Income Tax Rates

This post was written by Karl Whelan

I’d be interested to know the source of the figures cited in this article by Vincent Browne on income tax rates paid by higher earners. It certainly isn’t the last Revenue Commissioners statistical release on tax payments by income distribution, which relate to 2009. Anyway, it’s interesting to compare the figures reported in the article with the tax payments generated by plugging in the same salaries into this useful online tax calculator.

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130 Responses to “Income Tax Rates”

  1. hoganmahew Says:

    I think it is the revenue commissioners statistical information - if you work out effective rates of tax. Whether the sums are correct, I don’t know, but I’d say it is a simple workout of tax paid/earned revenue for each band. Not sure how the effect of the USC can be added in, though.

    One point the article misses is that tax reliefs are tapering anyway - mortgage relief, pension relief, BTL reliefs etc. are falling automagically each year to some degree.

  2. JohnTheOptimist Says:

    The source is Browne’s fevered imagination.

    This has proved a somewhat unreliable source over the years, particularily about this time a decade ago, when he was arguing repeatedly in his IT column that Osama Bin Laden couldn’t have had anything to do with 9/11 as he was living in Afghnistan at the time.

    More pertinently, Browne has been obsessed for years with the idea that Ireland is a massively unequal society. He repeats it ad nauseum, week in, week out. It isn’t. SILC surveys are published every year, although naturally Browne never cites them. These show that the level of inequality (aka relative poverty) in Ireland has fallen every year since 2001. Back then, Ireland was more unequal than most EU countries, with a relative poverty rate of around 22%, roughly the same as the UK. But, since then it has fallen to around 14%, which is below the EU average for the first time, and massively below the K, which remains at over 20%. The latest SILC survey is linked to below.

    http://www.cso.ie/releasespublications/documents/silc/2009/silc_2009.pdf

  3. Patrick Says:

    That tax calculator isn’t very accurate either. I wish I was taking home the 300 a month it said I should be.

  4. Seamus Coffey Says:

    That article is a mess. How can it talk about the effect of the USC on income tax statistics. The USC hasn’t even been in place for one year yet! Even 2010 data if it were available would not include the USC. The latest available data is 2009 and just refer to Income Tax (the Health Levy is excluded).

    The 2009 data (Table 1) show 5.1% of tax cases earning more that €100,000. These 110,000 people earned 24.1% of total income and paid 46.3% of the total income tax.

    Those earning between €17,000 and €40,000 make up 37.4% of cases, earn 27.0% of income and pay 8.9% of the total income tax.

  5. Johnny Foreigner Says:

    VB is not so stupid as to imagine that the average PAYE worker on 62,500 takes home 77% of this. He knows that the problem with effective taxation arises from the various reliefs that were around when these statistics were compiled. And therefore the solution lies with the reliefs. He also knows that these are being addressed as hoganmahew points out.

    This is very below-average statistical manupulation.

  6. Karl Whelan Says:

    @Patrick

    Most people will take home less than the calculator shows due to employer-related deductions for pension contributions, health insurance, income protections and the like. This might account for the difference.

  7. Eamonn Moran Says:

    Hogan I agree.
    Karl I think you are inferring that the numbers VB is using are out of sync with the revenue numbers but when I go through them I am coming up with similar numbers to VB.

    The highest effective rate for the highest income earners (those over 275k) seems to be about 33% effective.
    Excluding property directors it is 35%
    The Rate for Schedule D people earning over 275 seems to be 28%
    The Rate for Property directors earning over 275K is a mere 24%

    Happy to be corrected of course.

    Also I can confirm that tax takes from the average earners 35-50K would have risen far more dramaticly as a % increase in the last 2 years than those on higher incomes due to the regressive nature of the USC and moving of tax bands. PAYE workers in 35-40k have had effective rates go up about 50% in the last 2 years from 13.5% to 20%

    As for the Tax calculator, bit of a blunt instrument no?

  8. Seamus Coffey Says:

    @ Eamonn

    A single private sector worker with no children would have earning €35,000 and making a pension contribution of €2,100 would have paid €2,016 under the old Income and Health Levies. With the USC they would now be paying €1,769. I don’t think the USC is the quite what it is made out to be. The largest effect on people in this category has been the reduction of tax credits and tax bands.

  9. Eamonn Moran Says:

    @Seamus coffee

    I think its only fair if we use effective rates when measuring. This is the most accurate means of measurement. It seems virtually nobody is paying more than 35% and property directors earning over 275 K are paying a a mere 24% on average. I think Mary Davis would balk. Her P60 showed her effective tax rate was 35% on 156k

  10. Seamus Coffey Says:

    @ Eamonn,

    I agree that effective rates are a useful means of comparison. I was merely pointing out that the USC caused effective tax rates to fall for almost all income levels (with < €26,000 being the major exception).

    Do the effective rates include PRSI?

  11. Joseph Ryan Says:

    VB Said

    Just focus on those being paid between €50,000 and €80,000 a year (and this includes couples who jointly earn these amounts). The average pay of those in this bracket is about €62,500, which is more than double what 55 per cent of people in this society are paid (not counting social welfare payments). These in this bracket pay just 23 per cent of their total income in income tax, including the universal social charge.

    With both people working (on the same pay) both would be earning less than the 20% threshold (32,800 in 2011).
    Income tax approx 14%, USC 7%.

    VB is correct in that part of the statement.
    The key point is: (and this includes couples who jointly earn these amounts).

    I am not clear that his ‘avergae’ pay of €62500 is correct, as married couples in that catagory may account for two earners.

    However there has been a rush to the ramparts on this thread that could be confused with self interest rather than rational analysis.

  12. The Dork of Cork Says:

    @John
    I would prefer to have a lower consumption and not be in debt rather then a higher consumption high debt lifestyle.
    Although you have little freedom when you have no money , a cloud of debt becomes a much more oppressive psycological serfdom.
    Anyhow we need to seperate consumption from wealth - they are two very different things albeit related.
    Many middle class people have simply defected because the social contract or whatever they call it has been smashed over the last 20 years in particular as the market state has become a dominant force for ill.

    I think much of the middle class who are not in debt have become like the remaining Anglo Irish of old although with much less style.
    They have simply retreated back into the big house and turned off the heating.

  13. Joseph Ryan Says:

    A point worth noting:
    Total income does not include certain non taxable income.

    ” child benefit, maternity benefit and unemployment assistance paid by the Department of Social, Community and Family Affairs, certain earnings of writers, composers and artists, bonus or interest paid under Instalment Savings Schemes operated by An Post, interest on certain Government securities”

    So Bertie’s and Bono’s tax exempt ‘artistic’ earnings do not find their way onto these stats. The Irish Revenue tax on these ‘artistic’ contributions to to humanity is of course zero.

  14. Johnny Foreigner Says:

    @Joseph Ryan
    “However there has been a rush to the ramparts on this thread that could be confused with self interest rather than rational analysis.”

    I think you can have self-interest AND rational analysis. I take home 53% of my gross. There are plenty like me, presumably on this thread. This personal insight into how the tax system works makes me understand that VB’s analysis is nonsense. If he wants to expose tax dodging then why doesn’t he focus on the tax dodgers rather than lumping everyone with a high gross income together?

  15. The Dork of Cork Says:

    PS - I think the whole tax thing is a fake socialist canard - the truth is the money supply has collapsed with the western industrial collapse.
    People might stick their 200,000 nest egg in the post office but are earning only 6000 a year.

  16. Gavin Kostick Says:

    @ Joseph Ryan

    “The Irish Revenue tax on these ‘artistic’ contributions to to humanity is of course zero.”

    I’m painfully aware of the issue of self-interested posts, but just for the record, the Artists Exemption is now capped at €40k pa. So if Bertie and Bono, about whose affairs I only know what I read in the papers, were to be getting income from works of artistic merit, they should be paying tax on any income over that 40k.

    The issue of the tax exemption scheme for income from artistic works being degraded by classification of certain works which your average lady on the Phibsboro omninbus would not recognise as artistic, being used for tax relief, is a problem.

  17. Joseph Ryan Says:

    @Johnny F

    With no pension contributions a take home of 53% would imply a groos of close to 300,00pa. It would be a fairer calculation if you take the net pay + employee pension contribution as a % of Net Pay. I am sure that would change the equation.

    If you are still at 53% take home after that, then you can afford to relax and enjoy life a little.

  18. Desmond Brennan Says:

    @Karl
    Methinks you should send a letter to the editor

    also here’s a neat take on tax stats from Ronan Lyons:
    http://www.ronanlyons.com/2009/07/28/a-little-quiz-on-irelands-income-tax/

    Also to my mind tax analysis needs to include employer’s Prsi, as though the employee paid it. Employer’s Prsi is a sneaky legerdemain to hide the true tax rate.

  19. Eamonn Moran Says:

    Seamus Coffee

    “The 2009 data (Table 1) show 5.1% of tax cases earning more that €100,000. These 110,000 people earned 24.1% of total income and paid 46.3% of the total income tax.”

    Lies, damn lies, and statistics. In the US the figures would look much worse. 1% earn 40% of the wealth So in a US Example I imagine 1% of tax payers pay about 40-50% All this shows is that gross inequality is very, very damaging to the economy as a whole.

    Using the same table as you I think I have found a stat that VB could have used to show how inequality can make a tax system look very, very lob-sided.

    The top 5.1% earned 46.3% of total income tax and their combined effective rate was a mere 24.8% on average
    If these 110,000 people were asked to pay 30% (an increase of 21%) on average instead it would raise just over 1 billion.

    Then imagine we asked the poorest people to pay double their effective tax (an increase of 100% as opposed to the 21% being asked of the top 5%) rate that they currently pay. How many people would we have to ask to double their effective income taxes in order to raise a similar amount?
    I think the answer is quite shocking.
    1.5 million!
    Everyone earning less than 40K!

    So in order to raise 1 billion in taxes we could increase the richest 110,000 peoples effective tax by 21% (from 24.8% to 30%) or increase the bottom 1.5 million (or 73% of the total number in the economy) by 100%

  20. Eamonn Moran Says:

    The top 5.1% paid (not earned)

  21. The Dork of Cork Says:

    The entire - must collect tax meme to pay for expenditures is extremely flawed - a modern state is not a giant Trocaire box………except for Ireland of course.
    How can we finance ourselfs internally if we have no savings ? - increasing tax when people are saving will deny them saving tokens accelerating the export of our money supply further collapsing the domestic economy.
    I can see the “Irish” banks finally buying Irish bonds at 7% and surveying a wasteland of broken people - buying property on the cheap and lording themselves over us - claiming how stupid we are , which would I am afraid be true.

  22. Seamus Coffey Says:

    @ Eamonn,

    It is a sleight of hand to include aggregate and average percentages in the same sentence. In the above I deal with the aggregates. Here are the effective rates.

    The effective Income Tax rate for all earners between €17,000 and €40,000 is 4.3%.

    As you say the effective income tax for those earning more than €100,000 is 24.8%.

