SSIAs: robbing the poor to pay the rich

luckat

The SSIAs must be unique in taxing the poor - who couldn't afford to get them - to pay for the better-off to have their savings topped up by the state.

Every time I see those self-congratulatory ads I'm annoyed. Get away, ye thieves of time, ye!

fasterkitten

i think the min contribution was 12.50 a month. i'd be annoyed too if i'd missed the boat. the 'rich' who saved into their SSIA accounts are also subject to income tax and at higher rates.

HoJOs

fasterkitten wrote:

i think the min contribution was 12.50 a month. i'd be annoyed too if i'd missed the boat. the 'rich' who saved into their SSIA accounts are also subject to income tax and at higher rates.

yeah damn right, im glad im gonna be loaded pretty soon:D now stop cryin over spilt eggs before they hatch:p

Sleipnir

Let's not forget that there was a maximum of 254 euro per month as well as the minimum of 12.50 per month. 254 euro per month would hardly be considered an outgoing of "The Rich"

On the other hand, "the poor" who couldn't afford the minimum of 12:50 per month (or three euro per week) are probably living off state payments anyway so it wouldn't really cost much extra if they did decide to get an SSIA at the time.

Bull****, in a nutshell.

leeroybrown

It probably won't make you feel any better luckat but the direction of the money would probably have worked out similarly regardless of whether the SSIA's were used to do it.

Also, 1.2 million people took out SSIA's with the average account payout estimated to be somewhere between 13,000 and 14,000. Those adverts you are complaining about are designed to do exactly what was intended for the SSIA money - pull it straight back into the economy. A lot of it will feed back into the tax intake. They even invented a special SSIA tax to pull back some of the money when they matured.

ircoha

The SSIAs must be unique in taxing the poor - who couldn't afford to get them - to pay for the better-off to have their savings topped up by the state.


They even invented a special SSIA tax to pull back some of the money when they matured.

HTF did the SSIAs tax the poor?

WTF special tax would that be now?

stepbar

Im a student, I paid in €254 every month to my SSIA for 3 years. Im not rich I come from a modest background. I worked damm hard and saved every penny I earned in part time earnings. Everyone was entitled to open account, €12.70 was the minimum amount that you had to put in. Unless you are homeless there is no reason why someone couldnt put in the minimum amount into an SSIA. Dont see your argument OP, As another person said "the rich" were taxed. Robbing the poor to pay the rich??? Huh, come on, OTT IMO.

johnnyrotten

$&*^ the begrudgers. Enjoy your SSIA "Wealth" everyone

Time Magazine

ircoha wrote:

HTF did the SSIAs tax the poor?

WTF special tax would that be now?

The current European Central Bank interest rate is set at 3%, if I recall correctly (it's certainly within 0.25% of that). The furore of 5-7 Live et al lately about all those interest rates hikes were a rise from - wait for it - 2% to 3%. The SSIA Return On Investment ("interest rate") was 25%. Thus the return was not from some magical investment, it came directly out of State coffers that are paid for by all of us - including me, the meagre student, paying 21% VAT.

So all of us pay into the kitty, but only those of us who can pay €12.50 or more a month into SSIA-ville get the return. It's taking money from us all and only giving it to the rich, albeit "the rich" here includes all but society's least well-off.

Thus the title: robbing the poor to pay the rich.

pete

My problem with the whole thing was not that anyone was excluded, but that it was effectively a scheme for the State to give money to those who needed it least. I guess I just found the principle of it just a little bit distasteful.

And no, I didn't invest.

edit:what he ^ said, i suppose.

stepbar

The "poor" dont pay any tax..... so in effect who is robbing who???

pete

stepbar wrote:

The "poor" dont pay any tax..... so in effect who is robbing who???

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

tallus

Ok I dont know anyone who could be classified as rich who invested in an ssia but I know loads of average joes who invested including myself and I can assure you that I'm not rich, nor is anyone I know who invested. Why the hell would a scheme that actually benefitted the average joe be classified as robbing the poor to help the rich? For once everyone who actually works for a living, and I dont mean the Smurfits of this world, I mean any average schmoe with enough to invest got the chance to make 25% back from the state. It will never happen again so why make an issue of it ?

