The Flat Truth About Tax

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Estonian Ambassador to Ireland Mrs Kristi Karelsohn (left) with Lucinda Creighton TD and Eddie Hobbs at the Renua Flat Tax symposium, December 2015.

Can you handle it?

Our taxes are not ‘stolen’ from us – they pay for nurses, guards, building schools and Michael Noonan’s salary.

Dr Rory Hearne writes:

As part of a debate I took part in on Renua’s ‘Flat Tax’ on the Pat Kenny show on Newstalk yesterday, both Pat Kenny and Eddie Hobbs (who made the case for Renua) referred to the situation whereif you are paying over 50% of your income on tax then you are working 6 months for Michael Noonan and the next 6 months you are working for yourself.

This once more highlights the need for a reshaping of the discussion around tax.

Tax is not ‘taken away’ from you, ‘stolen’ or a ‘burden’ – we get our taxes back through the schools our children go to, the roads we drive on, the buses we use, the hospital we go to.
Renua has put its 23% ‘flat tax’ proposal as the corner stone to its Election Manifesto for the coming General Election.

Analysis of the figures show that it is a policy that will benefit the most higher income earners and wealthy.

The results from Renua’s tax calculator shown in the graphs below highlight that if their flat tax (plus graduated income benefit) was introduced:

 

1

A single person on a gross salary of €20,000 will increase their take home pay by 2.4% (€451) per annum.

2

While a single person earning a gross salary of €200,000 will increase their take home pay by a massive 42% (€45,000 per annum) – from the changes.

This change would significantly worsen our already serious problem of income inequality where over half of all income goes to top 20% of earners.

In regard to the tax revenue base for public services – the 23% flat tax proposal would decimate public services and usher in another round of austerity budgets.

KPMG’s supportive analysis of the flat tax, which Renua has drawn on, states that the flat tax would result in an initial shortfall of between four and five billion in tax revenue. While the Revenue have calculated that it would lead to a shortfall of €9bn.

Renua and KPMG argue that the shortfall would be made up relatively quickly as a result of the increase in economic activity and spending from the tax cuts which would feedback through increased consumption and employee tax.

However, both the IMF and OECD in studies on countries that have implemented the flat tax have found that such an increase in revenue has not been consistently found.

Introducing such a flat tax will therefore undermine the (already low) tax base in Ireland (as will other tax cut proposals such as cutting the USC). It is repeating the mistakes of the Celtic Tiger tax cuts that lead to austerity when unreliable taxes such as stamp duty collapsed in the economic crash.

So where will the much needed tax revenue to pay for high quality public services and infrastructure come from? Where will we fund the additional nurses, guards, teachers, hospitals, social housing, elderly care, roads, flood defences, schools that we all know needs substantial increase in public spending and investment?

Currently we have the lowest investment in capital infrastructure in the history of the state. On the basis of planned cuts to the USC and the current government policies then by 2019 we will end up with the lowest government expenditure in the EU. Renua’s proposals would make this crisis situation even worse.

It is also worth pointing out that the countries that Renua point to as models for Ireland to follow are Estonia, Latvia and Singapore. Lucinda Creighton writes in their opening introduction to their Manifesto that Renua’s aim is for Ireland ‘to become the Hong Kong of Europe’.

But the graphs below show that Hong Kong is one of the most unequal places in the world. Their levels of inequality are double that of Ireland –and worse than the grossly unequal US.

3

As for Estonia and Latvia, these are the two most unequal countries in Europe. These countries follow the free market, laissez faire, economic models which see the top and wealthy gain the most.

4

Hardly the models Ireland wants to follow?

It also important to highlight that income tax is only one part of the tax people pay. There are also indirect (consumption or stealth) taxes such as VAT, motor tax, A & E charges, water charges etc. VAT takes in a third of all taxes. And lower income households pay a 5 times higher rate of their gross income on these consumption and stealth charges than those on higher incomes.

Lower income households pay between 27 and 18% of their gross income on indirect taxes in contrast to between 5 and 8% of higher incomes. That is why lower income households have opposed the water charges so intensely. Because they are hit much harder by such consumption charges.

So we can see that the focus on reducing income tax and USC benefits higher income households more. And they know this.

In an Opinion Poll for the Irish Times in September last year – which social class group was most in favour of a cut to the USC? You guessed it – it was the highest social class AB.

Which begs the question – are the political parties clear that they are shouting loudest in favour of the interests of the top 20% when they argue for these tax cuts?

The opinion polls also show that this obsession with tax cuts by Renua (and most of the other political parties) is not what the public is looking for.

In fact, the polls show that a majority favour investment in public services rather than cutting taxes.

The recent Eurobarometer poll shows that in Ireland people’s main concerns are housing (34%), health and social security (29%) and unemployment (32%) – with tax much less of a concern (9%). While the Behaviour and Attitudes survey commissioned by TASC in June 2015 showed that almost 70% of people felt the government should prioritis investing in public services rather than spending money to cut income taxes.

5

Eurobarometer survey 2014

Of course our tax also goes to pay for Michael Noonan’s salary (which, as with all politicians – is way too high) but that is not the point. The point is that the argument of tax being ‘stolen’ from us or ‘taken’ – or the phrase the ‘tax burden’ – distorts the truth about tax.

