Should Irish tax exiles be told to stay away?

MadsL

My wife is still assessed for US taxes by the IRS despite not having lived there for six years. It takes a lot of work (and expense) by a Certified Private Accountant to reduce or negate this liability. Are you proposing that Ireland implements the same punitive double-taxation?

Sleepy

Kenny 5 wrote:

What exactly are these social responsibilities?

I think this question is the most valid to the core of this thread. IMHO, one's responsibility to society increases with one's power and financial status. I don't think this is an unusual belief and it's what we base our system of progressive taxation upon: one contributes to the exchequer according to ability to pay.

OscarBravo, my differentiation between a tax exile and an emmigrant would be on the nature of their time spent in Ireland. An emmigrant returns to Ireland to visit their family and friends. An exile returns to Ireland many times a year to not only spend time with family and friends but to conduct a significant part of their business from their country of origin. An emmigrant may send a few business emails from home whilst holidaying here or even return a number of times a year to conduct business with Irish clients etc. but I don't think any reasonable person could expect them to pay tax in this country on this basis.

It is on this basis that I would form any law dealing with tax exiles. If one is an Irish citizen and conducts more than a few weeks (maybe even a month) of their own business in this country they should be paying tax here.

I don't see this as a form of begrudgery. I'm proud to see businessmen like Michael O' Leary et al make fortunes out of hard work and talent in this country and abroad. It's when they decide that their wealth and sizeable tax liabilities on their even more sizeable incomes entitles them to skip the country for 186 days of the year and declare themselves eligible for tax in Guam :rolleyes:

The tax burden in Ireland, as measured by Forbes Misery Index, is lower than most of the world. We currently score 4th lowest in Europe in terms of total tax revenue as a perecentage of GDP so it's not like they can claim to be punitively taxed as could have been argued in the 80's. [source: http://en.wikipedia.org/wiki/Taxation_in_the_Republic_of_Ireland#International_Comparison]. Hell, U2 even had a large chunk of their income untaxed due to our cushy tax regime.

Voipjunkie

sean_keevey wrote:

o be honest I think that's just jealousy. If you had €1billion+ in assets, you'd structure it so as to minimize your tax liability if you had any sense at all.

Thats fine but then they should refrain from lecturing Irish people how their taxes should be spent.
I'm particularly think of people Like Bono and Dennis O'Brien who are never short in telling us we should spend more on Third World Aid or people with disabilities but quickly leave the country when they might have to contribute themselves to the money for those areas.

Jackie laughlin

I find Sleepy's post spot on.

However, I'm not advocating stripping these people of their citizenship or taking any other action which requires a legal distinction. I'm saying that they should not be feted (treated as personalities) in Ireland.

A Dub in Glasgo

Jackie laughlin wrote:

However, I'm not advocating stripping these people of their citizenship or taking any other action which requires a legal distinction.

Really, on what basis are you going to tell them to 'stay away'?

Should Irish tak exiles be told to stay away?

Sleepy

Like A Dub in Glasgow says, how elese would we tell tax exiles that their behaviour is not on? People are feted as celebrities for the most stupid of reasons in this culture (Jade Goody being exhibit A for the defense).

If, however, it is seen that there is something to lose by shirking one's responsibilities; to the point where the rest of one's countrymen no longer consider you to be one of them, where the act of avoiding one's tax liabilities through residence in another country becomes 'un-Irish': public opinion of these individuals will be very different.

luckat

Tax exiles and emigrants aren't the same thing. An emigrant works and is taxed in the country s/he has moved to.

A tax exile is a wealthy person who is resident in Ireland and moves his (usually) assets abroad to avoid paying tax here, sometimes also dodging in and out of Ireland to make sure not to be here for the minimum number of days that would allow him to be taxed here.

To my mind, the question is one of how committed one is to one's country. When I make my millions, I may have a different view on patriotism, of course, but currently my opinion is that if you're living in Ireland, you should really be involved, be talking about how taxes are spent, and be paying at least a proportion of one's taxes!

One question is why it's actually more profitable for U2 to move their assets abroad as soon as the artists' exemption happened. (I know they said they didn't take advantage of this tax break - maybe it was coincidental that they moved their money just after it.)

Ireland's wealthy seem to spend most of their time hanging around the star****ing crowd, getting glossy pictures in the likes of Hello!, and not engaging in any chat about the infrastructure, the health services, Irish education (and why teaching is so bad that we have a shocking rate of functional illiteracy), lack of opportunities for the deprived, and other things that their millions could help to fix.

I'm delighted when these millionaires give millions to charity, by the way. I just wish one of their charities was the Irish exchequer!

oscarBravo

luckat wrote:

Tax exiles and emigrants aren't the same thing. An emigrant works and is taxed in the country s/he has moved to.

So a tax exile is a "wealthy person" (I'll come back to this) who moves to another country, doesn't work there and doesn't pay tax there? How does that work, exactly?

luckat wrote:

A tax exile is a wealthy person who is resident in Ireland and moves his (usually) assets abroad to avoid paying tax here, sometimes also dodging in and out of Ireland to make sure not to be here for the minimum number of days that would allow him to be taxed here.