Time Magazine

As well as the opportunity cost - which is important - the statement the poor don't pay tax is ludicrous. VAT, DIRT, excise duties.

Come on, if you think the only tax is PAYE you're living on cloud cuckoo-land.

Hotblack Desiato

luckat wrote:

The SSIAs must be unique in taxing the poor - who couldn't afford to get them - to pay for the better-off to have their savings topped up by the state.

This is rubbish. The so-called "bonus" is simply the equivalent of tax relief at the standard rate. It was done in this way to give the same benefit to top rate, standard rate and zero rate taxpayers.

Most countries allow tax relief for small savers - it's about time we changed our traditional approach here of nailing them to the wall with tax.

The maximum SSIA contribution isn't huge, nobody will become a millionaire out of it. If you want to talk about schemes making the rich richer, talk about property based tax incentives.

pete

ninja900 wrote:

The maximum SSIA contribution isn't huge, nobody will become a millionaire out of it.

Very true, but as an aside I'm sure i'm not the only person who knows of someone who opened SSIA accounts under the names of every member of their family (self, wife, child & parents) & contributed the maximum amount each month?

He probably cut them in with a little thank you present when he cashed out, but it was his money going in each month and it was he who benefited four or five times over. A tidy little sum I'm sure.

stepbar

stepbar wrote:

The "poor" dont pay any tax..... so in effect who is robbing who???

When I talk about Tax its PAYE im talking about. VAT etc has to be paid but they can choose to pay as little or much as they like, just like I can and every other person in the country. So in effect the poor dont pay any tax, direct tax that is. Opportunity cost? thats great so what would you have done? Watch inflation go out of control or do something about it? And thats what McCreevy done, nipped it in the bud before it got out of control. Inflation affects the poor as well as the rich you know and is more painful for the poor. I really I dont see why I should be thankful for recieving a pitiful bonus on my saving, wont make anybody rich. God knows I'll be paying enough tax in years to come ;:rolleyes:

pete

stepbar wrote:

When I talk about Tax its PAYE im talking about. VAT etc has to be paid but they can choose to pay as little or much as they like, just like I can and every other person in the country. So in effect the poor dont pay any tax, direct tax that is.

So... how exactly do you go about choosing not to buy essentials?

Opportunity cost? thats great so what would you have done?

What would I have done with the free money being handed out now? Hmm. Good question, actually. Depends on how much all those 25%'s eventually add up to, doesn't it?

How about for starters we start with less exchequer borrowing and see how that works out?

Watch inflation go out of control or do something about it? And thats what McCreevy done, nipped it in the bud before it got out of control.

Because inflation had nothing whatsoever to do with his policies as Minister for Finance, right? Riiiight.

Inflation affects the poor as well as the rich you know and is more painful for the poor.

True. Just like indirect taxation, actually.

edit:

Using rates of VAT and excise rates for 2004, the estimates
suggest that indirect tax payments for households in the lowest decile
amounted to 20.6% of income, while the corresponding figure at the highest
income decile was 9.6%.

Source: Combat Poverty Agency

Time Magazine

stepbar wrote:

Watch inflation go out of control or do something about it? And thats what McCreevy done, nipped it in the bud before it got out of control.

Heh, the irony of that.

RTÉ report of ESRI's warning to not repeat fiscal policy of McCreevey.

The Irish Independent report on same wrote:

"A repeat of the dangerous conduct coming up to the 2002 election - when public expenditure increased by more than 20pc per annum - could be disastrous," said Mr Quinn.

Remember when inflation hit 5%? Guess who was Finance Minister?

No, really?

We could have serviced the National Debt, for one. Alternatively Fianna Fáil could have joined with every other party in the Dáil and asserted that a home is a civil right and eliminated forced homelessness once and for all. But no, Charlie decided to plan a pre-election 2007 splurge.

stepbar

Ibid wrote:

came directly out of State coffers that are paid for by all of us - including me, the meagre student, paying 21% VAT.

