€35k = circa €2.4k after tax per month
When I moved to Dublin in 98 I was on £9,500 and I drank and dined out a lot more than I do now!
€2.4k take home per month is a lot of money if your single or even if your married without kids say.
depends on your rent situation
Back in 98, I was paying £1,200 pm to rent a 2 bed.
In reality, the tax rate is recognition that the cost of living is much higher here.
Do you remember benchmarking, that caused so much negative comment on the PS?
Well, it was a similar form of recognition that housing was so expensive that those who worked for the state couldn’t afford housing.
And most of it, and more, went into the pockets of the developers, not into staff’s pockets.
Of course those who had already bought a hoouse did very well out of it, thank you very much.
But even they were encouraged to build on huge extensions/upgrade to a better house/take equity out of their property; the last leading to one pin member’s signature, IIRC, that it turned imaginary wealth into real debt.
True. Back then I was paying about £250 per month to share a room with a mate (it was a big room!) in a 4 bed house with 6 people in total.
I’d move back in tomorrow
That assumes no pension contribution.
A quick search of D10, 12, 22, 24, 15 &17 on Daft turns up a grand total of 11 1 beds and a room in a 2 bed. Discounting the latter at €800, we have one at €950 and ten in a range of €1100 to €1600. With a median at €1250, that leaves a disposable income of €1150 pcm after rent, to live in a relatively cheap bit of Dublin. If you’re not quick enough to get one of the cheaper places, you could be left with just that €800 a month. Sure, it’s survivable, but you’re not making any provision for your retirement.
What this illustrates above all is how much your material comfort depends on your rent, particularly in Dublin. If you manage to rent the very cheapest single person home (€950 pcm) you can spend €800pcm to get a basic, but not unpleasant life, with some simple material comforts and have something like €700 pcm left to save, invest or splash out as you like. At the upper end of the rent range in the cheaper bits of town (let’s face it, Drimnagh isn’t exactly Mayfair or Malibu), you won’t go hungry, but you have absolutely no safety margin and will be relying entirely on the state in your old age.
So I checked my payslip breakdown
I currently receive 60.5% of my gross salary net into my hand.
This is after deducting PAYE (20.7%), USC (3.7%), Employee PRSI (4%), compulsory public servant Pension & Pension Levy (11.1%) payments
I got a 1% pay rise in Oct. Of this I received only 38.2% net. Yes, I paid 61.8% tax.
So while overall I’m receiving 3/5th of my gross salary, for any future increase I’ll only get 2/5th!
Why even bother seeking a promotion? I’ll only get paid for 2 of every 5 days at work!
Ignoring any immediate benefit and assuming you are not subject to career averaging in your pension scheme - any increase in your base salary after the age of 40 is worth multiples of the increase in terms of pension benefits. A €5k pay rise could increase the value of your pension by circa €90k plus they give an additional €7.5k in lump sump at retirement.
But as you noted, 11% was pension contributions which are not tax. The highest marginal rate of deductions (tax, USC, PRSI) is a little over the 50% mark, unless you’re a self-employed high earner and pay the 3% USC surcharge.
Well, on the one hand you are a lot better off than your lesser paid compatriots. On the other hand, what I found as a high earner was that I couldn’t aspire to the standard of living of my similarly high earning siblings in other EU countries. Higher taxes and much higher costs across the board meant you could be comfortable but never to the extent of other EU citizens. Generous incomes in Ireland are a bit of a smokescreen for a high drag economy with weirdly low productivity outside the multinational sector.
And that’s even without the pot luck aspect of your accommodation situation. That could see you spend a million quid more or less than your neighbour over a lifetime, depending on your timing and the decisions you happened to make.
Jackal is clearly a public servant. Most of the pension contribution being made is the ‘public service pension deduction’ which confers no pension benefit whatsoever! The take is not hypothecated for public service pensions either. It’s basically a special tax on public servants, so is relevant for calculation of marginal rate.
Otherwise Ireland is indeed a very poor deal for high earners. Marginal rates are very high while at the same time many of the benefits available in many European countries (health, decent unemployment benefits, pay-related state pensions, subsidised childcare) are not provided in Ireland.
Pat Leahy in today’s IT asks a basic question: what was the balance between tax cuts and expenditure increases? Remember the 2:1 ratio promised by the FG/FF confidence and supply agreement which is now being re-negotiated. To be exact the agreement promised
OK, “investment in public spending” always meant increased public spending, whether current or capital. But you would also be mistaken if you thought “tax reductions” meant less tax. It meant “tax cuts” i.e. any measures which would reduce anticipated tax revenues, although everyone knew that tax revenues were bound to rise in a buoyant economy. What a wonderful world for government when its citizens simply assume that the government are entitled to revenue increases whenever the economy improves.