How do you define "wealthy"? Also, the bit about not being here for the minimum number of days to be taxed directly contradicts the bit about being resident here.

Zombrex

oscarBravo wrote:

So a tax exile is a "wealthy person" (I'll come back to this) who moves to another country, doesn't work there and doesn't pay tax there? How does that work, exactly? How do you define "wealthy"? Also, the bit about not being here for the minimum number of days to be taxed directly contradicts the bit about being resident here.

I would imagine a "tax exile" is defined as a citizen of Ireland who spends less than 183 days (or what ever it is in Ireland) in a given tax year in the country for the purposes of avoiding paying tax at Irish rates while still continuing to avail of the country and its services, such as still owning houses and assest here, and being resident here for a sizeable proportion of the 183 days (if not all of it)

Classically this was confined to wealthy people who could afford the travel expenses and the ownership of multiple dwellings to be able to do this.

I agree with you that such a definition is very objective and could not be used to criminally prosecute anyone, nor should it be used to strip someones citizenship.

But it wouldn't any way, since that would be ignoring the point of this rule.

It is simply a reflect the idea that if someone doesn't live here for most of the year they don't have to pay tax here. Just like if you don't have a TV you don't pay the TV license.

I think the problem with public perception of this is that tax exiles often continue to avail of services of their native country, often spending nearly all of the 183 days in the country and then nipping off just before they would have to pay tax. As such they are seen abusing the system, having the benefit of living in Ireland without paying anything to the culture and society. People feel that given the choice you should pay tax to the country you call home.

The answer to that of course is to lower the number of days you have to spending in Ireland to pay tax. If an Irish citizen had to pay tax in Ireland if they were resident for 50 days or more I would imagine you would get a sharp drop in the number of tax exiles.

Whether or not anyone would feel it necessary to do that is debatable.

Judt

Well, where do you draw the line... If I spend 7 months working outside of the country and so don't have to pay tax here, am I an exile or a victim of circumstance? How, precisely, do you draw a line in the law that says "If X equals Y then a person is an Exile" - how much do I have to earn, or how do you codify my intentions into a law without providing runarounds and loopholes; or do you create such a tight law that there's no room for genuine Irish people to hang onto their citizenship if they dare to work outside of Ireland?

Also, would there be a clause for, say, a business person who doesn't want their wealth taxed in Ireland; but whose business in Ireland creates significant wealth in the country? Etc.

Etc. Tax exiles are, as they say, a cost of doing business in a rich country the same as tax itself is a cost of doing business for the rest of us. Sometimes you just have to sigh, say f**k it and carry on - to hunt down and scalp tax exiles would cost the country more than the satisfaction would bring Average Joe Tax Payer.

Sleepy

Wicknight wrote:

The answer to that of course is to lower the number of days you have to spending in Ireland to pay tax. If an Irish citizen had to pay tax in Ireland if they were resident for 50 days or more I would imagine you would get a sharp drop in the number of tax exiles.

Whether or not anyone would feel it necessary to do that is debatable.

Exactly what I'd like to see if I'm level-headed about it. The 'stripping citizenship' remark came from the disgust I feel when I look at the likes of McManus and O'Brien who couldn't honestly claim to need the money they're saving through their exile status.

The tax revenue lost to the exchequer through the actions of those two 'gentlemen' alone would make such legislation worth passing.

Jackie laughlin

I've never been to a race meeting in my life. However, should I go and should I see a tax exile there, enjoying Irish company, I promise that I will go over and tell him/her loudly that they should be ashamed of themselves and I will tell their companions that they should have more self respect than to mix with such people.

When Jade Goody appears in the media, she is usually captioned explicitly. When these tax evaders appear, they are usually captioned positively without mention of "tax exile" flitting into the country to enjoy the benefits. I promise in future that I will complain and seek accurate captioning.

They should be harangued by Irish people and Irish media.

oscarBravo

Jackie laughlin wrote:

When Jade Goody appears in the media, she is usually captioned explicitly.

Is she? What title is she given?

Jackie laughlin wrote:

When these tax evaders appear, they are usually captioned positively without mention of "tax exile" flitting into the country to enjoy the benefits. I promise in future that I will complain and seek accurate captioning.

I've yet to see a definitive definition of a "tax exile". How can you expect such a beast to be captioned unless there's a clear-cut definition?

As an aside, tax evasion (as opposed to tax avoidance) is, in my understanding, a crime. Do you have evidence that the people you're referring to have broken tax laws?

Sleepy

OscarBravo, I thought my definition of a tax exile above was pretty clear. Did you miss it?

oscarBravo

Sleepy wrote:

OscarBravo, I thought my definition of a tax exile above was pretty clear. Did you miss it?

You mean this:

Sleepy wrote:

If one is an Irish citizen and conducts more than a few weeks (maybe even a month) of their own business in this country they should be paying tax here.

It seems a fraught definition to me.

Let's take my brother again. After working his way up from bar work, building sites etc - the usual Paddy in the Eighties story - he's now a part-owner of his business, dealing with big companies like BT and GM.