Just after spotting this, exactly what is your problem? You cant exactly talk. Your fees are paid by the taxpayer, so big deal if you have to pay 21% VAT and what ever other indirect tax going. And as well as that if you're getting a Grant well then you surely cant talk about "paying tax".

Inflation has nothing to do with it? Huh? It had a lot to do with the introduction of the SSIA. Inflation needed to be tackled and In fact after the SSIA was introduced inflation fell to 2.3% in 2004. Im not defending the policys of McCreevy but the SSIA did help stabilise inflation and ultimately reduce it prior to him leaving office.

People on Social Welfare payments in effect get "free money", monies paid out of taxpayers pockets. The rich couldnt be accused of robbing the poor in this case. In fairness we have a fairly generous welfare system.

Forced homelessness?? :rolleyes: See above....

Paying down the national debt / reduce borrowings arguments dont really wash - using the same logic we would have sank the proceeds of Eircom into the national debt. Wouldnt have been the best use of money, looking after future pension provisions would be more important TBH. Anyhow borrowing money is not such a big deal anymore, the Nationa Debt as a proportion of GNP is not overbearing.



TBH I think the pair of you are bitter because I cant really see any other reason why ye are dissing the SSIA as such a bad thing.

Time Magazine

stepbar wrote:

Just after spotting this, exactly what is your problem? You cant exactly talk. Your fees are paid by the taxpayer

Firstly, who says so? Am I a national?

Secondly my fees are paid by the State, as opposed to the taxpayer. I've often called for the re-introduction of fees to tackle social problems.

so big deal if you have to pay 21% VAT and what ever other indirect tax going. And as well as that if you're getting a Grant well then you surely cant talk about "paying tax".

No? I'm studying economics in a fairly decent university. I can expect, in my lifetime, to pay something over €500,000 in taxes. Are you really insisting that I cannot bemoan the fiscal policy of this government until that day? I've two years left of my undergraduate studies, am I only allowed to complain when I'm not in an academic environment? Furthermore, let's assume I am on the 100% Maintenance Grant. This comes to the grand total of €23 a week - wowza. I'd point out at this stage that a weekly student bus ticket costs €16.50 leaving someone whose parents collectively earn less than €37,000 (thus warranting "100% maintenance") with the grand spending money of €6.50 a week. Should we as a society not listen exactly to these people and not those with enough to spend on SSIAs?

No? Fair enough.

Inflation has nothing to do with it? Huh? It had a lot to do with the introduction of the SSIA. Inflation needed to be tackled and In fact after the SSIA was introduced inflation fell to 2.3% in 2004.

To be honest, and I don't mean to be patronising, but if that's the argument you're presenting I think the economics would be lost on you.

Im not defending the policys of McCreevy but the SSIA did help stabilise inflation and ultimately reduce it prior to him leaving office.

Let's just say that he turned a small impending problem into a much larger (by about 25%, in fact) latent problem and that the SSIA programme had a negligible effect on inflation, certainly less than about 0.2%. I suggest you look to the government budgets post-2002 election to see what curtailed inflation. You might even Google 'savage sixteen social welfare cuts'.

People on Social Welfare payments in effect get "free money", monies paid out of taxpayers pockets. The rich couldnt be accused of robbing the poor in this case. In fairness we have a fairly generous welfare system.

Whether that's your opinion or not - I'd have to disagree with you vehemently - it has no relevance whatsoever to the economic 'progressivity' status of the SSIA's. It's not just people on welfare who failed to capitalise on the system.

Forced homelessness?? :rolleyes: See above....

There exists a certain number of people who are homeless by choice. They are a small minority of homeless people; therefore the majority are not there by choice. If you think they can claim this "generous" welfare, I suggest you go to your local Social Welfare office and try make a claim without a fixed residence.

Paying down the national debt / reduce borrowings arguments dont really wash - using the same logic we would have sank the proceeds of Eircom into the national debt.

I disagree. I proposed lowering the national debt - about €9000 per man, woman and child in the State - as a non-inflationary method of helping the State. I'd have a far better use for the eircom funds myself, namely ensuring the line network remained nationalised.

Wouldnt have been the best use of money, looking after future pension provisions would be more important TBH.

I agree, another excellent suggestion.

