3 ms·

Doesn't Ireland have a graduated tax system?

by ode 11y ago

mootothemax 11y ago
Doesn't Ireland have a graduated tax system? According to Wikipedia, it does: http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ireland http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ire... "The taxation of earnings is progressive" Which makes the OP's post rather confusing. Does any country out there not tax progressively? I just can't imagine it - "Great, you got a pay rise! Now you get to take home less, until your pay rises by another $5,000!" Edit: On second reading, I think I understand what the OP is talking about: leaving money in the company they operate, which pays out (I guess through dividends?) at a lesser tax rate than if it were paid out directly as wages. I'm pretty sure this is a standard technique in the rest of the world, and not particularly unique to Ireland.
- yebyen 11y ago
  That's approximately how I read it. Even if it's his company, money he puts in his own pocket needs to have income tax paid on it (I would suppose this means, after any appropriate corporate taxes are paid by the corporation). If the money does not actually leave the company and go into his pocket, the only taxes that would need to be paid are those (low) corporate taxes. Of what value is money you can't have in your pocket and spend, of course, is an exercise for the reader, but presumably it could be paid out as personal income over a greater number of years (if the company survives that long) without ever paying $0.53/1.00 in personal income taxes on any portion of that money.
  - drcross 11y ago
    This is what I do. I worked hard for three years, pay myself a wage thats in the minimum pay bracket and will travel until the company money is gone. I'm not give a cent more than I have to to those crooks.
- sbierwagen 11y ago
  Does any country out there not tax progressively? I just can't imagine it - "Great, you got a pay rise! Now you get to take home less, until your pay rises by another $5,000!" He's just whining. At no point under the progressive tax system do you get penalized for earning more: the first $35K of your income is still taxed at the lower rate. When you earn dollar number 35,001, that dollar is taxed at 53%, but your average tax rate only goes up a hundredth of a percent. This misunderstanding of how tax brackets is so widely pervasive that I can only assume it's the work of enemy action: people who want to reduce income taxes, or to move the tax burden to the poor by implementing a flat tax rate.
  - yebyen 11y ago
    He's still paying a significantly higher tax rate on that dollar than if he didn't earn it this year. If he is not hurting for cash and he could defer it until next year (or year after that) with no penalty at all and (arguably) negligible risk, thus paying the lower personal income tax rate on that dollar, why not do it? I don't see what part is misunderstood. If you're being paid by your employer, obviously you want to take the raise regardless of higher taxes. If you are your own employer, both entities are paying taxes and each dollar of taxes paid is coming out of your own pocket.
    - rmc 11y ago
      Sure, but 50c is better than €0.
      - yc1010 11y ago
        The money doesn't appear out of thin air. It takes time and stress to earn each euro. Especially if you work for yourself or in a startup, you are probably working for someone else so you do not comprehend the perspective of someone who is trying to make his own way in the world. The tax system here puts a huge disincentive to work hard and earn a lot, at least there is an option if you have your own company to defer and stretch your wages over longer period BUT that comes with all sorts of risk since IT IS NOT YOUR MONEY but company money and corporation tax.

Doesn't Ireland have a graduated tax system?

by ode 11y ago

Doesn't Ireland have a graduated tax system?

Doesn't Ireland have a graduated tax system? According to Wikipedia, it does: http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ireland http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ire... "The taxation of earnings is progressive" Which makes the OP's post rather confusing. Does any country out there not tax progressively? I just can't imagine it - "Great, you got a pay rise! Now you get to take home less, until your pay rises by another $5,000!" Edit: On second reading, I think I understand what the OP is talking about: leaving money in the company they operate, which pays out (I guess through dividends?) at a lesser tax rate than if it were paid out directly as wages. I'm pretty sure this is a standard technique in the rest of the world, and not particularly unique to Ireland.

yebyen 11y ago
That's approximately how I read it. Even if it's his company, money he puts in his own pocket needs to have income tax paid on it (I would suppose this means, after any appropriate corporate taxes are paid by the corporation). If the money does not actually leave the company and go into his pocket, the only taxes that would need to be paid are those (low) corporate taxes. Of what value is money you can't have in your pocket and spend, of course, is an exercise for the reader, but presumably it could be paid out as personal income over a greater number of years (if the company survives that long) without ever paying $0.53/1.00 in personal income taxes on any portion of that money.
- drcross 11y ago
  This is what I do. I worked hard for three years, pay myself a wage thats in the minimum pay bracket and will travel until the company money is gone. I'm not give a cent more than I have to to those crooks.
sbierwagen 11y ago
Does any country out there not tax progressively? I just can't imagine it - "Great, you got a pay rise! Now you get to take home less, until your pay rises by another $5,000!" He's just whining. At no point under the progressive tax system do you get penalized for earning more: the first $35K of your income is still taxed at the lower rate. When you earn dollar number 35,001, that dollar is taxed at 53%, but your average tax rate only goes up a hundredth of a percent. This misunderstanding of how tax brackets is so widely pervasive that I can only assume it's the work of enemy action: people who want to reduce income taxes, or to move the tax burden to the poor by implementing a flat tax rate.
- yebyen 11y ago
  He's still paying a significantly higher tax rate on that dollar than if he didn't earn it this year. If he is not hurting for cash and he could defer it until next year (or year after that) with no penalty at all and (arguably) negligible risk, thus paying the lower personal income tax rate on that dollar, why not do it? I don't see what part is misunderstood. If you're being paid by your employer, obviously you want to take the raise regardless of higher taxes. If you are your own employer, both entities are paying taxes and each dollar of taxes paid is coming out of your own pocket.
  - rmc 11y ago
    Sure, but 50c is better than €0.
    - yc1010 11y ago
      The money doesn't appear out of thin air. It takes time and stress to earn each euro. Especially if you work for yourself or in a startup, you are probably working for someone else so you do not comprehend the perspective of someone who is trying to make his own way in the world. The tax system here puts a huge disincentive to work hard and earn a lot, at least there is an option if you have your own company to defer and stretch your wages over longer period BUT that comes with all sorts of risk since IT IS NOT YOUR MONEY but company money and corporation tax.