    We can have a debate about the level of income inequality but I’d like to stick to the tax system. The effective rate on those earning over €100,000 is almost six times the effective rate on those earning between €17,000 and €40,000.

    You may wish to change these rates and increasing both by 4.2 percentages points would bring in about €1 billion in each case. I’m not sure what point you’re trying to make about our Income Tax system but it is a very progressive system.

  23. The Dork of Cork Says:

    I have often wondered about the multinational corporate tax take - does its “revenue” impact on Ireland in any direct way ?
    You see I don’t believe that any taxes FUND goverment - however taxes affect behaviour.
    The multinationals are present in Ireland because of this low tax.

    When money becomes international it takes on different properties - corporate cash is now global , it does not interact with externalties now.
    Countries are left in the sad position of competing for international money when all money should be national - depriving themselves of their dignity.

    I can understand French anger - but we are sad pathetic bunch , their bile should be directed at international agents , not simple folk with no dignity.

  24. Eamonn Moran Says:

    @Seamus
    The only point I was trying to make in my last post is that unless we stick to only using effective rates for comparisons it is very easy to mislead.

    The initial post was inferring that VB stats were dodgy.
    “It certainly isn’t the last Revenue Commissioners statistical release on tax payments by income distribution, which relate to 2009.”
    But they are correct as far as I can see.
    Happy to admit I am wrong if I am.
    Over to you Karl?

    As for income inequality. Its a very hot topic at the moment.

    http://www.economonitor.com/nouriel/2011/10/17/full-analysis-the-instability-of-inequality/

    Also when the figures come out for 2011 I am positive the effective rates will have increased substantially for the lower and mid range.

    The big picture overall however is one that Karl has outlined very well in the past. We need to collect a lot more from everyone.

  25. The Dork of Cork Says:

    Karl wants to continue with reducing the money supply and increasing taxes - thats a nonsense Sheriff of Nottingham approach.
    The main problem is that the remaining money in the system is being used for non productive rentier uses i.e. its stuck in the banking system - shadowing useless assets.

  26. Bond. Eoin Bond Says:

    @ Eamonn

    someone paying 0% under the old method vs that person paying 2% now. Thats an infinite increase, and yet they basically still pay almost zero tax. We could play this game all day.

  27. hoganmahew Says:

    @Eamonn Moran
    “Also when the figures come out for 2011 I am positive the effective rates will have increased substantially for the lower and mid range. ”
    Perhaps, but I’ll bet you five billion old Yugoslav dinars that the effective rates will have increased by more for the top end and that transfer payments still more than make up for any tax paid at the lower end.

    We have a Berlin state with not even Boston tax rates…

  28. The Dork of Cork Says:

    @Hogan
    Berlin 1945 maybe - they lost the war because they could not produce fuel - we will lose because we cannot produce money.
    Taxes are just a measuring device that also affects behaviour for good or ill.

  29. Eamonn Moran Says:

    Come now Eoin
    The fairest way to play this game is to agree to just use effective tax rates as VB has done in his article.
    Also I have stated that there needs to be an increase in effective tax rates for all.
    All I was saying and all that VB was saying is that a small% increase for the guys at the top from (24.8%-30%) would actually lead to an extra 1 billion revenue.
    I would be happy to say that everyone earning over 30k should have their effective rates increased by 5% if that keeps you happy.

  30. Seamus Coffey Says:

    @ Eamonn,

    It’s very hard to see if Browne’s figures are correct. They seem to relate to 2011 tax figures but it is impossible to know these. The deadline for paying 2010 Income Tax hasn’t even passed yet.

    Browne uses income brackets that are not available in the Revenue’s Statistical Report such as €80,000 and €140,000. There may be another data source and it would have been useful if we had being given a nod in that direction.

    There is a number of mentions of inequality in the article and in this thread. The Income Tax table shows that in 2009 there was around €82 billion of income. This was unequally distributued. Data from the CSO show that the government made €29 billion of transfer payments in 2009. Any analysis of income inequality would have to account for that.

  31. Jon Ihle Says:

    Am I correct in intuiting that increasing the share of taxes paid by the rich could provide an incentive for a government to tailor economic policies to the interests of the so-called 1%, thereby exacerbating inequality? Is there an argument to be made that more broadly based taxation (i.e. regressive) actually encourages policies that benefit the greatest number?

    Vincent is going to have to choose: hostility to the rich or a fairer society. He may not be able to have both!

  32. Yields or Bust Says:

    @All

    Bond is right the game could be played all day as it has over the posts above but the fact is VB has a serious point - there is a wide gap between the have’s and have nots in Ireland and it seems like a reasonable proposition to close it in the most equitable manner possible.

    The tax thing is a side issue - if this was an exercise in tax raising then there are always methods to grab cash off the citizens - but I don’t believe this is VBs main point his point is that there are obvious inequalities and as a society we should be aiming to close them and close them faster than heretofore despite what the SILC surveys may suggest.

    Notwithstanding the fact that in a capitalist society the method we have been attuned to in reward recognition is cash based. If someone has a better method then I’m all ears.

    The problem of course with this seemingly fair request from VB is that the middle classes to which VBs radar is pointing to are largely up to their proverbials in debt particularly mortgage debt.

    In most well meaning middle class households they understand the VB party line and could afford to pay the additional taxes on the provisio of course that their debt creditors are willing to take a holiday or are willing to take a write down.

    Seamus Coffey has indicated on this site before that the mortgage mess is not really so bad because the numbers actually suggest c95% of households are making their monthly repayment. This argument of course is a nonsense. The truth is that the mortgage and related debt payments are indeed being made but quite literally at the expense of everything else - domestic demand is telling you that as is pension contributions, savings generally and entrepreneurial activity - all lower as a result.

    VBs middle class tax grab would ensure the numbers making the monthly repayments would continue to fall and suddenly Seamus’ stats would suddenly remind him of the film title ‘What Lies Beneath’ - and beneath the surface many thousands are just hanging on.

    So there’s the dilemma - tax those who supposedly on the face of it can pay more but almost guarantee the mortgage debacle worsens. The choice is yours.

  33. Ahura Mazda Says:

    VinB is consistent in his demands for ‘rich’ people to pay more. It would be nice if he placed some focus on the cost of living. There seems to be bugger all effort in this area.

    (off topic)
    @Seamus Coffey,

    I dropped a comment on your blog re new beginnings mortgage plan. http://economic-incentives.blogspot.com/2011/10/new-beginning-mortgage-proposal.html Do you think the NB incremental mortgage payments are correct?

  34. DOCM Says:

    @ John The Optimist

    Do you have the latets figures for Germany with regard to poverty levels?

  35. Paul Hunt Says:

    A grubby stick was thrown. A voice called ‘Fetch’. And lo, the pack hurtled after it.

    But Jon Ihle has a point. Taxes broadly based (ideally with some decentralisation of the levying - and of the spending thereby funded) and paid in anger are the most effective spur for democratic governance. Taxes levied on a narrow base, with subsequent disbursals from a remote, centralised pot, destroy effective democratic governance.

    Welcome to Ireland.

  36. The Dork of Cork Says:

    @Yields
    You have hit another nail in the head.
    I have been saying for some time now that mortgages are functioning as a tax does in a modern state i.e they are controlling inflation.
    However they are private in nature - the sacrifice is not spent back into the economy for real productive investment.
    This is what the ECB means by systemic risk in my opinion.
    Bank credit deposits such as Bank bonds are functioning almost like Goverment bonds did in the past - especially in the euro system which has so little goverment debt relative to credit.

    A complete repudiation of all mortgage paper and subsequent raising of tax would create a much more efficient system that would facilitate rational commerce & movement of people to appropriate areas for work , eduacation , lesiure etc.

    At the moment the most productive are trapped in debt prisons - unable to live full , efficient lives.
    As Jean Claude says in the interests of stability - but stability for who ?
    The Euro has only maintained its purchasing power by eroding wages - This wage deflation / entropy must stop.

  37. Michael Hennigan - Finfacts Says:

    Maybe Vincent should consider publishing some of his tax returns to avoid charges of being a caviar socialist.

    It would also strike a blow for that strange concept in Ireland - - transparency — which is usually linked with good governance.

    In Norway since 1863, it had been possible to apply in person at a local tax office to view another citizen’s tax return and since 2005, all returns are online.

    @ Jon Ihle

    During the boom when billions were flowing overseas into property investments, all that could be managed annually in venture capital investment in the tradeable goods and services sectors was about €200m.

    @ Yields or Bust

    Many in the workforce from 40 up, likely have low mortgages; some people upgraded existing dwellings rather than taking on big loans.

  38. TRP Says:

    There are Lies, Damned Lies and VB’s Statistics. His usually are fixed like his rants to match his argument. The Revenue Stats are for ” 2009 Income Tax”. In 2009 we also had a Income Levy at the margin of 6%, PRSI on earnings up to €75,036 @ 4% and Health Levy at the margin of 5% over €75,036. If VB thinks anyone is going to bust their gut and probably their health to pay currently 52% (41 + 7 + 4) and 55% (41 + 10 + 4), if you happen to be selfemployed , to a State that wastes money everyday ,that it has not got, well VB should also realise that not everybody is allowed to run businesses into the ground leaving creditors to pick up the pieces . I continue to be amazed that the Irish Times gives up valuable space to these rantings which most people now realise are just pie in his sky.

    @Eamonn

    They are not ” property” Directors but Proprietary Directors and one of the reasons effective “income tax ” rates on these people can be lower is that they invest in themselves and their families which the State quite handily ignores i.e. Health Insurance and medical expenses, Income Protection Insurance, Education expenses and some are paying their pension contributions from their Gross Salaries. If you dont have access to free medical,PAY Related Social Insurance, free Education and cheap Unfunded Guaranteed defined benefit pensions well you have to try protect yourself and your family to survive in this State which treats the Self Employed and Proprietary Directors of Private Companies abysmally.

  39. JohnTheOptimist Says:

    @DOCM

    Do you (JTO) have the latest figures for Germany with regard to poverty levels?

    JTO again:

    Yes, they are in the latest SILC report (table near the end)

    http://www.cso.ie/releasespublications/documents/silc/2009/silc_2009.pdf

    it gives the following figures for the percentage below 60% median in 2008:

    Ireland 15.5% - Germany 15.2%

    However, Ireland’s rate fell further to below 15.2% in 2009. No information on Germany’s figure for 2009.

  40. Dreaded_Estate Says:

    Tried to combine the 2008 tax take from the CSO report with the estimated USC and PSRI levies at various income levels to get a better measure of the total income tax burden.

    http://www.politics.ie/forum/economy/169192-income-distribution-tax-take.html

    Also tried to combine that with the VAT burden from this ESRI report to get a better picture of the total tax take at various income levels.

    http://www.esr.ie/vol42_2/06%20Tol%20article_ESRI%20Vol%2042-2.pdf

    Again the curve is far flatter than you would first imagine, ranging from 19% to those earning below €10k to 42% for those earning over €200k

    https://docs.google.com/spreadsheet/ccc?key=0AutgOtkznKxIdG05dXYtTGdOYkVpTmktTlZZNHo5dXc&hl=en_US&pli=1#gid=4

  41. grumpy Says:

    There has been a lot of talk about transfers of wealth from the young to the old.

