Should higher earners pay a higher rate of tax?

[KingKane]

I would agree that 50% at €100,000 is too low a band and perhaps too high a rate. The idea of progressive tax system is a good one, but part of the problem is that for earnings over say 150,000 few of those on those figures are PAYE and so it's harder to calculate and to collect.

In contrast the LDs in the UK are proposing 50% on over £100,000. Which is the equivalent of €150,000 and it buys you more, and their existing bands are much higher. I think it is somthing like £35,000 before you hit the currrent top rate there unlike our level of the average industry wage.

[rockofcashel]

A few questions here ?

First a clarification. The rate would apply at €127,000, not €100,000 as reported


1. How many people here earn more than €127,000 ?

2. Why do so many who earn less than €127,000 worry about the small number who do ?

3. How many think that a 50% rate for earners over €127,000, means that that rate will apply on all income? This is incorrect, it applys on marginal income. If you don't understand what that means... ask about it

4. Do people who disagree with this proposal understand the economic logic behind the proposal, including but not confined to the concept of marginal utility of income, and general redistribution of wealth

5. Do people understand the concept of the circular flow of income, and what increased consumption and increased savings do to the overall level of National Income ?

6. Do people see no anomoly in the fact that those earning 4 times the average industrial income, pay income tax at the same rate as those on the average industrial wage?


Now this thread has the potential to be an interesting economic debate, but please, don't look at the simplistic report in isolation, and make an uneducated answer to the poll.

[mjcoughlan]

It was reported in yesterday's Irish Times that Sinn Féin would introduce a new tier of tax, resulting in those earning €100,000 or more to pay 50% tax.

Not an original idea. It does, however, represent a step backwards, when we should be maturing and progressing at this stage. The impact fiscal policy has on general business activity and on incentives in general should not be underestimated. I think we should not be imposing higher barriers on those who are more successful. In fact, we should be encouraging success not taxing it. If the government wants to stop something (e.g. plastic bags), then taxation is a good idea. No sensible government would impose penalties on ambitious people. We should be looking at a flatter tax system, not a more "progressive" one, if that word is to be used to describe it.

[The OD]

Great - another SF economic policy which shows exactly where they are coming form - the victim mentality, the kind of people who follow the word 'rich' with 'w*a*n*k*e*r'.

I do believe a complete overhaul of personal taxation is in order all right and its very unequal at the moment, but this type of stupid mentality that punishes success is as bad as some of the IBEC loving policies that the PDs bandy about.

[KingKane]

A few questions here ?

First a clarification. The rate would apply at €127,000, not €100,000 as reported

rock, we mortals have to work off what the meeja reports. We don't get the interal SF memos.

1. How many people here earn more than €127,000 ?

What has that got to do with the argument? Oh right, if they were earning over 127,000 that invalidates their right to participant in the discussion.

2. Why do so many who earn less than €127,000 worry about the small number who do ?

I'll take the cheap shot first of asking why do you hate minorties so much? and then say perhaps it's because some of us might like to be able to earn that some day and also 100K or 127K between a couple earning in their 30s isn't an unbelievable sum of money. And since there are so few people on this on how much does SF calculate this would bring in? Or does SF propose this purely for fairness and points 4 and 5?

3. How many think that a 50% rate for earners over €127,000, means that that rate will apply on all income? This is incorrect, it applys on marginal income. If you don't understand what that means... ask about it

I know that the 50% will only be on those earnings above 100K or 127K level, however it is also the case that for married people in our tax code the situation is more complex. And how much does SF expect this to bring in?

4. Do people who disagree with this proposal understand the economic logic behind the proposal, including but not confined to the concept of marginal utility of income, and general redistribution of wealth

Redistribution of wealth sounds good in the sense of the wealth of the robber barons of the middle ages, not so much for those earning now.

5. Do people understand the concept of the circular flow of income, and what increased consumption and increased savings do to the overall level of National Income ?

Are you going to organise a lecture? Savings aren't always the greatest thing in the world ask the Japanese.

6. Do people see no anomoly in the fact that those earning 4 times the average industrial income, pay income tax at the same rate as those on the average industrial wage?

That's an argument for raising the bands so that those on the average industry are paying most of their tax at the lower rate. Not necessarily for creating a new rate.