Anyhow borrowing money is not such a big deal anymore, the Nationa Debt as a proportion of GNP is not overbearing.

Further arguing a moot point, but you still haven't said why lowering it would be a bad thing.

TBH I think the pair of you are bitter because I cant really see any other reason why ye are dissing the SSIA as such a bad thing.

I'm certainly not bitter. I'm not gloating in any way, but I expect to make quite a lot of cash in the future. I'm not bitter. My parents could afford an SSIA; I'm not sure whether my dad took it up but my mother did. Perhaps bitterness isn't the issue here, perhaps it's actually quite the opposite: altruism.

pete

stepbar wrote:

TBH I think the pair of you are bitter because I cant really see any other reason why ye are dissing the SSIA as such a bad thing.

Way to miss the point, dude.

sceptre

stepbar wrote:

When I talk about Tax its PAYE im talking about.

You can't go for a specific sub-set of what tax is merely because it may temporarily suit whatever argument you're trying to make. When I talk about tax it's tax I'm talking about, just like when I'm talking about rashers it's not limited to a specific brand of the things.

In any case, I've never been a fan of this notion that only those who pay direct tax have any right to complain about anything that goes on in this country. Paying income tax or earning over a certain level has never been a feature of a right to citizenship since this state was founded (though it was at one time in the 20th century effectively a feature of the gerrymandering nature of the Northern Irish state) and I bemoan the tendency of some to imply that what we should embrace is some sort of mercantilist oligarchy.

Macy

Well you can directly relate SSIA's to McCreevy cutting income tax for the rich. It was his taxation policy that lead to the bóllocking from the European Bank which lead to SSIA's in an effort to take money out of the economy.

There would've been no need, and a much wider benefit, if McCreevy had increased the lower threshold of the lower rate of tax (say to take the minimum wage out of the tax bracket which he failed to do his whole tenure) and widened the lower rate of tax band (say to take the average industrial wage out of the top rate of tax). Instead McCreevy went for a PD budget that benefitted the rich by reducing their tax, which contributed to house price inflation, general inflation etc etc. The top 6% benefitted by 60% from that bugget, whilst the bottom 60% benefitted by 6% iirc.

Nevyn

And those that managed to scrap together the minium ammound will be if they are in recipt of welfare payments screwed over when the issa matures.

I know of a dingle parent who did this to save towards getting back to work to get a start on creche fees and work clothes ect and has been told that instead of having the money as a step up her singles parents allowances ect will be docked as it will be seen as added income.

Noelie

Ibid wrote:

Secondly my fees are paid by the State, as opposed to the taxpayer. I've often called for the re-introduction of fees to tackle social problems.

??????

and where does the state get it's money?? do they have a magic money tree hidden somewhere?

Zombrex

Thaedydal wrote:

I know of a dingle parent who did this to save towards getting back to work to get a start on creche fees and work clothes ect and has been told that instead of having the money as a step up her singles parents allowances ect will be docked as it will be seen as added income.

Your friend needs to read up on social welfare. That is the way it has always worked, and it is nothing to specifically do with the SSIA, it applies to all savings.

But it only kicks in after €20,000 of savings AFAIK. If your friend was saving at the min SSIA amount (15 euro a month or something) I doubt she would have that much saved, unless she is combining this with other savings.

http://www.oasis.gov.ie/personal_finance/government_savings_scheme.html
Assessment of SSIA savings for medical card and social welfare purposes

All savings and investments (including SSIAs) are taken into account for the purposes of assessing your entitlement to medical cards and for social welfare purposes. The formula for calculating weekly means:
Capital Weekly means assessed
First 20,000 euro Nil
Next 10,000 euro 1 euro per 1,000 euro
Next 10,000 euro 2 euro per 1,000 euro
Balance (e.g. capital in excess of 40,000) 4 euro per 1,000 euro

sceptre

Noelie wrote:

and where does the state get it's money?? do they have a magic money tree hidden somewhere?

Apparently there's one in Brussels.

bonkey

Ibid wrote:

Secondly my fees are paid by the State, as opposed to the taxpayer.

And the State also were the ones to pay into the SSIAs.