    Ireland, near insolvent as it is (you can argue about the meaning of the word near, but that’s all) has unfunded pension liabilities far North of a hundred billion German Euros. Many current pensioners are on whopping pensions funded from current tax revenues and emergency loans from the IMF and Co.

    How are pensioners taxed?

    “A single or widowed person, who is aged 65 or over, will not be liable to any Income Tax if their income does not exceed €20,000.

    A married couple, were one or both spouses are aged 65 or over, will not be liable to any Income Tax if their combined income does not exceed €40,000.”

    Actually that cut and paste is slightly out of date. The “age exemption” has been reduced to 18,000 and 36,000

    Of course, medical cards are issued to anybody over 75, no matter how big a pension they receive, regardless of whether it is a state provided income.

    So far as I recall, a farmer has to wait until he or she is all of 40 years old before renting leasing out land and being exempt from income tax on the first 20,000 annually.

  42. DOCM Says:

    @ JTO

    Thanks. I thought that this was the case. Ireland is on a par with Germany in the poverty stakes. The really significant point, however, is that while Ireland’s percentages have been improving, those of Germany have been deteriorating.

    http://www.dw-world.de/dw/article/0,,5259373,00.html

    This is a reflection of what happens in the “mercantilist core” so ably described by Martin Wolf in the FT and discussed on another thread.

  43. Antoin Daltún Says:

    “Of course, medical cards are issued to anybody over 75, no matter how big a pension they receive, regardless of whether it is a state provided income”. Negative. Remember the furore when this was cancelled from 1 January 2009.

    “For over 70s, a means test was introduced, with effect from January 2009.

    Since January 2009 there are gross income limits of €700 per week for a single person and €1,400 per week for a married or cohabiting couple. There will be no standard deductions allowable (for example, for income tax).

    However, if your income is over these limits, you can still apply for the ordinary medical card or GP Visit Card: for example, if you have high medical expenses, such as paying for a nursing home.

    Pensions, earnings, interest from capital and all other sources of income are included in the means test”.
    http://www.citizensinformation.ie/en/health/entitlement_to_health_services/medical_card.html

  44. ObsessiveMathsFreak Says:

    How come VB has to show his figures, but neither the banks nor the government have to show theirs.

  45. Bond. Eoin Bond... Says:

    @ Eamonn

    As per some points from Seamus Coffey, Paul Hunt and others above, we already a ridiculously progressive taxation system. The effect of the most recent taxation measures was to widen the base so that the 50% or so who paid little or no effective tax were somehow made to pay at least some material portion (ie 10%) in taxes. As Paul Hunt noted, it is a good thing for democratic governance for this to happen, but you’re the one who brought up the issue of low earners having their tax “doubled”, not me.

    As you noted, this tax base widening does not necessarily generate a truly enormous amount of money, but then the point of VB’s article was not to argue for an ‘effective’ taxation system, it was to have a ‘just’ and fair one. The problem is, it already is a pretty fair one (some historic loopholes notwithstanding, but most of these are in the process of being closed off). Marginal taxes are already fairly high, and it’s difficult to argue for more tax increases to be levelled soley on high earners in the interest of ‘fairness’.

  46. jmg Says:

    Out of context: In their latest monthly Bulletin the ECB discussed the TARGET2 payment system.(page 35- 40)
    LINK http://www.ecb.int/home/html/index.en.html
    The ECB makes the following statement: “There is no single database grouping together the TARGET2 balances of all NCBs, but
    an imperfect proxy can be calculated on the basis of the IMF’s International Financial Statistics” (Footnote 5 on page 36)
    I think that is really an astonishing sentence!!!
    I did an internet search of the TARGET2 data via the national central banks websites.

    Here are the TARGET2 data for Greece:
    http://www.bankofgreece.gr/Pages/en/Publications/FinStat.aspx?Filter_By=9

    The TARGET2 data for Italy made a big jump in August and September:
    http://www.bancaditalia.it/statistiche/SDDS/stat_fin/Aggregati_riserve
    Other liabilities within the Eurosystem (net)
    may 2011 + 13,866 bn Euro
    June 2011 + 5,997 bn Euro
    July 2011 - 16,312 bn Euro
    August 2011 - 57,469 bn Euro
    September 2011 - 103,511 bn Euro
    As late as May and June 2011 Italy had TARGET2 claims. It looks like capital flight.

    I did find the following on the Central bank of Ireland homepage:
    http://www.centralbank.ie/polstats/stats/cmab/Pages/Money%20and%20Banking.aspx
    30/09/2011 Table A.2 Financial Statement of the Central Bank of Ireland
    Is the “Other liabilities” item in this statement the TARGET2 liability of the Irish central bank vis-a-vis the ECB?

  47. Livonian Says:

    @all

    Slightly increasing income tax on “the top 9%” has two advantages for everyone especially “the top 9%%”. (Except, perhaps, those who are heavily indebted)

    1) Most money earned above a certain level is discretionary income which is often spent outside the economy. Practically every one in the “top 9%” ( including many of the mega wealthy )benefits when money circulates within the domestic economy.

    2) The overwhelming majority of the “top 9%” are not mega wealthy so do not have freedom to choose where they “officially reside”.(Those who can afford to “reside” elsewhere have to factor in other “costs/benefits when choosing where they “reside”.)
    Consequently the slightly extra tax would actually be a premium for being able to live in a stable and equitable society. The additional fiscal revenue(compared to the social stability premium) would just be a welcome bonus.

    @Karl

    IMHO to exclude a Pension contribution from “take home” income would be a bit like saying my “take home income” is what I have in my pocket on pay day after I have popped in to make a deposit in the local credit union before getting home in time for supper. At some stage that “contribution” or “deposit” is going to be drawn down and “taken home”.

    Employer related deductions for health, pension and income protection are actually a different form of income as are the additional social welfare benefits (medical card, rent allowance etc) people receive in addition to dole, disability old age pensions etc.

    @all

    IMHO it is a very easy mistake for (comparatively) high earners to make the mistake of believing that saving a “few percent” on income does not carry a social risk.

    Whether VB`s statistics are accurate or not I think his message still remains easy for every one to understand. He is an easy, and tempting, guy to criticise ( his fiscal estimates are probably not “spot on”) but I think he is making relevant points here in his article and I agree it would have been beneficial if he also focused on cost of living which is to some extent actually influenced by discretionary income of the “top 9%”. :)

  48. The Dork of Cork Says:

    Remember that kid in sixth sense who saw debt people !!

    Well I see cars……. cars in driveways depreciating , one person in car , cars going to school , cars becoming the last refuge of middleclass decadence.
    TAX PRIVARE CARS NOT INCOME
    Give people a choice to become more efficient - do not bludgeon them with a further reduction of their take home pay which could possibly affect basic life support.

  49. Livonian Says:

    @JTO and DOCM

    Re: poverty levels in Germany and Ireland.

    Although the poverty levels in both countries are the same I would imagine the proportion of people among the !5% who find it necessary to occasionally sample the “plat de Jour” at neighbourhood garbage bins is higher in Germany than Ireland.

    IMHO apart from the Scandinavian countries it seems to me that Ireland is one of very few European countries which does not indulge in the perverted neo-liberal experiments of examining how far society is prepared to let an individual fall.

  50. Joseph Ryan Says:

    @Livonian

    perverted neo-liberal experiments of examining how far society is prepared to let an individual fall.

    Just watched Euronews. That experiment is now reaching a conclusion in Greece.
    The Greek army must be itching to make a contribution to the experiment. Imagine the fiscal incentive that the top army brass would have to take over the experiment. Last time was 1974?

    @All

    The ‘intellectual nature’ of this particular thread must seem a little removed from reality from the point of view of Aviva workers this evening.

  51. Karl Whelan Says:

    @ Liv

    “IMHO to exclude a Pension contribution from “take home” income would be a bit like saying my “take home income” is what I have in my pocket on pay day after I have popped in to make a deposit in the local credit union before getting home in time for supper. At some stage that “contribution” or “deposit” is going to be drawn down and “taken home”.”

    I was only trying to explain to Patrick why his idea of “take-home pay” may not have matched the calculator.

  52. Karl Whelan Says:

    Eight contributions from the Dork. Did anyone understand any of them?

    Anyone have opinions on how this kind of thing affects the site’s usefulness?

  53. The Dork of Cork Says:

    @Karl
    Your wildly conservative views in the mist of the greatest misallocation of resourses the world has ever seen is a source of constant pleasure for me.

    I like the fact that you don’t want to or wish to understand what I am saying although to be honest sometimes I don’t understand it myself - trying to get your head around the Chinese Industrialisation process for example which has dwarfed the 19th century European experience in both scale & speed is hard for anyone really.
    But still even if you don’t like Dorks I like Karls.

    Try to get our head around this tide of credit hitting this bog & washing out - you don’t solve this problem with income tax !!!!! - you solve it by creating real net assets on a European level at least.
    That means spending money into existence in a rational manner - not subtracting energy credits from labour.

  54. Seamus Coffey Says:

    @ Ahura,

    I think the NB incremental mortgage payments are wrong. Thanks for the prompt.

  55. Kevin Donoghue Says:

    Anyone have opinions on how this kind of thing affects the site’s usefulness?

    All I can say is I find the scroll-wheel on my mouse very handy.

  56. David O'Donnell Says:

    @all

    ‘… A further €2.75 billion in increased income taxes, which could be a combination of closing off loopholes, tax increases and, ideally, an increase of a few percentage points on people earning over €50,000? It would go a long way to meeting the €3.6 billion target.’

    Well - is Browne correct on the substantive point that further taxation on the upper end has the potential to ameliorate some of the draconian measures on the underclass, the disabled, and those who generally do not vote? Local burden sharing in other words, local solidarity etc ….. The Irish welfare state is essentially a middle class construct - and the middle classes benefit disproportionately compared to the working class and underclass …. and this has been the general picture for 50 yrs at least.

    I wont’ mention the upper_echelon gougers …. these, of course, remain untouchable and sacrocanct in this kleptocracy … and illusions of accountability from Moriarity through Mahon and others are billed to the bleed1n serfs and trousered by the legal ferengi … and nothing ever happens.

    @Karl Whelan

    Useful thread …

  57. Enda H Says:

    @Karl W,

    Eight contributions from the Dork. Did anyone understand any of them?

    I stopped reading Dork’s comments a couple of months ago.

    Anyone have opinions on how this kind of thing affects the site’s usefulness?

    I’m all for open discussion but there comes a point when someone is just singing Spice Girls songs during the opera. It’s a pain in the arse.

    Dork, any chance you might compromise and agree to a single post per thread or something?