The truth is that we get our tax back through public services – when we use a hospital, go to college, drive on a road, take the bus.

And that is why rather than cutting taxes – we should be finding ways to fairly raise the taxation base (such as introducing a third higher rate of tax on incomes over €100,000 or a wealth tax on financial assets).

Hopefully this truth will see some light during the noise of the election debate.

Dr Rory Hearne is a Senior Policy Analyst with TASC, the Think-Tank for Action on Social Change. His regular column appears here on Wednesday mornings. Follow Rory on Twitter: @roryhearne

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77 thoughts on “The Flat Truth About Tax

  1. Martin Heavy-Guy

    Fantastic, thanks for the clear research and explanations, which are common sense but it’s nice to have them in graph form.

    Problem: Every one of these gombeens that we have a choice to vote for swing hard to the right and it doesn’t make a spit of difference which one gets in, they are all vying for a lower tax bracket for high earners, because they themselves are high earners.

    Solution? Not RENUA…

  2. Clampers Outside!

    Are they still on about this nonsense.

    Look a family of four spends what a family four needs to.

    But just because one family of four is on €40,000 and another on €200,000 does not mean that the family on a higher income will spend more. This is the same bullcrap economics that “trickle down” is based on.

    Fupp off Renua and Hobbhs you thick fuppin’ poor excuse for an FG carbon copy.

  3. Declan

    So did he just endorse the Social Democrats? I thought Rory was PBP man.

    Also, the all politicians are highly paid argument is bollocks. Give me a well paid one any day over a corrupt one. But I think Malcolm Tucker said it best “no one likes to see a comfortable minister” (paraphrasing).

    We all want higher pay but I don’t think we like the other guy getting it

  4. Chris Mass

    We all use roads, hospitals, schools, public services etc . Why should some people be expected to pay much much more and others much less to use the exact same services. People should not be punished for achieving a well paid job. Im not talking about heads of state companies or politicians here as their salaries are ridiculous. . But, I mean if i was on 200k a year and 91k was going on tax id be pretty peeved. I am not a high earner but if everyone paid the same with additional supports for genuine less well off people then this model is something id support.

    1. MoyestWithExcitement

      “People should not be punished for achieving a well paid job.”

      Taxes aren’t punishment, FFS. If you’re on 200k, you can spare more money for the schools our children need than someone who works the checkout in Aldi.

      1. Chris Mass

        e.g- But my children are going to same school, receiving the same education, from the same teacher. Should I have to subsidise your portion of school funding? That,s what i mean for additional support for the less well off family. A school grant which i (e.g) would not qualify for.

        1. MoyestWithExcitement

          If you can spare more, then yes. Our children need teachers. Those children need to be paid. We can take the money off someone working the checkout in Aldi who can barely make ends meet as it is, or we can take it off someone who’ll still have €100k a year to live on after we’ve taken it.

          1. Chris Mass

            e.g If I have worked hard to do well at college, get a good job and work my way up the ‘ladder’ to get paid more in my job then the idea of me having my money “taken” from me to fund people who haven’t made that effort/choice then its not a fair system. People in lower paid jobs cannot expect to have everything handed to them or feel its someone else’s fault that they haven’t got a better paid job. The same way higher paid earners cannot expect to avoid paying fair taxes or feel that can milk any benefits from the state.
            We all get the same level of education at a young age and it is more about effort and bettering yourself that should be instilled more in people than ‘expecting’ to be subsidised at the expense of other people, regardless of job or finances.

          2. MoyestWithExcitement

            Subsidised? Expecting things to be handed to them? Who are you talking to? I was talking about how a flat tax is completely unfair. What has that got to do with people having stuff handed to them?

          3. LW

            @Chris Mass – if you have gone to college and school in Ireland, it has been funded by the tax system. Your success is not solely a result of being good at spelling tests. You’re the product of social services funded through tax. Possibly the product of generations of incremental improvement thanks to the same social services. A shortfall of €9 billion would, without question, impact heavily on the system’s ability to provide services. Instead of seeing the taxes as being taken for you, see yourself as repaying the society which provided you the opportunity to flourish.

          4. Clampers Outside!

            @Chris Mass

            You forget that if you are in college and earning a well paid job… you already had a lot of “privileges” just to get there, including my taxes keeping down the cost of that college.

            Maybe you should have an €80,000* loan to pay off for your college… would you be happier then?

            “We all get the same level of education at a young age” ….but some come home to a warm meal and a safe home to study in, many don’t. Believe it or not, that is called ‘privilege’.

            * Number worked out with a pencil after some frustration and a laxative

          5. John

            Why is that “privilege” doesn’t apply to:

            – non-whites
            – non-Christians
            – women

            If you’re a lesbian, half black/half caucasian university professor who went to an Ivy League school, lives in a $1m apartment and supports “Black Lives Matter”, you’re immune.

            Whereas if you’re a white, middle-aged, blue collar, God-fearing man who likes hunting, big engine cars and young women with blond hair and big jabs, you’re a privileged danger to society who needs to be sent on mandatory “awareness/consent” courses designed by metropolitan transgender professors (like the above) who live 1000s of miles away and have never been more than 50 miles from a major international airport.