Now this thread has the potential to be an interesting economic debate, but please, don't look at the simplistic report in isolation, and make an uneducated answer to the poll.

[Pidge]

1. How many people here earn more than €127,000 ?
2. Why do so many who earn less than €127,000 worry about the small number who do ?

Because those small number are mostly employers and are necessary for a healthy economy.

3. How many think that a 50% rate for earners over €127,000, means that that rate will apply on all income? This is incorrect, it applys on marginal income. If you don't understand what that means... ask about it

Of course it's only going to be on marginal income, but it's still a massive amount to pay.

4. Do people who disagree with this proposal understand the economic logic behind the proposal, including but not confined to the concept of marginal utility of income, and general redistribution of wealth

I understand the theory, but frankly think it's wrong and overly simplisitic - seemingly relying on the theory that "Higher Tax=More Money for Government", which decades of high tax have shown us. The best way to redistribute wealth is via jobs and salary increases.

5. Do people understand the concept of the circular flow of income, and what increased consumption and increased savings do to the overall level of National Income ?

Yup, I also understand that Ireland doesn't need any injections into the circular flow of income - that would drive up inflation. Inflation occurs when there is too much money chasing too few goods. Adding to the circular flow of income would only exacerbate the inflation problem (which I'm sure you'd agree, would have a negative effect on your redistribution of wealth plan).

6. Do people see no anomoly in the fact that those earning 4 times the average industrial income, pay income tax at the same rate as those on the average industrial wage?

No, that seems alright to me. They are paying four times the amount of tax after all. Besides, that got little to do with this proposal as far as I can see. More to do with tax bands.

[Libero]

Now this thread has the potential to be an interesting economic debate, but please, don't look at the simplistic report in isolation, and make an uneducated answer to the poll.

That's all very nice, rock, but do Sinn Féin have any real analysis and projections of their proposals? Specifically, I'm thinking of predictions as to the effect on tax take and economic activity - standard fiscal projectons and analysis like those produced by the Department of Finance or www.ifs.org.uk

It is highly irresponsible for any party or interest group to make proposals in this area without giving an honest indication of what they think the effects of it will be, and how it will effect the country.
Highly irresponsible because as tax takes have gone up with falling rates, it is logical to assume that the take may go down with rising rates. Counter intuitive for sure but still logical, and something that seems to have been overlooked by Sinn Féin.

Of all the areas of political debate, tax policy should not be decided by heavy reference to rhetoric and soundbites. Ideas like justice and fairness are important and shouldn't be overlooked, but deciding tax rates purely through those kind of abstract values is as lacking as discussing Northern Ireland policy solely on the basis of increasing national income.

4. Do people who disagree with this proposal understand the economic logic behind the proposal, including but not confined to the concept of marginal utility of income, and general redistribution of wealth

5. Do people understand the concept of the circular flow of income, and what increased consumption and increased savings do to the overall level of National Income ?

Do Sinn Féin? I've had a look at the tax proposals on their website and unless I'm missing something, there is scant mention of any of those things that rock rightly mentions. Lots of paragraphs about fairness and equality and all that, but not much actual economics.

[the muppet]

This would be a giant step backwards for our little country.

Read up on the legacy of high tax rates in the tribunals etc..

There seems to be a general acceptance ( among those not invovled )that high earner should pay a higher rate. The current tax system is based on a percentage system that ensures higher earners pay more tax.

The Sinn Féin policy is to fool the foolish into somehow thinking the high earners somehow don't pay their fair share. They do and then some.

To introduce a new higher rate will undo much of the progreses of the last 15 years. People will see it worthwhile to dodge the system or worse still for the revenue to emigrate. I personally would emigrate.

[mjcoughlan]

This is what happens when SF people talk about anything else other than a united Ireland. They rely on the theory they learned from Leaving Cert economics instead of thinking about in practical terms what their own party is proposing.

[Pidge]

This is what happens when SF people talk about anything else other than a united Ireland. They rely on the theory they learned from Leaving Cert economics instead of thinking about in practical terms what their own party is proposing.

Ehhhhh...I'm basing what I say almost exclusively from LC Economics and can see how these theories fail (and I'm mostly getting Cs).