  58. Michael Hennigan - Finfacts Says:

    @ David O’Donnell

    Yes, there is potential for higher income taxes and Europe’s knowledge economy, Denmark, has the highest taxes and highest average earnings.

    The social security system is funded from taxation. So there are no big penalties on hiring staff or disincentives from cutting staff, as there is in France.

    This year to encourage the immigration of researchers, there was a special tax regime introduced for the first 5 years of residence.

    Workers retire on almost 90% of their earnings.

    The problem with having Ireland as a high tax country is that public services will remain mediocre and the insiders will continue to scrounge what they can get away with. So it’s unlikely that reasonable people would ever conclude that tax euros are being prudently spent.

    Despite much higher taxes, the standard pay of a Danish MP is almost €80,000; the equivalent TD earns €92,000.

    A Dublin TD can claim €12,000 a year for travel to Leinster House without receipts; the maximum paid to Danish MPs for housing/travel from Zealand is €13,000 and two-thirds of it is payable subject to proof of spending.

    The idea annual expense claims of giving some TDs tax-free gifts of over €200,000 would be considered an outrage in real democracies.

    @ Livonian

    IMHO apart from the Scandinavian countries it seems to me that Ireland is one of very few European countries which does not indulge in the perverted neo-liberal experiments of examining how far society is prepared to let an individual fall.

    So France and Germany force employers to pay treble the social security costs of Irish counterparts for what?

    Beyond your horizons, are a majority of private sector workers with no occupational pension and the contributory old age pension is about 33% of average earnings.

    What level pension do most non-public sector workers retire on in France, Germany or Austria?

    You also seem to be unaware of the German Kurzarbeit system.

    And under your nose, there’s a two-tier workforce about to develop beyond just temps and contractors, four decades after the campaign for equal work for equal pay for women began - - and we are all for a fair society too as long as it impacts someone else.

  59. Aidan R Says:

    @ Michael

    Given your excellent outline of the the terrible pay, work and pension conditions of those in the private sector I find it hard to understand how you conlcude that the public sector should also be reduced to the same conditions?

    Might it not be more rational to argue that employees in the private sector need to start demanding the same pay and conditions?

    Or is it better to have a perpetual race to the bottom in labour conditions - because this is the inevitable outcome of your analysis.

    Finally, you are right, Irish people will not be happy giving up their low tax regime and shift toward a Danish system. But, this is not because of public sector ‘insiders’ but because it will go to pay the bad debt of reckless banks in the private sector.

  60. Bond. Eoin Bond Says:

    @ Aidan

    “Finally, you are right, Irish people will not be happy giving up their low tax regime and shift toward a Danish system. But, this is not because of public sector ‘insiders’ but because it will go to pay the bad debt of reckless banks in the private sector.”

    No, actually its cos i think the government typically spends our taxes incredibly poorly no matter where it goes. What was Bertie Ahern saying in that interview he gave/was released this week, that we increased spending on healthcare by 400% and we still had a poor health service?

  61. Garry Says:

    “Finally, you are right, Irish people will not be happy giving up their low tax regime and shift toward a Danish system. But, this is not because of public sector ‘insiders’ but because it will go to pay the bad debt of reckless banks in the private sector.”

    It can be both Aidan.

    +1 Michael H on your suggestion that we copy Norway and all tax returns be online.

    Also every adult should be required to file a tax return which should list all income plus treat all welfare as income. By welfare, I’m including unemployment benefit, but also childrens allowances, phone line rental, rent allowance, bin charge waivers, single farm payments and so on.

  62. JohnTheOptimist Says:

    The important point is not, to my mind, the precise figures for this or that tax, about which you can get tangled up in all sorts of knots. It is about whether or not Ireland is a very unequal society.

    The Big Lie, repeated ad nauseum by Vincent Browne, Fintan O’Toole, Gene Kerrigan and virtually all of the Dublin 4 media, is that under the rapacious evil right-wing FF-led government, who were out only to screw the poor and give all the country’s money to their developer friends, Ireland became a much more unequal society and the poor were trampled into the ground. In contrast to the progressive and saintly Labour-led government before it, which looked after the poor in a proper and caring manner.

    As with everything you read in the Dublin 4 media, it is hogwash of course.

    The following are the figures for the proportion of the population living below the poverty line (60% median) from 1994 to 2009. The figures come from the ESRI Living in Ireland Surveys up to 2001, and the CSO Suvey of Incomes and Living Conditions series when they took over the function from 2003 on. But, as I far as I know, their methodology is identical.

    LIIS 1994 15.5%
    LIIS 1997 18.2%
    LIIS 1998 20.0%
    LIIS 2000 20.9%
    LIIS 2001 21.9%
    SILC 2003 19.7%
    SILC 2004 19.4%
    SILC 2005 18.5%
    SILC 2006 17.0%
    SILC 2007 16.5%
    SILC 2008 14.4%
    SILC 2009 14.1%

    What the figures show is that relative poverty and inequality increased quite dramatically when the saintly Labour Party was last in government between 1994 and 1997 (and the saintly Michael D Higgins was a member of that government), but decreased during the lifetime of the evil FF government (which the evil Sean Gallagher was not a member of, but probably voted for, which is clearly enough to disqualify him from the Presidency). As Michael Caine would say: “Not a lot of people know that”. Hands up, how many readers of this site know it or have ever seen these figures? However, given the media we have, their ignorance is excused. But, nice to see that, during the Presidential campaign, the Dublin 4 media haven’t lost their touch for demonising one side and elevating to sainthood the other side.

  63. Eamonn Moran Says:

    TRP and Eoin

    I genuinely think that we should ban talking about marginal rates. It is so misleading.
    If we want to have an honest discussion on as emotive an issue as the amount of tax people pay then we need to at least try to do it in an honest way.
    @ Eoin
    For the record I agree that Everyone should be paying at least some taxes. 10 marginal rate for those on the minimum wage should be the starting point. However my objective would be to shift towards a more Nordic system. Obviously this would have a very negative impact on our GDP and growth in the short term.
    However I think we are going to move towards Nordic levels of tax and get third world levels of service for the next while due to the massive debt overhang in the economy.
    When the repayments eventually become more manageable either due to default or because we have paid a lot of the debt down we will have a choice. Improve services or reduce taxes or just pay the people who provide the services a lot more for doing the same job.
    After your colourful oxymoron “ridiculously progressive” I am guessing you will be punting for tax reductions at that time?

  64. Johnny Foreigner Says:

    @JtO
    You are 100% correct, FF made the country more equal especially in their latter years. And yet you never hear them talk about it. Their formula of reducing median incomes through economic devastation and increasing social welfare payments to unsustainable levels is strangely unappreciated - even by themselves.

  65. The Dork of Cork Says:

    @Enda H
    Sure Enda - you are probally right - 1 post from now on unless there is a response to my ravings
    Besides the spit & drivel I produce when I read pointless conservative posts on taxing a declining money supply is not very conducive to discussion I guess.

  66. David O'Donnell Says:

    @Michael Hennigan

    Yes - I’m a fan of the Danish system - as pointed out a few times on this site. How to distinguish Ireland from Denmark …. hmmmm lets try Governance ….

    ‘@Bond …. on effectively and efficiently using such revenue.

    @John TheOptimist

    I hear Bertie has signed on Sean_een Gallachoir as an adviser (hope you are not too put out, what with dat €5k dosh up an all) - The Bowel Bertie wants to figure out how to give a director’s loan to himself before the Mahon stuff bites the dust - but he cannot remember if he has a company or not, who he might or might not have appointed to its board, and he still cannot find dat bleed1n bank account. A true social_ist … WesLife Yah … dats da name. He surely must be in line for Whinger of The Year, probably the decade, after dat DCU interview.

    p.s. Blind Biddy says Hi.

    @The Dork

    Lieveremont wants to know if you might turn out on the blind_side this weekend to further confuse the poor all blacks?

  67. Aidan R Says:

    @ Bond. Eoin Bond.

    “The government typically spends our taxes incredibly poorly no matter where it goes. What was Bertie Ahern saying in that interview he gave/was released this week, that we increased spending on healthcare by 400% and we still had a poor health service?”

    Agreed. But this begs the question why? Governments are made up of political parties. It is Fianna Fáil and the PD’s that have constituted all Irish government during the period under discussion. It should come as no surprise that all of the countries mentioned that are successful have had a long history of left leaning social democratic parties in government. Social democrats believe in taxation for public investment. In Denmark they organised a tax strike to push for the better use of citizens money. The Irish approach to taxation has always been “give people back their money and let them spend it how they want” i.e private healthcare, education

    In terms of healthcare - the new public management ideological project behind the creation of the HSE was the brain child of the PD’s. This project was informed by a centre-right ideology (I appreciate economics does not consider left or right wing politics important to technocratic management but it matters). The outcome is a total waste of taxpayers money. The general point is that taxpayers money, from a comparative European perspective, is always better spent if it is informed by a coherent left of centre (or Christian Democratic in the German case) policy project.

  68. Bond. Eoin Bond Says:

    @ Eamonn

    “After your colourful oxymoron “ridiculously progressive” I am guessing you will be punting for tax reductions at that time?”

    no, i actually won’t, i accept that the more affluent people will always have to make the biggest contribution. I believe, at a very base level at least, in a progressive tax system (although i think that it should be simplified massively via a simple flat tax + a TFA).

    However the more affluent earners already do make a massive contribution, so i just think that to keep asking them for more and more and more (effective AND marginal rates for high earners have increased hugely already - per the DoF website, a single high earner like me is paying around 7.3% more in tax than in 2008, a low earner is paying around 3-5% more) is neither just nor sensible when taken in isolation.

    As examples of how much people pay in tax (income tax, PRSI and USC, and personal, standard employee and home carer tax credits), here’s some examples per the DoF Budget website:

    “Single, full PRSI” category, 2008 vs 2011, average tax rates:

    15k income - 0% vs 2.7%
    25k income - 8.3% vs 14.0%
    40k income - 18.6% vs 24.2%
    120k income - 35.4% vs 42.7%

    “Married, full PRSI, one income, two children” (does not include child ben):

    15k income - 0% vs 2.7%
    25k income - 2.9% vs 7.2%
    40k income - 10.4% vs 14.2%
    120k income - 31.6% vs 39.1%

    “Married, full PRSI, two income, two children” (does not include child ben):

    15k income - 0% vs 2.0%
    25k income - 0% vs 2.5%
    40k income - 3.6% vs 9.2%
    120k income - 27.2% vs 33.4%

    The same Budget document also shows that 37.9% of income earners still pay 0% in income tax. We live in a ridiculously progressive tax system, and its not simply “colourful” to claim that.

  69. David O'Donnell Says:

    @all

    On Governance - Punch in Ireland and Demark here …. and note difference in Government Effectiveness

    http://info.worldbank.org/governance/wgi/sc_country.asp

    ..it does the charts etc …. [also worth looking at Germany, Finland, etc and at Greece, Portugal, Italy and France …..

    @all at all
    Anyone got an OECD link on breakdown of the low-medium Irish revenue in comparative perspective [and we need to go beyond purely income tax ….