            In Ireland’s case, “privileged” means:
            – white
            – Christian parents
            – working parents who value private education
            – gets a job, pays taxes, pays for healthcare

            “underprivileged” means:
            – never worked, never paid taxes
            – gaff in city centre
            – spends 50% of disposable income on booze/fags
            – reproduces at a rapid rate

            I know lots of so-called “privileged” people caught in rent traps – they cannot save, work 60 hours a week and have SFA to their name after 10 (sometimes 20 years) of work. To be honest, given a choice, I’d sooner be caught in a “poverty” trap (Irish version of “poverty”) than a rent/worker-drone trap. In the case of former, the money ain’t great, but the hours aren’t bad.

            We live in an increasingly screwed up country/world where common sense is out the window. We need to reward work, value effort and create a more equitable, meritocratic society. Not in a Commie/socialist way. Nobody is articulating a vision for the future bar a few notable exceptions – people like Archbishop Martin.

          6. sǝɯǝɯʇɐpɐq

            @ ‘John’

            Your polarisation of the non-existant situation has made it much clearer for me.

            -But then you threw in Archbishop Martin at the end, and now I’m almost as confused as you are.

          7. LW

            @John That is just beautiful. And what does the bould Archbishop say about “young women with blond hair and big jabs”?

          8. MoyestWithExcitement

            “Whereas if you’re a white, middle-aged, blue collar, God-fearing man who likes hunting, big engine cars and young women with blond hair and big jabs, you’re a privileged danger to society who needs to be sent on mandatory “awareness/consent” courses designed by metropolitan transgender professors (like the above) who live 1000s of miles away and have never been more than 50 miles from a major international airport.”

            Straw man alert. White privilege, to put it as simply as possible, means it’s assumed you’re a good person. Non whites are frequently *suspected* of being criminals/criminally minded and/or stupid and/or lazy. Look at all the refugees being branded as either terrorists or economic migrants who are chancing their arm.

        2. nellyb

          If properly organized and managed, taxes would provide dignified safety net for all citizens if terrible things happened (disability, chronic ilnesses, lost of income provider etc). I don’t believe private life insurance can be relied on long-term. And try to get them money out of them. Probably die from stress in the process.
          We live in a country, not a house. You neglect what’s outside your door – you’ll drown in brown.

      2. Lorcan Nagle

        “Taxes aren’t punishment, FFS. If you’re on 200k, you can spare more money for the schools our children need than someone who works the checkout in Aldi.”

        This with bells on. I work in IT and make a decent wage, but when I left college I couldn’t get a job in my chosen vocation for nearly 3 years. I ended up working in a Tesco warehouse making a wage so low it was increased by the Partnership 2000 initiative. Every single time I’ve changed jobs I’ve gotten a raise, and I’ve paid more tax, but I’ve still got more money coming to me after that increased tax rate. Every single time. And sure, it’d be nice if I had even more cash so I could go buy whatever I want whenever I want, but I remember the times when I had nothing and how hard it was to get by.

        I have no problem paying more tax than someone who works a zero hour contract in a call centre, or behind the deli counter in a centra, because I can afford it. A little bit of empathy isn’t too much to ask.

  5. Tish Mahorey

    Crime is also a major concern. Scumbags shooting each other from moving cars is not normal and shows they have no fear of being caught and punished.

  6. Chris Mass

    @LW Again it a case that we are all in the same boat at one point in time. If I went to college and was funded by the tax system then so was the Johnny in my class who didn’t make the effort. He spent his time missing lectures and going out on the piss. Then he dropped out after failing his exams in third year and now has a job in a local german retailer (not @MoyestWithExcitement) while I am in a higher paid job in a multinational. We both drive the same roads, use the same healthcare system and our kids are in the same class in the same school. And here is Johnny saying I should 20 or 50 percent more tax than him just cos he is where he is and I have money “to spare”?! How is that fair?

    I do agree that there will be a big hole to fill with this proposal but having this “oh he’s doing better than me, he can pay more” idea is unequal in itself

    1. MoyestWithExcitement

      “Again it a case that we are all in the same boat at one point in time.”

      No, we are not. Do you think a Anto Byrne from Clondalkin has the same chance of success as Fionan Higgins from Foxrock.

      “If I went to college and was funded by the tax system then so was the Johnny in my class who didn’t make the effort. He spent his time missing lectures and going out on the piss. Then he dropped out after failing his exams in third year and now has a job in a local german retailer (not @MoyestWithExcitement) while I am in a higher paid job in a multinational.”

      You can’t base your entire view of social welfare and tax on a straw man. Most people in those low paying jobs never went to university.

      “And here is Johnny saying I should 20 or 50 percent more tax than him just cos he is where he is and I have money “to spare”?! How is that fair?”

      Because you can afford it. Again, if we need money to pay for teachers, why should we take it from someone who already struggle to pay the rent and not take it from someone who’ll still have 100k to live on afterwards?

      1. ReproBertie

        It’s Marxism 101 Chris – “From each according to his ability to each according to his need.”

        Of course Marxism is not the only way to run a country but Ireland is run with a socialist tinge (or a Christian one if you want to live that whole you have two coats and he has none stuff) and it’s really nothing more than an acknowledgment that, despite appearances, we’re all in this together.

