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January 08, 2013

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Simon

Interesting Piece alright. Do you have investment as a % of GNP by anychance?

Michael Taft

Simon - I don't have any estimates for nominal GNP in 2017. The Government projects GNP to be 78.4 percent of GDP. So, working from the IMF projections for that year, Irish investment would be 12.7 percent of GNP (10 percent of GDP).

If we use the Fiscal Council's hybrid GNP measurement - which attempts to reconcile problems with both GDP/GNP measurements - then Irish investment would be 11.5 percent.

Anyway it is measured, Ireland will still be a low-investment economy.

tells.it.like.it.is

Ah Jaysus, Michael, you're not even trying to compare like with like.

The vast majority of the EU-15 countries with higher average tax rates for high earners than Ireland also have much higher average earnings than Ireland, up to 56% higher in fact.

In each case, the definition of high earner is made in respect of the *local* average wage.

Not based on PPP, no attempt to take into account different wage-level distributions that may skew the averages, nor even any level-setting compared some absolute measure of high earnings ... just a straight multiple of the local average.

Michael Taft

tells.it.like.it.is - please feel free to post your own estimations in the comment section here.

Ciaran

Michael,

One practical question I have in relation to the chart based on the OECD Calculator - why did you calculate it on the basis of one partner earning twice the average wage, with the other earning 1.67 times the average wage?

To answer your last question, our economic model is based on a regressive income tax and social insurance contribution regime, together with a Government-approved system of transnational money-laundering. Never mind that groups such as ISME, SFA and IBEC are indulged in their frequent assertions to the effect that things would be super-duper again if banks lent easy money to their members, while insisting simultaneously that their employees and customers should suffer.

6to5against

Sorry Michael,
You must be wrong, because Brian Hayes was on the radio last week and he said that we already had the most progressive taxation system in the world, and nobody in the studio even questioned him on it so it must be true.
So obviously the facts are wrong.

Michael Taft

Ciaran - I used this formula as this is produces the highest work income for a household in the OECD calculator. It only goes up to 200 percent of average wage for a first earner and 167 percent of the average wage for a partner/spouse.

6to5against - I never question my betters. I only seek to learn from them.

However, on the issue of 'progressivity' I will be doing up a post in the near future on this issue.

Ciaran

Michael - thanks for clearing that up for me.

6to5against - are you implying something scurrilous about the conduct of our broadcasters, who, as we all know, are union-infested and 'left-leaning'?

David Crowley

As for our (Ireland) low Corporate Tax Rate - must check the figures but I think our corporate tax as a percentage of our tax take is around 10-12%? but in Germany it is only about 5%. While this is only one factor, I think it sounds either our corporate tax rate is doing well or Germany's isn't.

I think if our government actually tried to tighten a few loopholes in our corporate tax laws and let companies like Google/Intel/HP/Facebook/Ebay etc pay more tax in Ireland while still giving them tax breaks and the lower rate we could still keep their inward investment while maybe getting more tax from them

Fintan

Seamus Coffey has responding to this post on his blog.
It's social insurance is where we are lower, not tax (we are slightly above average)

http://economic-incentives.blogspot.de/2013/01/is-ireland-low-tax-again.html

Des Derwin

Michael,

Time to repost all this, Michael. R. Bruton now says, not that there should be no further tax increases, because it is hitting investment, but that Irish tax is too high as is and is hindering investment.

http://www.irishtimes.com/business/economy/ireland/bruton-criticises-high-income-tax-rates-1.1352025

Martin Kelly

That's right Des, the budget comes in two months earlier this year and the blue boys are obviously staking out their positions, so far they have held the line while Labour caved in, eg 300 euro cut to carers on 125 euro cut to TDs and Minsters. There is progressive extraction for you. Still ruling by fooling. Martin

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