  70. JohnTheOptimist Says:

    @Johnny Foreigner

    You are totally 100 per cent wrong.

    Try backing your arguments up with facts occasionally.

    In anticipation that someone would post along the lines you did, I had allready calculated the figures for median incomes over the period. These are the figures. As you will see, median incomes increased continuously during the period, exactly the opposite of what you claim.

    (1) 60% median poverty line in current euros:

    LIIS 1994 €4,161
    LIIS 1997 €5,468
    LIIS 1998 €6,135
    LIIS 2000 €7,663
    LIIS 2001 €8,796
    SILC 2003 €9,171
    SILC 2004 €9,680
    SILC 2005 €10,057
    SILC 2006 €10,566
    SILC 2007 €11,890
    SILC 2008 €12,455
    SILC 2009 €12,064

    (2) 60% median poverty line in euros adjusted to base 1994=100.0:

    LIIS 1994 100.0
    LIIS 1997 131.4
    LIIS 1998 147.4
    LIIS 2000 184.2
    LIIS 2001 211.4
    SILC 2003 220.4
    SILC 2004 232.6
    SILC 2005 241.7
    SILC 2006 253.9
    SILC 2007 257.9
    SILC 2008 299.3
    SILC 2009 289.9

    (3) consumer price index adjusted to base 1994=100.0:

    LIIS 1994 100.0
    LIIS 1997 105.8
    LIIS 1998 108.3
    LIIS 2000 116.3
    LIIS 2001 121.8
    SILC 2003 131.9
    SILC 2004 134.9
    SILC 2005 138.1
    SILC 2006 143.6
    SILC 2007 150.6
    SILC 2008 156.7
    SILC 2009 149.8

    (4) 60% median poverty line adjusted for inflation to base 1994=100.0:

    LIIS 1994 100.0
    LIIS 1997 124.2
    LIIS 1998 136.1
    LIIS 2000 158.4
    LIIS 2001 173.5
    SILC 2003 167.1
    SILC 2004 172.5
    SILC 2005 175.0
    SILC 2006 176.8
    SILC 2007 189.7
    SILC 2008 191.0
    SILC 2009 193.6

    The bottom line is that the median poverty line was 93.6% higher in REAL (ie inflation-adjusted) terms in 2009 than in 1994, but fewer people were below it in 2009 than in 1994 (15.5% in 1994, 14.1% in 2009). It was also 55.9% higher in 2009 than in 1997 (when MDH left office), but far fewer people were below it (14.1% in 2009, 18.2% in 1997).

  71. Joseph Ryan Says:

    Corporation tax stats on tables linked above Table CTS 1
    http://www.revenue.ie/en/about/publications/statistical/2010/index.html

    91652 (75%) of a toal 122498 companies had nil or negative trading income.

    €2948Million (74%) of total CT €4004 million was paid by companies with trading profit in excess of 10,000,000.

    So much for a vibrant domestic economy!!.

    Of course a annual reg tax of €2000 on all companies might get rid of some of the nonsense dormant and duplicate companies much favoured in this country.

  72. Bond. Eoin Bond Says:

    @ Aidan

    you are aware that FF and the unions were completely in bed with each other throughout the boom years, right, and that it was their cost agreements which saw so much of the public expenditure wasted? Unless you want to kick the unions, and so most of the public sector, out of the “left leaning” camp, which would be refreshingly honest from a left leaning supporter like yourself?

    “It should come as no surprise that all of the countries mentioned that are successful have had a long history of left leaning social democratic parties in government.”

    You should also be aware that its a very right of centre government in Sweden in recent years that has steered its economy almost untouched through the crisis.

    Also, have you ever heard of the UK Labour Party, the Greek PASOK party, the Spanish Socialist Party (PSOE), the Portuguese Socialist Party etc, who were all in power in the lead up to the financial crisis, or in PASOK’s case for most of the twenty years beforehand when they ran up huge debts and fudged accounts, right? To say that left-leaning governments lead to better governance is one of the more insanely generalistic comments posted on this site lately.

  73. DOCM Says:

    @ JTO

    It is easy to improve the equality statistics by instigating a banking and building boom and using the ephemeral tax returns that result to buy support from the electorate. Unfortunately, reversing out of this situation is more difficult as a culture of entitlement is harder to break than to create. Indeed, in order to do it without causing a social breakdown it has been necessary to maintain a deficit (i.e. borrow) in the order of €20 billion annually and up to a point where private investors were no longer willing to lend money to the Irish government. Hence, the presence of the Troika implementing a forced programme of retrenchment from the international financial fire brigade.

    These are the facts.

    But back to the subject of comparisons in relation to income tax and social welfare. I distrust international poverty comparisons, not least for the reasons outlined above for the improvement in Ireland’s figures. The debate will go all over the place until it is focused on one word: equality. The Scandinavians (and the Dutch), mainly for historical and cultural reasons, take this word literally. Most other Western democracies do not. Ireland is a curious case because there is a great sense of social responsibility at the private volunteering level when the very opposite is the case with regard to the official. Either the government is wasting your taxes or it must give you a grant. That about sums up the general attitude.

    The proposed reform of the civil service pension regime is a case in point. The concept of “legitimate expectations” trumps “equality” every time.

    A sea-change in Irish thinking is required. It is my hope that it will be forced upon us both by the lack of financial means and EU treaty provisions outlawing discrimination (which cover a much wider field than is popularly imagined).

  74. Joseph Ryan Says:

    @Bond/Eamonn

    The progression in the income tax is not very progressive.
    For single person (excl USC/PRSI)
    From €0 to €16500 0%
    From €16500 to €32800 20%
    From €32800 to €infinity 41%

    It seems to me that whatever ‘progression’ there is (to 41%) , is cutting in at a very low level and not increasing thereafter.

    I would remind those of a younger generation that in the 1980s, the following was the case for even very modest income earners.

    Income tax 65%
    PRSI 7.5%.
    ‘At the margin’ 72.5% Versus today approx 52%

    Presumably the same percentage of those funds as today went to education etc. No doubt some of todays better earners were beneficiaries of that tax funded education spend in the 1980s.

  75. Paul Hunt Says:

    Ah, Mr. Bond, it is a surprise to see you descending to ‘grubby politics’. There can be no doubt about the extent to which governments, of whatever complexion, were captured by those exercising economic power and influence in the run-up to the crash. However, governments, seeking re-election, had to distribute the available largesse fairly widely, but, in particular, on median or swing voters. But it was all a case of bribing people with their own money.

    What is interesting in the data in JtO’s latest comment is the extent to which Irish CPI took off. Much of this was driven by rent capture and monopoly profit-gouging, but it also reflects the extent to which governments failed to ensure the efficient financing of the service provision for which it was directly or directly responsible. This required a mix of taxation and borrowing for productive investment or privatisation of these activities. But neither option was chosen. Instead the focus was on getting as many voters as possible outside the income tax net and the investment was financed inefficiently via excessivly high ‘point-of-use’ charges for infrastructure and utility services. This fed into consumer prices which led to demands for higher pay or transfer payments which governments seeking re-election were happy to honour.

    But these excessively high ‘point-of-use’ charges are simply an implict and inefficient tax to compensate for government failure to ensure efficient financing of service provision.

    The further point, to which I’ve alluded previously, is that the more people who are outside (or barely in) the income tax net, the more focus they will have on extracting largesse from the central pot and the less stake and interest they will have in effective democratic governance to ensure that the taxes they pay are well spent.

    The central pot is now much reduced and we don’t have effective procedures of democratic governance to devise and implement the policies that will help to replenish it and to ensure the proceeds are well spent.

    It’s every man or woman for him or herself - and the divil take the hindmost. It’s not pretty - and it’s likelier to get uglier.

  76. Yields or Bust Says:

    @Michael Hennigan

    I’m in the over 40 camp and also in the not so small mortgage camp (albeit being fully serviced) so making general statements about age and debt dynamics as you do, may be misleading.

    Many older folk with liitle of no debt mortgages used (or more correctly our beloved banks allowed them) the equity in the homes as collateral to start businesses or become guarantors on their childrens not so small mortgages - many of said guarantees are, sadly, likely to come home to roost.

    So be extremely careful in making assumptions regarding debt overhangs in any Irish age cohort - best to assume its all bad.

  77. DOCM Says:

    @ Paul Hunt

    “The further point, to which I’ve alluded previously, is that the more people who are outside (or barely in) the income tax net, the more focus they will have on extracting largesse from the central pot and the less stake and interest they will have in effective democratic governance to ensure that the taxes they pay are well spent”.

    I could not agree more!

    It is curious to see how our everyday language becomes distorted (you yourself being an unintentional victim) the example in this case being that of “taking people out of the tax net” as if it was a trap to be avoided rather than a social responsibility. Again, the Scandinavian countries set the example. Income and tax returns are in the public domain as has been pointed out above.

  78. Yields or Bust Says:

    @Joseph Ryan

    And equally remember the significant outcome of a high tax strategy was - TWO tax amnesties to counter the black (real) economy for most of the 1980s and early 1990s and the birth of a self assessment tax system to place the onus back on the taxpayer to pay rather than on the Revenue to go around chasing citizens for cash.

    I say no thanks to a high tax economy - giving more cash to a Govt (any Western Govt it seems) is always a bad investment choice - they always find a knack of making a balls of seemingly the simple things and the ‘investment’ often ends up as a ‘liability’ - recent examples include delights such as the nationalsation of Anglo, recent ‘investments’ in the other ‘banks’ , Benchmarking x2, Terminal 2 etc etc I could go on but you get the idea.

    None too cleaver and in most cases all highlighted before the event as daft ideas whose returns were at best questionable and in their worst case disastorous.

    I appreciate there is a happy medium of State involvement required but we’ve consistently failed to find that watermark.

  79. Eamonn Moran Says:

    @ Eion

    “The same Budget document also shows that 37.9% of income earners still pay 0% in income tax. We live in a ridiculously progressive tax system, and its not simply “colourful” to claim that.”

    (Based on the table on page 6 of the 2009 revenue commissioners report from the original post I can make the following observations)

    Does it also say that all of these people (37.9%) earn less than 20,000 PA.
    Does it say that those 37%.9 of people earn just under 9.2% of the total income of the country(7.5 billion of the 82)?
    Do you know how much more revenue we would take in if we were to tax this 37% of the people at an effective rate of 10%?
    We would take in an extra 720million per year.
    So when people make the claim that it is not possible to get the money the country needs by just taxing the rich (the top 5.1%) It is important to remind them that they cant do it by taxing the poor either!

    Also I would have to question the DoF’s Stats because as Seamus Coffee pointed out earlier the USC had a large increase on the effective tax rates of people earning under 26k. Are you sure the DOF stats include USC?

    Eoin the Tax system is only ridiculously progressive if you forget that we have a very unequal distribution of income.

    It is a lot worse so in The US. Its a lot better in Nordic countries.
    I would prefer move towards the Nordics.