      2. Chris Mass

        Anto Byrne has as much opportunity as any one else. Fionnan might have the latest iPhone or newest clothes but they are still both able to make something of themselves if they apply themselves. Regardless of their address they can still complete primary and secondary education, apply to university/regional colleges, get a trade, get a job, volunteer, use access routes to further education, improve their CV and contribute to the society that we all use and live in. Anto isn’t doomed to a life of neglect, low paid jobs, and socio-economic disadvantage.
        As I said above there is a hole to fill financially to fund public services from this proposal but your logic of “because i can afford it” is like a shop charging Johnny E2 for a carton of milk and charging a higher earner E10 cos “he can afford it”!

        1. MoyestWithExcitement

          “Anto Byrne has as much opportunity as any one else. Fionnan might have the latest iPhone or newest clothes…”

          He also has contacts because he’s from Foxrock and his parents are well to do. He wants to be an accountant so his dad rings his pal who owns his own practice to see if he’ll take on young Fionan as a trainee. Anto comes from Neilstown and his da was an alcoholic. He doesn’t know anyone. Anto has to send speculative CVs which could get lost in a pile or thrown out when someone sees the return address is Neilstown. Same opportunity as everyone else? Seriously, that’s just factually wrong.

          “Anto isn’t doomed to a life of neglect, low paid jobs, and socio-economic disadvantage.”

          Doomed? No, but he has a much MUCH harder job getting to the top than someone born to a rich family in Dublin 4, wouldn’t you agree?

          “As I said above there is a hole to fill financially to fund public services from this proposal but your logic of “because i can afford it” is like a shop charging Johnny E2 for a carton of milk and charging a higher earner E10 cos “he can afford it”!”

          It’s not like that at all. It’s not even close to being like that. You can’t compare a product sold by a private company to a service everyone needs and so is paid for by the communal kitty. Do you think someone on 20k a year should have to live on 15k a year (the dole is about 12k) after tax so you can feel like you were treated fairly?

          1. Chris Mass

            Now you are talking about the straw man example! That type of ‘wink wink who ya know, not what ya know’ is there obviously and cannot be avoided but that is not the way majority of society get a job. Its most qualified person and the best person for the job. Anto’s journey to the top is what he makes it. It might be more segregated in your example but that is an extreme case.
            You can’t compare a product sold by a private company to a service everyone needs and so is paid for by the communal kitty
            Its an analogy for us both receiving the same product or service that we both use or need, I am charged much more than you “cos i can afford it”
            Do you think someone on 20k a year should have to live on 15k a year (the dole is about 12k) after tax so you can feel like you were treated fairly?
            No i do not but that comes back to my original point of additional supports for people who are genuinely less well off.

          2. Dόn Pídgéόní

            “Its most qualified person and the best person for the job.”

            That’s sweet in a way

          3. MoyestWithExcitement

            “That type of ‘wink wink who ya know, not what ya know’ is there obviously and cannot be avoided but that is not the way majority of society get a job.”

            There is a reason the saying ‘It’s who you know not what you know exists.’

            “Its most qualified person and the best person for the job.”

            That is not reality. Hiring human beings is not a mathematical equation.

            “It might be more segregated in your example but that is an extreme case.”

            Ok. So let’s take a very, VERY, common case. Anto and Fionan both go to UCD. Fionan’s parents pay for his rent and give him pocket money so he can focus all his time on his studies. Anto’s parents can’t afford that so he needs to get a job and this affects his studies so he ends up with a lower grade. Are you STILL saying Anto and Fionan have the same chance in life? Really?

            “Its an analogy for us both receiving the same product or service that we both use or need, I am charged much more than you “cos i can afford it””

            But as I already explained, that analogy doesn’t work. You can’t compare those situations. You don’t need to buy that milk and the owner of the company doesn’t need to make a profit from producing milk. We ALL need an education. Teachers NEED to be paid so they can eat and have shelter. We all HAVE TO make sure they get that so they can give our children the education the law says they’re obliged to have until they’re 16. That is just not the same as buying a pint of milk.

            “No i do not but that comes back to my original point of additional supports for people who are genuinely less well off.”

            This whole Broadsheet post is about taxing people on 20k the same percentage as someone on 200k. “Additional supports” have nothing to do with that.

          4. Shayna

            So how does it all work out in the end for Anto and Fionnan? Their eyes meet in a crowded bistro in Ranelagh?….(to be continued)

    2. LW

      Johnny sounds awful. But apart from your lingering grudges towards him, first I’d like to point out there’s already inequity within the education system, because not everyone has the same access. College is still an expensive proposition, even subsidised as it currently is. The healthcare system is close enough to two-tier as things stand. And funnily enough, with Johnny’s lower income, he’s actually in a position where he’s more likely to be paying higher road tax, as older cars don’t qualify for the newer lower bands.

      Actually I think your answer is contained within your own argument. We all get the same early education, and we all pay the same tax on the early part of our income. If, as you say, you choose to go on to get a higher paid job, you know that it will bring a higher tax bracket with it. It won’t cost you money though, because the money you have earned equal to Johnny’s is taxed at the same rate. Which seems fair. If you choose to chase that higher paying job, it can’t really come as a surprise to you that higher earnings are taxed at a higher rate, because it has been a long standing feature of the tax collection here.

