% are subject to a different tax code?
Click to expand...
You didn't ask about tax code though - you asked a very different question.
TheBigShort said:
Are you suggesting that the level of tax levied on the income of the top 6% of earners is greater than everybody else?
Click to expand...
The LEVEL of tax levied on high income earners is, of course, greater than on lower incomes - it's a simple fact with a progressive tax code. Both in € and %, higher earners pay more.
 
TheBigShort said:
Are you seriously suggesting that the top 6% are subject to a different tax code?
Click to expand...

No but you asked about the level of tax levied on the top 6% of income earners.

Higher income earners pay tax at their marginal rate (55% in the case of the self-employed) on a greater proportion of their income. Hence, they pay a greater level of tax on their incomes than lower earners.
 
orka said:
You didn't ask about tax code though - you asked a very different question.
Click to expand...

I'm simply asking what is the significance of the top 6% being liable for 49% of the tax. Like I suggested earlier, if the same 6% all doubled their salaries next year, relative to everyone else, then they would contribute to an even greater % than 49%. Isn't that correct?
So by virtue of their high incomes they contribute 49% of the income tax take. If you increase those incomes, relative to everyone else, the % level would increase greater than 49%. Isn't that correct?
For that, low income earners should pay more tax on their incomes. Is that correct?

orka said:
The LEVEL of tax levied on high income earners is, of course, greater than on lower incomes - it's a simple fact with a progressive tax code. Both in € and %, higher earners pay more.
Click to expand...

In monetary terms yes of course. In % terms, the rules are clear for everyone - 20% on first €33,500, 40% thereafter.
There is no separate tax code for the top 6%. The same rules apply to them as a minimum wage worker. You cannot compare the tax liability of a minimum wage worker with a millionaire and deduce that we are over reliant on the taxes of the millionaire and instead we should rely more on the tax contributions of the minimum wage worker.


Sarenco said:
No but you asked about the level of tax levied on the top 6% of income earners.
Click to expand...

20% up to €33,500
40% thereafter
Minus personal and PAYE allowances. The same rules for everybody.
What you appear to be ignoring is that the top 6% only contribute 49% of the income tax take by virtue of their incomes.
If their incomes were to double next year, relative to everyone else, then they would contribute an even greater amount than 49%, isn't that correct?
Do you think the top 6% would reject a doubling of their incomes on the basis that it would mean a higher % contribution of the total tax take?

Sarenco said:
Higher income earners pay tax at their marginal rate (55% in the case of the self-employed) on a greater proportion of their income. Hence, they pay a greater level of tax on their incomes than lower earners.
Click to expand...

No they don't. You cannot compare the tax liability of someone on €100,000 with someone on €20,000. The €20,000 earner doesn't have the income in the first instance.
All you can do, in fairness, is compare what the €100,000 earner pays on their first €20,000 and then compare that to what the €20,000 earner pays and you will find, that the level of tax applicable is exactly the same.
 
But assuming, for a moment, I am wrong in my views can anyone propose one solid idea that would assist with this issue (if there is one)?
Bearing in mind, in my calculation, the top 6% earn, on average, in the region of €180,000 pa.
How can their burden be relieved?
 
Last edited:
It's simple enough really...cut the top rates of USC to bring the combined highest rates of tax/USC/PRSI to 49%.

The punter then keeps the majority of any incremental income which would have an important psychological effect.

And I stand by my suggestion that we cut the PAYE and Personal Tax Credits. There are too many people in this country who earn very little, pay very little tax, but still believe that the world owes them roast beef.
 
You must log in or register to reply here.
Back
Top