  80. Michael Hennigan - Finfacts Says:

    @ Aidan

    I favoured a mandatory pension system during the boom and the Pensions Board was on a similar track but the Minister for Finance’s rep vetoed the issue.

    The said minister is now drawing an annual pension of about €140k at the age of 51.

    Lord Adair Turner then chairman of the UK Commission on Pensions said in Dublin in 2006 that a “a purely voluntary system was not going to work….employers won’t provide adequate pensions for employees and individuals won’t go out and buy pensions themselves.”

    Demanding high pay and conditions now when apart from the number that face high longterm unemployment, there are likely many companies on the brink, is not realistic.

    It is true that in this clientist system, without collective power, the impression of individual access to power is an illusion.

    Contrast the way taxi drivers were treated post deregulation compared with with farmers?

    The private sector (outside of the fee cartels) has to operate differently to the public sector or should everyone be guaranteed employment?

    The Aviva job cuts which Richard Bruton termed a ‘legacy issue’ because of the fall in sales contrast with the absence of big cuts in the state controlled financial firms.

    Anglo, a bank on a wind-down and not in the business of acquiring customers still has about 1,000 staff.

    What realistically does it need: maybe 150 with a small management team?

    But who is paying for this big payroll including several mangers costing over €200 pa including pensions?

    It’s not directly seen and it’s part of the grubby till with many hands adding to the grease - - where would the sheltered private sector be without this cash cow?

    As for the Germans, since 1973, they have been mainly paying for a scheme that has prevented depopulation of the Irish countryside - - subsidising 94% of average farm income - - yes, 94%

    @ Yields or Bust

    About 40% of Irish owner occupied homes have no mortgage compared with less than 10% in the Netherlands.

  81. Yields or Bust Says:

    @MH

    Not disputing the headline mortgage debt numbers but when other debts and Guarantees are considered the situation is definately worse than the headline numbers suggest.

  82. Paul Hunt Says:

    @DOCM,

    Guilty as charged :-)

    But the more subtle point I was trying to get across in the earlier part of my comment is that the efforts to reduce the income tax liability of more and more people (and eliminating it for increasing numbers) were accompanied by implicit taxes in higher charges for services that are far more regressive and inefficient than the charges levied under an efficient tax/borrow and invest or privatised regime. The revenue to finance service provision has to come from somewhere.

    It simply baffles me that so few people recognise the damage this is doing to consumers, the economy and the process of democratic governance. But, for governments, it is a very clever ruse. Citizens can vote out of office those who levy explicit taxes - and vote to re-elect those who reduce them, but they can’t vote to eject those in the quangos or parastatal bodies who levy these charges.

    In fact we’re doomed to see even more of this with the Government’s NewERA contraption. The key problem is that, at independence, Irish citizens ‘took possession of’, rather than ’secured ownership of’, an existing model of democratic governance. The distinction is subtle, but extremely significant. A key implication is that the day-to-day functioning of the system is not employed to impose effective democratic governance on native power elites; it fact it is operated to allow then to do more or less what they like - subject to any constitutional restraints that might be activated - between general elections.

    But there is no widespread popular demand for any change. So we are where we are.

  83. Bond. Eoin Bond Says:

    @ Eamonn

    is there any point in repeating yourself again? As i noted further up above, your maths deal with how to raise money, not how to produce a fair and ‘just’ system of taxation. You keep asking for everyone to talk about effective rates, and then supply a lot of maths which has absolutely nothing to do with either average or effective rates. Your argument is about income inequality, which i’m afraid is a completely different argument to the creation of a progressive, fair or just tax system. You can have taxes at 0% for low earners and 90% for high earners and still have massive income inequality. Taxes won’t fix that. And, as JTO has admirably pointed out, in terms of inequality in our soceity, Ireland has apparently become a much more equal society over the last decade compared to some of our close neighbours.

    Finally, yes, i’m 100% sure the DoF stats include the USC, because they state unequivacally that they include the USC. Further my figures were produced alongside the 2011 Budget last November, vs the somewhat outdated 2009 Revenue figures. As noted repeatedly, the system has both changed a lot since then in terms of the USC as well as the disappearance of many tax reliefs. Remember, the USC is 2% on the first 10k, and 4% on the next 6k, and the 7% rate only kicks in after that. Even the USC is progressive in nature. Further there are reductions for medical card holders (4% ceiling) and surcharges on self employed earning over 100k (+3%, so 10% on everything above that).

  84. Joseph Ryan Says:

    @Yield
    “I appreciate there is a happy medium of State involvement required but we’ve consistently failed to find that watermark.”

    I accept the point that there is a medium, whether happy or not!.

    Nevertheless, it is crystal clear that high income earners in both PS and private sectors were huge beneficiaries of the failure of the State to burn the bondholders and force private debts where they belonged.

    Such a course of action by the State would have involved severe cuts in PS and most likely private payroll as the State was forced to adjust rapidly to the ECB carrying out the treats it promised on foot of such action. I do not think it would have involved the necessity to immediately balance the budget as argued by many people given that the IMF was clearly in favour of ‘burden sharing’ in the case of the banks.

    But there have been very clear winners in the course of action pursued by the State.
    The winners it seems want to keep their winnings without too much cost.

  85. disgruntled observer Says:

    @ Bond.

    “You can have taxes at 0% for low earners and 90% for high earners and still have massive income inequality.”

    Eh no, you won’t. I think you’ll find that the income distribution will become very normal. There’d be a massive disincentive on any company to pay, or any employee to receive, over a certain income limit if progressively taxes were to rise to 90%. It would be a de facto maximum wage, and one that I might add is badly needed. You might think things are ridiculously progressive. But only someone who hasn’t looked back past the last thirty years and/or benefited from it’s dominant ideology could think that.

    I’ve said this before, but it bears repeating. In that bastion of capitalism, the US: From 1944 to 1962 tax rates for income over $250,000 ranged from 94% to no less than 89% in the US, and was still 70% in 1980.

    I remember listening to a lecture by Elizabeth Warren where she reminisced about how kids would bemoan “my parents are so middle class”. Everybody was middle class.

    That’s the point of a properly progressive taxation system. It’s not about revenue, it’s about equality, something the US learnt during the Great Depression and forgot as memories receded. Something the Scandinavians didn’t forget.

    It also might make the great and good care about the level of public services and put some manners on the private finance sphere which is equally badly needed.

  86. David O'Donnell Says:

    @Paul Hunt

    ‘… we are where we are.’

    Oh Dear - Paul … you have been assimilated - all that copious and trenchant resistance has been futile …. I’m sending 7_of_Nine toute suite …..

    & Colonel Gadaffy has been killed in Sirte.

    @Joseph Ryan
    ‘Nevertheless, it is crystal clear that high income earners in both PS and private sectors were huge beneficiaries of the failure of the State to burn the bondholders and force private debts where they belonged.

    YES. Ergo, they can afford a percentage point or so …. which can save lives at the nether end of the human spectrum. A modest land tax would not go astray either - nor would a substantial VAT increase on state invoices to the legal and other professional ferengi - but perhaps the salary_breaking_advisors to FG/LP will veto such moves to upset their colleagues in the upper_echelon gouger fraternity. So Bruton the landed younger may continue to re-create his two-tier society ….

  87. David O'Donnell Says:

    @disgruntled observer

    Elizabeth Warren?

    Tuesday, October 18, 2011
    Elizabeth Warren’s Jobs Plan: War with Iran

    http://www.nakedcapitalism.com/2011/10/elizabeth-warrens-job-plan-war-with-iran.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+NakedCapitalism+%28naked+capitalism%29

    beats the BIS paper … almost!

  88. DOCM Says:

    @ Paul Hunt

    Again, I agree completely with this view and had it in mind to comment on it in the context of VAT levels which hit the poor disproportionately.

    But I know that your point is a different one. I do not know, for example, of any other country in the world that would consider income from parking at its hospitals as a legitimate source of income. An example of the skewed thinking that results can be found in the activities of the company contracted by the HSE to run its “parking facility”. It applies, under instruction from the HSE, the same rules to handicapped parking in its private hospital carparks as would apply on the public road. Without a certificate of permanent handicap, it is “illegal” to use them, subject to a hefty fine, even if they are outside the front door of an orthopaedic hospital! This is the explanation for the spectacle one often sees of relatives pushing patients around in wheelchairs in parking lots at a great distance from the hospital entrance. Various other elements of the health service, such as the ambulance service, have been set up as separate entities with their own lines of command. The net result is that there is nobody actually in charge in our major hospitals.

    This is not a criticism of the excellent care of the front-line medical staff who have not lost sight of the fact that the patient is, and should remain, to sole focus of a good health service.

  89. disgruntled observer Says:

    @ David O’Donnell

    Yeah, I know. I saw that. Really, really disappointing if true. I didn’t watch the video though. But the lecture she gave was fascinating.

    Apparently pre-crisis there were more families going bankrupt in the states than getting divorced. And the number one reason for bankruptcy was health care costs. They should probably add the headquarters of the healthcare companies to the list of occupied sites.

    Anyway, here’s the link:

    http://www.youtube.com/watch?v=akVL7QY0S8A

  90. Bond. Eoin Bond Says:

    @ Disgruntled Ob

    i was speaking in a very theoretical way. Simply, taxing me more won’t pay you more.

    @ All

    Off topic, but still…

    GERMAN GOVT DOES NOT RULE OUT POSTPONEMENT OF EU SUMMIT,
    QUOTING GOVT AND COALITION SORUCES- GERMAN NEWSPAPER DIE WELT

    Looks like we have a high stakes game of poker going on.

  91. hoganmahew Says:

    @disgruntled
    “Eh no, you won’t. I think you’ll find that the income distribution will become very normal. ”
    Eh, yes you would. You are confusing income distribution with transfers.

    By your argument the current system of taxation would see nobody in the higher tax bracket because companies wouldn’t pay them that much.

    My guess is that companies would pay huge amounts to offset that taxation or find other ways to game the system to the same effect. Gaming is far worse, because it is no susceptible to taxation and redistribution.

  92. disgruntled observer Says:

    @ Hogan,

    “You are confusing income distribution with transfers.”

    Eh, no I’m not.

    “By your argument the current system of taxation would see nobody in the higher tax bracket because companies wouldn’t pay them that much.”

    That’s precisely what happens in the Scandinavian economies. Ever heard of a Scandinavian Director earning the absurd amounts the Goldman Sachs crowd pay themselves.

    “My guess is that companies would pay huge amounts to offset that taxation or find other ways to game the system to the same effect.”

    That’s what the UK banks threatened to do when they wanted to bring in a 50% tax on bonuses. What they should have done was taxed them as normal income. Put in a top tax rate of 90% as Mr Bond suggested and see if they take that tack. Considering how much of their profits go on salaries, they’d go bust even faster than the last time.

    As for gaming it. They’re already doing that. It should be a law enforcement issue.

  93. disgruntled observer Says:

    @ Bond, Eoin Bond,

    “Simply, taxing me more won’t pay you more.”