      Finally, agreeing that there is a hole in the proposal does nothing to fill it, any more than a flat tax will do anything to fill the hole in the budget

      1. scottser

        all very well, except you fail to mention that the tax system favours those who are wealthy. they can afford to hire accountants and lawyers to best advise them on how to minimise their exposure to tax liabilities.

        1. MoyestWithExcitement

          Yep. I remember reading about the WWF getting the lawyers out for some very basic wrestling game in the App Store designed by 2 people. People at the top will crush anything that threatens even a cent of their income.

      1. ohrotide

        Now that’s unfair. I don’t like this ganging up on Chris Mass. I don’t think that he really wishes ill on those who pay less tax, or that he resents having to contribute to services through a higher tax band.
        I think he just wanted to use this thread to point out that he’s doing better than Johny (“a higher paid job in a multinational”, no less).
        Kudos to you Chris!
        Kudos.

    3. Charley

      I went to school with someone like you, arrogant from a young age, he did well ,got to management level in a multinational , they pulled the pin when the grants ran out, yer man had no other skills, ended up back living with his mother and signing on at 40 so don’t be so sure that it won’t happen to you.

  7. Ferret McGruber

    Thank you Dr. R for that clear analysis. I’m delighted to have your facts and figures as to why Renua scare me so much. They’re like the Progressive Democrats on steroids.

  8. Kolmo

    The presumption if we don’t pay politicians their very high salaries they would be bribed or corrupt is nonsense – if someone is criminally inclined, regardless of income, they will be corrupt. Stop voting for spivs and shills.
    Has anyone the salary figures of our politicians compared to other similar nations? I suspect like most things here we ain’t getting a bargin

  9. Zaccone

    “Lets reduce government revenue by €9bn, then hope for the best that it might be restored from other sources that we have no concrete evidence for. Trickledown baby!”

    What could possibly go wrong with such a plan?

  10. Andy

    Chris,
    Out of the EU28 countries (2012 figures below):
    – Ireland has highest proportion of people living in households classed as Very Low Work Intensity (23.3%),
    – Ireland has the 3rd highest proportion of people living in households classed as Low Work Intensity (11.7%),
    – Ireland has the 9th highest proportion of people living in households classed as Medium Work Intensity (18.5%),
    – Ireland has the 11th highest proportion of people living in households classed as High Work Intensity (20.6%),
    – Ireland has the lowest proportion of people living in households classed as Very High Work Intensity (25.3%).

    Now, the reason all your hard work doesn’t give you as much as you would expect or as much as you’d get to keep in other countries is mainly because there is very few people in Ireland who are actually net contributors to the tax system.

    The 23.3% of Irish Households classed as Very Low Work Intensity (essentially no one in the household works for more than 20% of their available time – no one works more than 7.4 hours a week) compares with an EU28 average of 10.4%. We have twice the amount of households where no one works. The 2nd worst performer in this category is Hungary at 16.7%.

    Now, add those classed as Low Work Intensity (no one works more than 40% of their available time – approx 15 hours a week). This gives us 35% of households in Ireland where no adult works more than 15 hours a week)

    The EU18 average for Households in both VLWI and LWI is 17.5%. Ireland has twice as many people in these categories as the EU18 average. That’s 1 in 3 households in Ireland has no one working over 15 hours a week.

    The EU18 average for combined Very High Work Intensity and High Work Intensity is 64.5%. However, Ireland’s combined % of total households is only 46%.

    So what does that mean. We have 20% less households working full time and 18% more households not even working 15 hours a week.

    As such, relative to our European peers Ireland has a smaller number of fully working households which are require to pay for themselves as well as the higher number of barely working households.

    In Sweden you pay high rates at high income levels but you also get massive benefits. Also Sweden has a much much higher level of people classed as VHWI and HWI (81% of all households versus Ireland’s 46%).

    Until the LWI & VLWI figures increase dramatically, those in the VHWI & HWI categories will have to continue incurring penal marginal tax rates and a lack of access to services.

    As Cormac Lucey put it:
    “Ireland’s poverty problem is not that welfare benefits are inadequate. It is that that Ireland’s poor work far less than their counterparts anywhere else in the EU. Our figures in this regard are startlingly bad and, in a European context, strikingly anomalous.”

    http://economic-incentives.blogspot.ie/2014/12/at-risk-of-poverty-rates-ireland-and.html

    Now, I’m sure my crass use of statistics will have me labeled a blue shirt or a shill or something.
    And if folks don’t like the above link, how about they put in the effort and validate them on the Eurostat website.
    http://ec.europa.eu/eurostat/tgm/refreshTableAction.do;jsessionid=YPKOhR0jFKUnGRVjMCJpwFB-iBx7RWMXKSA3qsqftD9K1ylDbgis!-1527901574?tab=table&plugin=1&pcode=t2020_51&language=en

  11. Andy

    Out of the EU28 countries (2012 figures below):
    – Ireland has highest proportion of people living in households classed as Very Low Work Intensity (23.3%),
    – Ireland has the 3rd highest proportion of people living in households classed as Low Work Intensity (11.7%),
    – Ireland has the 9th highest proportion of people living in households classed as Medium Work Intensity (18.5%),
    – Ireland has the 11th highest proportion of people living in households classed as High Work Intensity (20.6%),
    – Ireland has the lowest proportion of people living in households classed as Very High Work Intensity (25.3%).