So what was agreed was that government will increase spending by twice as much it “cuts taxes”. But the latest budget fails even that test of “tax and spend” although you would never know it from the acres of newsprint devoted to the latest Budget and the preliminaries for an extension of “confidence and supply”. Pat Leahy, one of the best informed Pol. Corrs. , has to do his own “back of the envelope” calculations (i.e. no one in the Dail has dared to ask) and he discovers that the recent Budget had
He goes on to claim that, in this unannounced swing away from tax cuts, FG and FF
Pity the IT’s leading political commentator doesn’t read his own paper’s latest opinion poll
irishtimes.com/news/ireland … -1.3664554
Or perhaps he just didn’t read all the way to the bottom of the IT report where this gem was buried. I love how the minority opinion is quoted first and very affirmatively
while the more popular view is put second, and is expressed conditionally
Just in case their readers might be confused about the “right” opinion.
Tax and spend figures are presented in a particularly confusing way.
There is no agreement on what a no-policy-change baseline is. Does it include demographic pressures? Do you adjust tax credits for inflation or for wage growth? Do you adjust for likely falls in unemployment spending due to rising employment? Do you adjust after the fact?
As a result, anyone can spin a budget as ‘contractionary’ or ‘expansionary’. 2009 was a very interesting example - welfare policies which were designed to be contractionary were in effect expansionary. This was because inflation was negative when everyone had expected it to be positive.
You’re right, I stand corrected.
Tell me about it. That’s partly why I stopped working as soon as I could afford to. The benefits of high earnings were not worth it compared to an extra twenty years of doing my own thing.
Budgetary maths can get very complicated but there’s no way the latest budget met the 2:1 ration promised in the agreement with FF. Bad enough that almost no-one mentions this but now we have the IT pretending it was the Irish people’s choice.
The main headline on last Sunday’s Business Post was
Voters spurn budget tax cuts in favour of more public spending
And the first sentence of Michael Brennan’s report states that
Almost two-thirds of voters have said they would be willing to forego budget tax cuts at a time of rising fears over the economic costs of a no deal Brexit
Looks like a very strong signal of popular support in favour of higher spending over tax relief.
But that wasn’t what people were asked:
The report was based on a SBP/RedC poll which asked a series of questions about Brexit. A question on whether people were cutting personal spending because of Brexit received the obvious answer: no. Then came this:
Q7 In the next budget, would you prefer to see tax cuts and/or increases to social welfare that benefit you personally, OR would you rather that any available funds are instead invested in improving public services?
61% of people said they preferred improving public services.
A masterclass in manipulation to get the answer the client wants. The linkage of tax cuts and personal social welfare increases mixes different categories. “invested in improving public services” is so much better than say “pissed away on white elephants like rural broadband”
A good indicator of how confused people were by this question is the breakdown by party support. Sinn Fein supporters were the only party to favour tax cuts!(Presumably, they actually want social welfare increases but that’s not how the SBP presented the results to its readers.)
When did SBP join the tax & spend consensus?
Even the normally right wing pro business parts of the media have been subsumed into the neo liberal orthodoxy which is simply central planning aka socialism. As Hayek predicted, the rise of total state control over the individual appears inexorable.
I thought the skewed poll question last week might be an aberration but have a look at this commentary in today’s SBP
There’s the usual slight of hand, using figures for “at risk of poverty” to mean “poverty”. He also claims our taxes are low by using our GDP as a ratio. Another sure sign of shameless propaganda. Should we trust the only other statistic quoted (that half the increase in income over the past five years has gone to the top decile)?
He lists many reasons why “reducing or even eliminating inequality is desirable”. So he believes eliminating inequality will bring a plethora of benefits. His Doctoral thesis was well received at the Khmer Rouge University🤮
Worst is the subhead for which I blame the SBP editors
Social inequality is getting worse as the economy grows – the only solution is to tax the rich harder*
By rich, he means €80K. p.a., , neatly catching the Garda/teacher household.
Many questions occur:
Does this gom know who pays taxes in Ireland?
Does he regurgitate this stuff for his “philosophy” students in UCC and which great philosopher are they studying - J. Corbyn?
Why is the SBP wasting its readers time with propaganda?
Why do I still buy Sunday newspapers?
I recommend Branko Milanovic’s book “Global Inequality” which is highly critical of modern capitalism but proposes a serious framework for viewing these trends in a global context.
Based on the OECD data for 2018, Ireland is the second worst OECD country to earn income from work at the upper margin of earnings (167% of the average annual gross wage earnings of adult, full-time manual and non manual workers in the industry), compared to lower earners (67% of the average wage earnings). And although this story is not new (we were in the same position back in 2014), the gap in effective marginal taxes charged on the higher earners relative to lower earners is getting worse.