    Ok, theoretically then: I beg to differ. And I’m not referring to transfers here. This is a systemic issue. In a closed monetary system with constant money all prices/wages are relative. As your’s decline, mine go up. Simple.

  94. Paul Hunt Says:

    @David O’Donnell,

    Not assimilated; just being realistic. When one of the most vocal and forceful TDs on matters of democratic governance, John McGuinness, the Chairman of the PAC, does not recognise that he and his colleagues in the Dail have all the power and authority they require to establish procedures to hold the goverment (and the machine behind it) to account and believes he has to plead with the Minister for Public Expenditure and Reform to secure permission to behave as a proper public representative and legislator, then the game is up for all of us who have long clamoured for reform of democratic governance.

  95. DOCM Says:

    @ Michael Hennigan

    I agree generally with the points that you make but not with the following as far as Germany is concerned.

    “As for the Germans, since 1973, they have been mainly paying for a scheme that has prevented depopulation of the Irish countryside - - subsidising 94% of average farm income - - yes, 94%”.

    The EU budget can be viewed as a common pot (about 2% of total EU government expenditure) into which countries are (supposedly) to contribute according to their means and receive (supposedly) according to their needs. The difficulty arises when there is disagreement on the definition of “needs”, the UK not considering the CAP as a legitimate one, at least as far as it was concerned. The result is the famous UK rebate which requires the calculation of “operating budgetary balances” i.e. who pays in and who receives.

    The details for the period 2000 to 2009 can be found at pages 87 - 89 of the “EU 2009 Financial Report” (Google) with a calculation of the percentage (positive or negative) for each member state relative to Gross National Income, the best indicator of the capacity to pay (or not). It will be seen that Germany’s net contribution is not out of line with that of other richer Member States and that Ireland’s net receipts have been rapidly falling. The major reduction in the cost to the UK because of its rebate may also be noted.

    The major problem confronting the EU in deciding the next multi annual financial framework is that Germany (with Sweden, the Netherlands and Austria) succeeded under Schroeder in negotiating a 75% reduction in the calculation of their contribution to the cost of the UK rebate, leaving the bill to be made up by the other Member states, the bulk of the money coming, of course, from France, Italy and Spain.

    Another major bone of contention to add to all the rest.

    As the Commission points out in its document (page 87);

    “This accounting allocation, among other drawbacks, is non-exhaustive and gives no indication of many of the other benefits gained from EU policies such as those relating to the internal market and economic integration, not to mention political stability and security”.

    Indeed!

    Germany has now surpassed France as an agricultural exporter (as can easily be gauged from the shelves in Aldi and LIDL).

  96. disgruntled observer Says:

    @ Hogan,

    Just re-reading my reply to your reply. I knew something didn’t sound right.

    You said. “By your argument the current system of taxation would see nobody in the higher tax bracket because companies wouldn’t pay them that much.”

    And I replied.

    “That’s precisely what happens in the Scandinavian economies.”

    Call it tiredness but I missed the “nobody” in your comment. My mistake. However, I stand over the claim that there’s a disincentive to pay high wages with an increasingly high tax rate. It stands to reason. Think of taxes to income as like friction to motion. It’s just logic.

  97. hoganmahew Says:

    @disgruntled
    “Ever heard of a Scandinavian Director earning the absurd amounts the Goldman Sachs crowd pay themselves. ”
    Ever looked?

    Where does the CEO of IKEA live? Who ‘owns’ IKEA? Where is it based?

    Just because it is secret, doesn’t mean it doesn’t exist:
    http://www.thelocal.se/12198/20080603/

  98. David O'Donnell Says:

    @ALL

    On Troika statement (in next thread …)

    The Minister said there was nothing in the discussions about increasing income tax and decreasing social welfare payments and said these were matters for the Government to decide at budget time. But he added, the troika had no difficulty with the Government “substituting one fiscal measure for another one of equal value”.

    http://www.irishtimes.com/newspaper/breaking/2011/1020/breaking4.html

    Is there a latently strategic reason why ‘increasing income tax’ is always bundled by this admin with ‘decreasing social welfare payments’? Who is being spun - and by whom - in whose interests?

  99. hoganmahew Says:

    @disgruntled
    It may be logic, but logic doesn’t take account of greed. It is illogical for bank management to destroy their banks, but somehow time and again they manage it.

  100. disgruntled observer Says:

    @ Hoganmahew,

    In fairness, I did review my hastily made comment.

    But funnily enough the link you provide proves one of my key points. The Swedish authorities don’t see tax avoidance as a reason to lower their tax rates, but as an enforcement issue that warrants action. Contrast that with what you’re suggesting which in it’s crudest form says (and correct me if I’m wrong), that we shouldn’t have high taxes because they’ll be avoided.

    “It is illogical for bank management to destroy their banks, but somehow time and again they manage it.”

    Too true. But weren’t the ridiculous bonus schemes fingered as one of the culprits of the crisis? Are they wrong when they say that the best way to rob a bank is to work for one?

  101. hoganmahew Says:

    @disgruntled
    Yes you did in fairness.

    “we shouldn’t have high taxes because they’ll be avoided. ”
    No, that’s not what I’m saying. I’m saying that it doesn’t matter what rate of tax you put on income, ways will be found to compensate some excessively, whether in income or lifestyle terms. If that means moving top executives to countries with lower tax rates so they become tax exiles, then that is what will happen. There will always be a Malta or a Monaco or a Lichtenstein or a Netherlands or a Dublin while that is permitted to be the case. Raising taxes in one country to punitive levels makes the decision easier for those who can shop around leaving behind those who cannot .

    Far better, I reckon, to address some of the other tax disparities - inheritance, CGT, dividends etc. within the current system to get the effective tax rates up at the top end. If I, as a normal self-employed, have to pay income tax, PRSI and USC on interest I earn in a bank account (on top of DIRT), I don’t see why everyone else doesn’t have to on their idle sources of income either.

  102. Eamonn Moran Says:

    “You keep asking for everyone to talk about effective rates, and then supply a lot of maths which has absolutely nothing to do with either average or effective rates.”

    yes I know but only because you did the same.

    “The same Budget document also shows that 37.9% of income earners still pay 0% in income tax. We live in a ridiculously progressive tax system, and its not simply “colourful” to claim that.”
    this contradicted your own figure
    “15k income - 2.7%”
    Your comments re the dangers of taxing people at the top (120k+) are ridiculous.
    even at the current rates of 42% for single and 33% for married with 2 incomes, it is way below what some people are paying in other countries. UKs 50p tax comes to mind.

    You also have people like warren buffet in the US telling the government to close tax loopholes and tax him more.

    I will agree with you on the point JTO made re FF’s impact in income poverty in the 2000’s. The increases in Social welfare have resulted in a decrease in inequality at a time when America and the UK were going the other way.
    This by the way was fairly much single-handedly down to Brian Cowan’s time as minister of Finance.
    What I am arguing, along with Roubini (no leftie) is that income equality actually helps growth in an economy and allowing those at the top to not distribute causes the system to eat itself alive.
    The clearest example is the US New deal from the 40’s to the 70’s v from the 80’s till now.

  103. hoganmahew Says:

    @Eamonn Moran
    Income inequality is not solved by transfer payments - it is perpetuated by them.

  104. Gavin Kostick Says:

    @ David O’Donnell

    “Is there a latently strategic reason why ‘increasing income tax’ is always bundled by this admin with ‘decreasing social welfare payments’? Who is being spun - and by whom - in whose interests?”

    I took it for granted that this is a deal by the coalition partners: no income tax increases FG, no social welfare cuts Lab. I think this is problematic for limiting room to manouvre. Silly actually.

    I also reckon that the no social welface cuts looks more get-at-able, by time limiting, or putting terms and conditions on them.

    I would support Eamonn Moran in looking for an additional higher band of income tax for higher earners. But it doesn’t look at all likely.

    I’m also thinking of Yields or Bust’s remark:

    “Notwithstanding the fact that in a capitalist society the method we have been attuned to in reward recognition is cash based. If someone has a better method then I’m all ears.”

    And trying to come up with a good answer. Hampers for bankers.

    I wonder if a Presidential candidate would care to come up with a citizen’s OBE system. Is there one?

  105. Garry Says:

    transfer some payments to me hogan and I’ll agree with you :)

    actually, if you do, I’ll ask you to transfer some more tomorrow :)

  106. David O'Donnell Says:

    @Gavin Kostock

    Yet they are separate issues. Bundling them muddies the waters …. who benefits?

    Social welfare spend is decreasing …. thousand little cuts -

    No income tax increase. Silly? Yes - there is room for a higher band. Croke Park. Silly? Yes. Unions sold out low paid private sector workers to benefit of upper_echelon PS. Bank Guarantee. Silly? Yes …. where we livin? Silly_Con Valley of the Idiot Citizen_Serfs …

  107. DOCM Says:

    @ All

    When did decrease become a transitive verb? What’s wrong with reduce?

  108. David O'Donnell Says:

    @DOCM

    ‘reduce’ doesn’t rhyme with ‘increase’ and would upset the dactyllic idyllic hexameter favoured by the troika and the upper_echelon epicurian vichy_regime - The Aesthetic Turn don’t you know!

  109. paul quigley Says:

    @ hogan

    ‘Income inequality is not solved by transfer payments - it is perpetuated by them’

    I am far fron expert on transfer payments, but that sounds like the purest ‘free markets’ ideology. Are you really saying that Bismarck was wrong to implement Social Insurance in the 1870s ?

  110. hoganmahew Says:

    ‘Wrong’ is such a perjorative word. What do you think Bismarck’s motive was? To equalise society or to preserve the existing inequality?

  111. paul quigley Says:

    @ DOCM

    Congrats to you and all posters for a terriific and wide ranging thread.

    ‘I do not know, for example, of any other country in the world that would consider income from parking at its hospitals as a legitimate source of income. An example of the skewed thinking that results can be found in the activities of the company contracted by the HSE to run its “parking facility”. It applies, under instruction from the HSE, the same rules to handicapped parking in its private hospital carparks as would apply on the public road. Without a certificate of permanent handicap, it is “illegal” to use them, subject to a hefty fine, even if they are outside the front door of an orthopaedic hospital! This is the explanation for the spectacle one often sees of relatives pushing patients around in wheelchairs in parking lots at a great distance from the hospital entrance. Various other elements of the health service, such as the ambulance service, have been set up as separate entities with their own lines of command. The net result is that there is nobody actually in charge in our major hospitals’

    I know nothing about hospital parking, but that’s a case of perverse incentivisation, which is, I think, best understood by reference to Alec Nove’s work on the economics of the former Soviet Union.

    http://en.wikipedia.org/wiki/Alexander_Nove

    Michael Lipsky’s Street Corner Bureaucracy is also instructive, but a more entertaining description is provided in Joseph Heller’s satirical novel Catch 22.

    Pay and promotion is just one of the things which motivate managers. There are always perks, and the perks sometimes outweigh the pay.