    Now, the reason all your hard work doesn’t give you as much as you would expect or as much as you’d get to keep in other countries is mainly because there is very few people in Ireland who are actually net contributors to the tax system.

    The 23.3% of Irish Households classed as Very Low Work Intensity (essentially no one in the household works for more than 20% of their available time – no one works more than 7.4 hours a week) compares with an EU28 average of 10.4%. We have twice the amount of households where no one works. The 2nd worst performer in this category is Hungary at 16.7%.

    Now, add those classed as Low Work Intensity (no one works more than 40% of their available time – approx 15 hours a week). This gives us 35% of households in Ireland where no adult works more than 15 hours a week)

    The EU18 average for Households in both VLWI and LWI is 17.5%. Ireland has twice as many people in these categories as the EU18 average. That’s 1 in 3 households in Ireland has no one working over 15 hours a week.

    The EU18 average for combined Very High Work Intensity and High Work Intensity is 64.5%. However, Ireland’s combined % of total households is only 46%.

    So what does that mean. We have 20% less households working full time and 18% more households not even working 15 hours a week.

    As such, relative to our European peers Ireland has a smaller number of fully working households which are require to pay for themselves as well as the higher number of barely working households.

    In Sweden you pay high rates at high income levels but you also get massive benefits. Also Sweden has a much much higher level of people classed as VHWI and HWI (81% of all households versus Ireland’s 46%).

    Until the LWI & VLWI figures increase dramatically, those in the VHWI & HWI categories will have to continue incurring penal marginal tax rates and a lack of access to services.

    As Cormac Lucey put it:
    “Ireland’s poverty problem is not that welfare benefits are inadequate. It is that that Ireland’s poor work far less than their counterparts anywhere else in the EU. Our figures in this regard are startlingly bad and, in a European context, strikingly anomalous.”

    http://economic-incentives.blogspot.ie/2014/12/at-risk-of-poverty-rates-ireland-and.html

    Now, I’m sure my crass use of statistics will have me labeled a blue shirt or a shill or something.
    And if folks don’t like the above link, how about they put in the effort and validate them on the Eurostat website.

      1. Andy

        Yep, big increase in 2009 but it is also worth noting that Ireland has always been the worst or second worst performer in the VLWI category (including during peak boom/lowest unemployment years).

        Regardless of what caused it, right now (Y/E 2014) VLWI category comprises 21% of the population and they’ve to be paid for by those in HWI & VHWI categories.

    1. Mickey Twopints

      I’m trying to get my head around this, but it’s like drinking from a fire hose. Am I interpreting the following chart correctly? Is it really saying that 424 of every 1000 single-person households is effectively unemployed? 523 of every 1000 lone parent households also? Even after making allowances for the fact that the government doesn’t count those on courses, Jobbridge and CE schemes etc. as unemployed, those numbers just don’t make sense to me as a layman.

      http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Proportion_of_population_aged_less_than_60_living_in_households_with_very_low_work_intensity,_by_household_type,_2013.png#file

      1. Andy

        That’s correct.
        That table relates to the entire population below the age of 60 so it would include children etc.

        42.4% of households comprised of single persons are VLWI,
        52.3% of lone parent households are VLWI,
        11% of households with 2 parents and 1 child are VLWI,

        Single person households make up approx 25% of the total 1.6mm households (Census 2011)
        The lone parent EMployment rate is only about 43% so 57% of them are unemployed or not seeking work (which means there’s no one in the household working = VWLI)

        1. Mickey Twopints

          According to this: http://www.academia.edu/4529287/Measuring_low_work_intensity_an_analysis_of_the_indicator

          ..which I am still trying to digest, the Eurostat figures are based on those aged 18 to 59 *except* students aged under 25, thus excluding children and those under 25 still at school/college/uni. If that’s the case the numbers appear very distorted.

          We have very comprehensive back-to-education provisions – It isn’t clear to me whether the Eurostat measure makes allowance for adult/mature learners engaged in training/re-training/upskilling.

        2. Mickey Twopints

          That table relates to the entire population below the age of 60 so it would include children etc.
          My understanding is that it does not include children, nor does it include those under 25 in education.

          Single person households make up approx 25% of the total 1.6mm households (Census 2011)

          Isn’t that *all* single occupancy households,not just those in the 18-59 age group?

    2. Lorcan Nagle

      Guysm I think you have Andy all wrong. Take a look at this paragraph:

      “As Cormac Lucey put it:
      “Ireland’s poverty problem is not that welfare benefits are inadequate. It is that that Ireland’s poor work far less than their counterparts anywhere else in the EU. Our figures in this regard are startlingly bad and, in a European context, strikingly anomalous.””

      Clearly, his point is that if the poor are unable to get enough work to pay their fair share of the tax, it’s insane to then cut tax on the middle and upper classes. It’s a fine argument against the flat tax.