In both cases, the taxpayer is arguably the original source of the money. Where, specifically, in our tax system the money has come from isn't clear, which leaves us free to argue about whether or not VAT rates should be relevant and so forth.

I'm studying economics in a fairly decent university.

So you should know about the benefits of encouraging saving to cut inflation.

You should also know that the only person the taxpayer pays their tax to is the State, who then decides what to do with the money.

And yet, despite being an economics student, you overlook these and other such issues in order to make your complaint.

Furthermore, let's assume I am on the 100% Maintenance Grant. This comes to the grand total of €23 a week - wowza.

Which would come in at about 100 yoyos a month, which would be greater than the maximum amount obtainable from the govt as their contribution to an SSIA (25% "bonus" of the €254 yoyo max is €66 per month, or approximately 17.50 per week.

So when you get a small bit of cash, its nothing great.
When others get less, its practically a crime.

Should we as a society not listen exactly to these people and not those with enough to spend on SSIAs?

Which people?

The poor students like yourself who claim to argue that they'd be perfectly happy having their fees not paid, but at the same time cry a river that they don't get enough money off the government, whilst complaining that those who get less even though for an arguably valid reason are being given too much?

If thats who you mean, then no, we shouldn't. If you could get by without some of the fees etc. you say you'd be happyu to do without, then with them you can afford an SSIA. So you're one of the people you say we shouldn't listen to.

Or did you mean your parents? You later go on to point out tehy could afford an SSIA, so again, they're part of the group we shouldn't listen to.

So who is it you want us to be listening to again? Its not people like you, its not people like your parents, but there doesn't seem to be any other financially-identifiable groups in your descriptions.

Or did you just mean we should listen to those who don't want SSIAs over those who didn't seem them as the end of the world?

Let's just say that he turned a small impending problem into a much larger (by about 25%, in fact)

"small, impending problem" + 25% == much larger problem.

Interesting math.

stepbar

Ibid wrote:

Firstly, who says so? Am I a national?

Secondly my fees are paid by the State.

So yes you are a National and yes you fees are paid by the State, which inturn recieves its income from the Taxpayer. Simple economics....

Ibid wrote:

Are you really insisting that I cannot bemoan the fiscal policy of this government until that day? I've two years left of my undergraduate studies, am I only allowed to complain when I'm not in an academic environment?

As a student myself (soon to be a PAYE sorker) I have had 6 good years of free fees and grants to support me, paid no tax apart from indirect tax (big deal :rolleyes: ). So I cant really complain about my "tax money" being wasted when I recieve more than I pay.

Ibid wrote:

To be honest, and I don't mean to be patronising, but if that's the argument you're presenting I think the economics would be lost on you.

If you're telling me that Inflation was not part of the reason well I'll eat my hat. :rolleyes: I have a masters in Strategy so come forth with the economics, i'd be interested to hear what they are.....

Ibid wrote:

If you think they can claim this "generous" welfare, I suggest you go to your local Social Welfare office and try make a claim without a fixed residence.

A hostel counts as a "fixed residence" / a friends home counts etc etc... Ive worked in Social Welfare.. have you? The Social Welfare system is quite generous. Heard of Rent allowance? Practically pays for your rent. Anyhow thats an argument for another day.

Ibid wrote:

I disagree. I proposed lowering the national debt - about €9000 per man, woman and child in the State - as a non-inflationary method of helping the State. I'd have a far better use for the eircom funds myself, namely ensuring the line network remained nationalised.......Further arguing a moot point, but you still haven't said why lowering it would be a bad thing.

And why is it such a good thing? "A non inflationary method of helping the State". In what way does it help the State? Save a few quid on interest? TBH The National Debt is the least of our worries. Pension provisions for future generation is a bigger problem. The National Debt is only 27% of GNP. Its not exactly overbearing TBH.

telecaster

The people who had excess money to save at the time now have even more money. The people who couldn't afford to save at the time are now ever further behind their more comfortable citizens.

I think this is the essence of the original poster's point. And I agree. There is now one group of people dripping with an excess wad of cash driving up the price the everything while those not on the gravytrain remain in the ha'penny place.

I'm alright Jack.