    Outsourcing management functions is common in our PS.
    Firstly it relieves the manager of tedious responsibilities which may be perceived to deliver a poor rate of return on time or effort.
    Secondly it brings in income, which attracts the kudos associated with being an
    ‘enterprising ‘, ‘sensible’, ‘businesslike’ person.
    Thirdly it establishes positive personal links with the private sector and opens the door to consultancies and other opportunities.

    What is occurring is privatisation, and balkanisation, by stealth. I suppose it’s basically leveraging ones PS executive ‘shadow’ powers. The tacit ‘rules’ of client advocacy are such that the process generally goes unchallenged, unless the client group happen to be well heeled and assertive. Result, no one represents the public interest. This will end up with people having to pay a backhander to get attention in the frontline PS.

    The rot is one more consequence of executive dominance in the Dail. The back door privatisers are confident of backing where it counts , because the roots of the current system run very deep and the parties are fairly compromised. Paul Hunt has it right.

  112. paul quigley Says:

    @ hogan

    I am no historian, but I’d guess like any other conservative politician of his day, he was taking steps to head off the threat from the the trade unions and socialists. I am sure there were many Prussiasn civil sevants who recogised the economic and social value, as well as the justice of those same payments.

    I have great time for your posts, I just thought that one was fired from the hip :)

  113. Sporthog Says:

    @ Paul Quipley,

    I know all about hospital parking, having paid 8.50e for 2 1/2 hours at one hospital car park recently.

    Not nice at all when one’s loved one is seriously ill and on the way out you get to be faced with extortion.

  114. hoganmahew Says:

    @paul quigley
    No, it was actually Bismarck and his sop to innenpolitik that I had in mind. Real incomes are what matter. Real incomes have declined for large parts of the western world in the last twenty or so years.

  115. hoganmahew Says:

    @sporthog
    Indeed. Dealing with a wife who has just had a caesarian, a firstborn, no wheelchairs, no porters, and only consultants allowed to drive close to the door is no picnic either.

  116. paul quigley Says:

    @ hogan

    Of course incomes matter, but I fail to see how one can treat transfer payments as anything other than a variety of income.

  117. hoganmahew Says:

    @paul quigley
    Because they do nothing to change the underlying position - that one section of society is underpaid for its labour versus another. It is a perpetuation of inequality since the transfer payments are applied universally by need not by ‘undervalue’.

    Anyway, they can’t be income, otherwise they’d appear in the revenue commissioners database and we wouldn’t have 40% of people earning less than 20k and Mr. Browne would be out of a job etc. etc.

  118. disgruntled observer Says:

    @ Hogan

    “Far better, I reckon, to address some of the other tax disparities - inheritance, CGT, dividends etc. within the current system to get the effective tax rates up at the top end.”

    I’d add corporation tax to that also. This corporation tax issue is ridiculous.

    “Because they do nothing to change the underlying position - that one section of society is underpaid for its labour versus another.”

    Aha. So the question is, presuming you think it’s an issue, how do you fix that problem?

    I think you have essentially one of two ways.

    1. A radical and revolutionary change in the mode of economics, i.e. abolition of markets on the line of participatory economics.

    OR

    2. Taxes that progressively climb until there is an effective maximum wage.

  119. Eamonn Moran Says:

    @ Hogan

    “Income inequality is not solved by transfer payments - it is perpetuated by them.”
    So are you against a social welfare system?

  120. hoganmahew Says:

    @Eamonn Moran
    “So are you against a social welfare system?”
    Are you a troll?

  121. hoganmahew Says:

    @disgruntled
    I think a maximum wage is a bit of a red herring. There is always going to be some redistribution as well as unequal contributions to pooled assets (i.e. the higher incomes pay more towards health, education etc.). The key for me is not to exclude certain types of income from taxation or to have tax breaks for certain types of worker - everybody should pay taxes, everybody should pay taxes at the same progressive rates, no income should be excluded.

    Tariffs have a bad name, but if we are going to protect income levels and working conditions (never mind environmental issues) we are going to have to distinguish goods that come into the EU that are produced to lower standards than we expect for our labour.

    Then there are the issues that Paul Hunt keeps raising - structures within the economy and society that favour some groups over the rest in earning terms.

  122. Michael Hennigan - Finfacts Says:

    @ DOCM

    Earlier this week, the FT presented an analysis where Ireland has a mean gross disposable household income of €53,500 compared with Germany’s €42,600.

    As for CAP, in 2003, Ireland was the leading per capita beneficiary, close to €500 and more than double the No. 2 — Greece.

    Recall those signs at road works abut European Union support?

    We even got money to support enterprise policy.

    So we should expect solidarity but we have made no net contribution to the budget in 38 years.

    Now we want radicalism of a kind from forthcoming summits but closer fiscal union would likely involave treaty changes.

    What is striking about the development of the EEC/EU is that successive enlargements from 1973 when Ireland was admitted, haveinvolved membership for countries where there has been no strategic interest but just the prospect of a new burden.

    The Irish EU haters in recent years demanding referenda, should wonder if the citizens of the original six have been asked to vote on the admission of countries like Ireland?

    In 1973, most farm households did not have running water. Eaten bread is of course soon forgotten.

  123. Eamonn Moran Says:

    @ Hogan
    “Are you a troll?”

    My question is reasonable and you resort to name calling.
    You seem to be of the opinion that transfer payments lead to an increase income inequality? I would have thought that the conventional wisdom would be the opposite.
    Lots of people are against transfer payments and that is fair enough I was just trying to establish what angle you were coming from.

  124. hoganmahew Says:

    @Eamonn Moran
    Then I suggest you look up the meanings of the world “preserve” and “perpetuate”; my dictionaries do not give “increase” as a synonym.

    You might also look at the change in income inequality since welfare state came into widespread being post 1945.

    As I say, transfer payments cover up income inequality and in doing so perpetuate it. Based on the experience of the last twenty years, you could probably argue that they increase it, although I don’t think this is going to be sustainable - the countries with the greatest increase in inequality have, as far as I can see, decreased taxes on the wealthy more than on the not wealthy - the means of funding transfer payments has been changed.

  125. Jules Says:

    @Karl

    Does your little calculator take into account the various schemes either started up or built on by the last administration which means the over 80k bracket pay a significantly less percentage tax than the middle bracket. Those schemes are BES, lets build a property that no one wants in Ballybef***, lets call myself an artist etc. etc. etc.., lets NOT have a property tax on my mansion, like every else in the world, lets NOT have a tax on my massive pension contributions like every else in world, lets not pay for my darlings to go to University like every else in the world. If we dont face up to the taxation issue in this country we are going to desperately cut social welfare and government services, sacrifice our education system to the God of euro. Also the cuts will send the country in a steep recession and we still go down in a sea of red ink. Tax or be damned.

  126. Livonian Says:

    @Michael Hennigan

    Congratulations you managed to provoke me into responding to you which has also probably been assisted by the fact that I have to babysit while the better half of the Livonian parenting experiment is kind enough to explore the delights of Saturday night for both of us:

    The Irish state contributory pension (12 K a year) is much higher than 33% of the average single earner “take home pay” in the private sector. In fact the majority of single private sector workers only take home about twice the state contributory pension without the benefit of medical cards, free travel, etc until they are above retirement age.

    Then again as I only have limited “horizons” maybe my estimates are wrong (and most average private sector workers are actually”taking home” north of 500 Euro a week in which case I cannot see why you are referring to the emergence of a two tier system in the work force.

    You may have noticed a general election in Ireland earlier this year which reintroduced the minimum wage and left Minister Bruton blowing on a solitary bugle even within his own party.

    A two tier system (in the private sector)will only fully emerge if the electorate allows it.There are two hopes of that and one of them unfortunately is no longer with us.

    The Irish electorate is much more sophisticated than electorates in most
    other democracies and a lot more educated than it was 20 years ago when there was also a danger of the emergence of a two tier system in the work force. (I am only speaking about the private sector because the public sector has “tiers” which are currently orbiting the stratosphere and will have to reconcile the “two,or more, tiers” it is introducing)

    Is there any possibility your arguments became a little entangled ?

    You provide great information and I learn a lot from your information but believe it or not “playing the ball and not the man” is actually quite easy.

    Attempting to categorise people is IMHO also a pointless activity because by paying attention to the what another person is saying rather than making presumptions about their “horizons” runs the risk of missing the fact that many of your ideas may actually be resonating with the other person.

    Then again you may just like a good old fashioned argument in which case I am afraid I cannot oblige.

    There are good reasons why I use a pseudonym and in return for being allowed to use a pseudonym I consider it essential that I try to play the ball and not the man” and only comment when I feel I have something to contribute. Consequently I rarely respond to “comments about my comments” so congratulations on provoking an exception from me.:)

    BTW the Kurzarbeit system is not flawless and does not protect everyone from abject poverty. The harsh reality is that “Plat de Jour a la local garbage bin” among unfortunate people is tolerated in Germany (and most other European countries excluding the Scandinavian nations) much more than it is in Ireland.

    @Karl re Dork

    Personally I do not find Dork annoying although I often scroll over his comments. On occasion he has come up with “gems” in the middle of everything he writes. If he realises he is annoying people I am sure he will take note.

    @Karl re : etc

    Apart from a “brief bout of emotion” during the summer this excellent site IMHO usually maintains a respectful tone. Some forums range from a cyber version of the “Mad hatters tea party” to the outright vindictive. This site has never delved to such depths and as a result is followed very closely throughout Europe and elsewhere.

    Best…L

  127. Livonian Says:

    Apologies should have written:

    ….paying attention to what another person is saying rather than making presumptions about their “horizons” AVOIDS the risk of missing the fact that many of your ideas may actually be resonating with the other person. :)

  128. Aidan R Says:

    Any policy policy proposal on taxation in the current crisis (i.e extreme limitation of resources) is pointless in the absence of a discussion on the overall distribution of income and wealth in the economy.

  129. David O'Donnell Says:

    @Livonian

    ‘BTW the Kurzarbeit system is not flawless and does not protect everyone from abject poverty..’

    The purpose of the Kurzarbeit has a lot less to do with alleviating poverty - and much more to do with maintaining productive capacity, maintaining employee skills and firm specific human capital, and [a key point which Irish admins have some difficulty in visualising] maintaining viable firms (especially SMEs) in reasonably fit condition while awaiting an upturn - which makes economic sense ….

  130. Livonian Says:

    @David @Livonian

    Well written . I know what the objectives of the Kurzarbeit system are and agree completely that those objectives make “economic sense”.

    I must admit to also being confused about why Michael H felt it was necessary to refer to the Kurzarbeit system when reponding to my comments about comparative poverty levels (and the more frequent incidences of occasionally needing to include “Plat de Jour a la local garbage bin” in one of those countries) in Germany and Ireland.

    IMHO “economic sense” and maintaining productive capacity in lean times does not necessitate tolerance of abject poverty among the most vulnerable people in a society. In Ireland we need to do more of the former without abandoning the latter.:)

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