      1. Andy

        Whether it is “unable” or “unwilling” is open to debate.

        Regardless, until those VLWI & LWI figures reduce Ireland will be stuck with a highly unbalanced distribution of gross income which has to be rejigged through the taxation system so the net income distribution is more in line with EU norms.

        If you’re a high earner then you’re goosed.
        There is no way around it unless someone actually seeks to tackle this issue.
        You’re options are to just accept it and get on with life, vote for politicians willing and able to change it, or emigrate. I chose to emigrate.

        1. Lorcan Nagle

          “Whether it is “unable” or “unwilling” is open to debate.”

          And I agree with you, the figures clearly show they’re unable.

          “If you’re a high earner then you’re goosed.”

          As someone who’s a high earner by the standards of the poor (but not upper class by any definition of the term), I disagree.

          “You’re options are to just accept it and get on with life, vote for politicians willing and able to change it, or emigrate. I chose to emigrate.”

          And I’m choosing to vote.

          1. Andy

            I don’t think you’re right Micky. The table you linked to is the entire population below 60 years. Have a read of the Statistical Population definition at the bottom of the SILC Methodology page
            http://ec.europa.eu/eurostat/statistics-explained/index.php/EU_statistics_on_income_and_living_conditions_(EU-SILC)_methodology_-_monetary_poverty#Main_tables

            “The population aged 0 to 59 is covered when the indicator is broken down by work intensity of the household.”
            They strip out kids & students when they discussing other statistics (AROP, Education achievement, children AROP etc).

            Best of luck with your vote.

            Sadly other than Renua I haven’t seen anyone come out with any “sticks” although Renua’s stick is blunt given they’ve a graduated income supplement element.

            And a flat tax doesn’t even deal with the underlying issue – the massive amount of households where no one works!! It’ll have no impact on them.

            These households need to be forced back into the labor market and then seek to force the lower paid either up the income ladder or onto the income tax ladder in some manner.

            Budget proposals are back to being all “carrots”. Until they rejig the social support system to place more responsibility on the citizen nothing will change.
            I’m all fine with the Socdems introducing their Nordic service models if they also introduce the Nordic social welfare model – where welfare payments are based on contributions and payments decline the longer someone is a claimant. Until there’s a bit of stick with the carrot nothing will change.

          2. Mickey Twopints

            And a flat tax doesn’t even deal with the underlying issue – the massive amount of households where no one works!! It’ll have no impact on them.

            These households need to be forced back into the labor market and then seek to force the lower paid either up the income ladder or onto the income tax ladder in some manner.

            Ah. I didn’t realise I was exchanging viewpoints and engaging in discussion with a sociopath. I’m out.

      2. Charley

        The other issue is that a lot of companies either don’t pay overtime or low overtime rates which makes working extra hours pointless.

  12. Truth in the News

    A reincarnation of the defunct PD’s in the reappearance of Lucinda instead
    of Mary Harney, McDowdell, and last but not least Dessie, all their policies
    are no Tax for the Rich and Fleece the Poor, and they hope to get elected
    as Rea Nua…..burned one twice shy.

  13. Peter Dempsey

    Just a hunch – the people sticking up for Anto from Clondalkin are probably middle class and relatively privileged.

    1. Nigel

      Don’t they know they’re supposed to spit on him, mock his apparel and taunt him by waving fat wads of cash at him?

  14. Anne

    “Ah. I didn’t realise I was exchanging viewpoints and engaging in discussion with a sociopath. I’m out.”

    He has all the hallmarks of a sociopath all right Mickey. He was advocating corruption on another thread there recently.

    This is interesting –
    Capitalism: A System Run By and For Psychopaths

    http://www.whale.to/b/psychopath34.html

    He’s probably a ‘partial psycho’.
    “Regardless of whether they are characterized as compensated psychopaths, partial psychopaths, subclinical psychopaths or subcriminal psychopaths, these psychopaths cause others to suffer immeasurably from their own psychopathy, and conveniently for them they do it without a trace of their always nonexistent conscience. Dr. Robert D. Hare, the world’s foremost expert on the psychopath, has described psychopathy as “a socially devastating disorder defined by a constellation of affective, interpersonal, and behavioral characteristics.”

    Particularly characteristic of the psychopath are shallow emotions, the utter absence of empathy, guilt, or remorse, glibness/superficial charm, manipulativeness, inconsistency, deceitfulness/lying and a grandiose sense of self-worth”

  15. Andy

    @Mickey Twopints
    “Force”, “encourage”, “entice”
    You can use whatever euphemism you want but either way, without (i) bringing those VLWI households into the income tax net, and (ii) bringing those households on low incomes up the income chain* then the current highly progressive income tax structure will continue.

    * 2015 figures on income tax & USC below:
    – 30% of earners (703,800) were exempt from all USC & income tax,
    – 36% of earners (862,300) were exempt from all income tax but obviously a small number paid the lowest rate of USC,
    – Only 20% (474,200) were paying the higher rate of income tax (40%),
    – The lowest 65% of income earners (up to €40,000) only generate 11% of the total income tax take (an effective income tax rate of 7%).
    – The lowest 51% of earners (up to €30,000) only pay 4% of the total income tax take.
    – Those households earning between €40k and €70k pay 25% of the total income tax take and represent 21% of the total income tax payers.
    – Those households earning over $75k only represent 12% of total income tax payers yet they pay 61% of the total income tax & USC take.

    75% of income tax paying units earn less than €50k and that 75% (1.8mm units) only pay 19% of the total income tax & USC take. Over 1 million earners have an effective income & USC tax rate of less than 6%.

    The only solution is to increase the numbers of middle income and high earners and increase the effective income tax rates on almost everyone.

    Ireland’s tax ready reckoner can be found here
    http://www.revenue.ie/en/about/statistics/

    1. Anne

      Wrong.
      Here’s why –
      https://brianmlucey.wordpress.com/2016/01/09/renua-flat-taxes-and-evidence-based-policy-making/#more-5951

      “Keen et al 2008 ITPP do a comprehensive review of the then state of knowledge. They state “there is no sign of Laffer-type behavioral responses generating revenue increases from the tax cut elements of these reform”. In plain language, no, there is no magic buoyancy.”

      “Looking again at simulations for Germany, Fossen 2009 FS concludes “The simulation results indicate that flatter tax systems do not encourage people to choose self-employment, but rather discourage them from doing so. This is explained by the reduction of entrepreneurs’ income risk through progressive taxation”

      Voinea and Mihaescu 2009 looked at the Romanian experience “We conclude that the flat tax led to increased income inequality and it stimulated households consumption particularly among the wealthiest households.””

      1. Anne

        And..
        http://karlwhelan.com/blog/?p=1571

        “Impact on Inequality
        To understand the impact of flat tax proposals, it is necessary to have a fully-worked example that shows how households in every part of the income distribution will be affected and how the taxes raised add up to match the revenue of the existing system. As far as I know, RENUA have not provided these calculations but I have put together a spreadsheet using data from the Revenue Commissioners to illustrate two different types of flat tax system. My conclusion is that any system that features a 23 percent tax rate and raises the same revenue as the current income tax and USC combined will be sharply regressive in its impact on income distribution.”

      2. Andy

        Dear Anne,

        1. All the figures in my post above are 100% accurate,
        2. I do not think a flat tax is a good idea and have never said that.

        You seem to be having a conversation/argument with posts that don’t exist.

        Have a good weekend,
        Andy

        1. Anne

          Oh right.. I didn’t really read what you wrote, sorry. You lost me somewhere on 75%, 50%, 25% of people.. Like yaaaawn Dear Andy. No offence.

          But about this – “the only solution is to increase the numbers of middle income and high earners and increase the effective income tax rates on almost everyone. ”
          Solution to what exactly?

          People on lower incomes shouldn’t be paying proportionately more of their income on tax than higher earners.
          You should look at the percentages that way – as a percentage proportionate to the person’s income, rather than who’s paying for what within the overall income take.
          Broaden your horizons.
          If people are exempt completely from paying tax – i.e. if they don’t earn enough.. that’s fair enough. They cannot pay and shouldn’t be expected to pay what they don’t have.

          I agree with this though –
          “The only solution is to increase the numbers of middle income and high earners”. Low pay is endemic and entrenched in the Irish economy. Only the U.S. beats us for having highest percentage of low paid workers. We’re the Mexicans of Europe. ( Is job-bridge considered a paying job? I suppose it is, if they’re not included in the employment figures.)
          Low paid workers shouldn’t be expected to pick up the slack for that. They shouldn’t be punished because of that inequality, in other words.

          There’s more to wealth also than just income. There are plenty of other ways of raising the tax take. No doubt you wouldn’t like that either.

          A nice weekend to you too.

          1. sǝɯǝɯʇɐpɐq

            Well said Anne.
            When you’re right you’re right, and that’s normally when you swing a bit to the left.

            You are a massive conundrum.

  16. bobsyerauntie

    why is anyone surprised?

    Renua are more right wing than Fine Gael..

    Lucinda Creighton did a glowing tribute piece to Margaret Thatcher (when the Iron Lady passed away in 2013). In her tribute to Thatcher Lucinda ended with

    ” So what is her legacy? Traditional Labour Party socialism as it existed in Britain for much of the last century is extinct. High taxation, nationalisation and unfettered trade union power were finally rejected by the British people, and the Thatcher creed of low taxes, home ownership, and privatisation firmly took hold.

    In 1979, these policies were seen as radical and almost dangerous, but today they are viewed as the norm to such an extent that former Labour Prime Minister Tony Blair was seen as a keeper of her flame. Put simply, Margaret Thatcher was a leader who made her country stand tall again. She proved that it takes time, firm leadership and many sacrifices for a country to get back on track. These are lessons which all politicians and governments can learn from”.

    http://www.independent.ie/opinion/analysis/lucinda-creighton-margaret-thatcher-was-a-grocers-daughter-who-made-her-country-stand-tall-again-29182740.html

    Lucinda was junior minister for foreign affairs at the time she wrote her article praising Maggie Thatcher- imagine what she would be like if she got into power with Renua?..

    I shudder to think..

  17. bobsyerauntie

    sorry minor error in my last comment..
    Lucinda was Junior Minister for European affairs (not foreign affairs).

    Even worse..

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