Suppose they land a big contract with (say) Intel, and it requires that he spend several weeks working onsite in Leixlip. Seems to me he's inadvertantly become a tax exile by your working definition, and in danger of public verbal abuse if he should happen to meet Jackie Laughlin.

Sleepy

I suppose it would depend on the definition of 'several weeks' really and whether or not a proper system was put in place (fairytale with the Irish Civil Service I know) to to grant exceptions for those who are genuinely only home on a once off basis every few years. If your brother were to be spending 3 months of each year or so living and working in this country I honestly don't see it as unreasonable to expect him to pay his taxes on any income earnt here within those three months.

InFront

Me neither. I'm not in favour of this 'public shaming' of tax exiles, but I would be of the opinion that even if you're only working here for one month of the year, that's going to be just under 10% of your working year, depending on the industry youre in. For something like the horseracing sales industry, it's even higher.

I don't think it's unreasonable that someone would be expected to contribute something to the country from which their industry draws its income for that length of time, especially if it is on a periodic basis.

oscarBravo

Sleepy wrote:

I suppose it would depend on the definition of 'several weeks' really and whether or not a proper system was put in place (fairytale with the Irish Civil Service I know) to to grant exceptions for those who are genuinely only home on a once off basis every few years. If your brother were to be spending 3 months of each year or so living and working in this country I honestly don't see it as unreasonable to expect him to pay his taxes on any income earnt here within those three months.

The problem is that it has to be codified so that it's entirely consistent, predictable and fair. You mention 3 months of each year or so - what does that mean? If he spends three months of this year on a one-off project and never comes back, should he be taxed? What should he be taxed on? His salary (paid from his company's UK bank account into his UK bank account, even while he's over here)? His company's profit (which is already subject to UK corporation tax)?

I'm not raising these questions to be difficult or because I'm vehemently opposed to your basic point. They go to the heart of the matter. It's one thing to sit at home and tut tut when J P McManus appears on the TV, but it's another thing entirely to legislate for such an ephemeral concept as a "tax exile".

Zombrex

At the end of the day tax exiles aren't doing anything wrong, because we have already decided that it is not fair that someone who is not in the country for more than 183 (English figure, can find the Irish one, but you get the point) should have to pay tax.

As I said before if people disagree with that figure then we should lower it.

Saying that some people who are not in the country for more than 183 are grand, but others are not, is rather illogical. If a person doesn't spend 183+ days in Ireland then the government don't ask them for tax.

I mean who here pays more tax than they are actually required to do? I pay the tax that the tax office tell me to pay. I've never gone "Umm, I think the rate I'm on should be higher, I think I will drop a little extra in for the government"

If people don't agree with the length of time that a person should have to pay tax they should want it lowered. But saying we should punish people, or even get mad at them, for simply following the law is rather illogical.

If someone banged on my door and said "You, you only paid 4,000 in tax there. That is a disgrace!" I would reply "That is what the government told me to pay". If they replied "Yes but you should pay more!" I would tell them to talk to the government, not me.

old boy

the vast majority of us cannot afford to leave to avoid paying tax, which means we have to stay and shell out, if people leave to avoid paying tax then they should stay out, if they arrange publicity stunts to raise money for charity, why not pay their tax here and then arrange the stunts as well, these people are not coming back to please any one, only their own egos and the publicity machine they orchachest (forgive my spelling)

Zombrex

old boy wrote:

the vast majority of us cannot afford to leave to avoid paying tax, which means we have to stay and shell out, if people leave to avoid paying tax then they should stay out

They do stay out, that is the point. They have to stay out for over 183 days. If they don't they are required to pay tax in Ireland.

You are right that most of us cannot afford to have multiple homes around the work, and as such cannot afford to move from country to country on a whim. But that is hardly an issue for those that can is it?

The question people seem to be avoiding asking is if you don't spend a significant proportion of the tax year in this country why would you pay tax here?

luckat

Really, the only answer to the skiving-off of the wealthy is for tax to be standardised internationally, if that's possible, feasible or desirable, which it probably isn't.

I wonder, though, how stringently the number of days tax exiles spend in Ireland is monitored. Doubt it's very.

Sangre

Punishing tax exiles is a sure fire way of getting them to move their whole businesses elsewhere which generate a lot more revenue then the exile's personal wealth.

Jackie laughlin

Ah, Sangre, a hoary old argument: "If we tax the rich, sure they'll run off with their investments here and we'll be destroyed entirely, begorrah!"

I am clearly making a distinction between legality and morality. Residency laws are framed so that these people can enjoy Ireland while paying no tax here. Those of us who disagree with such laws can do three things: vote for someone who agrees with us, if such a party/candidate presents; give those who benefit from the legal scam a very frosty reception; protest at media presentation of such people as "celebrities".

Zombrex

Jackie laughlin wrote:

Residency laws are framed so that these people can enjoy Ireland while paying no tax here.

They do that by not being resident here.

Jackie laughlin

Come on, Wicknight, 180-odd days is half a year! The law is framed to make this sort of behaviour legal.

Zombrex

Jackie laughlin wrote:

Come on, Wicknight, 180-odd days is half a year! The law is framed to make this sort of behaviour legal.

As I said then it is an issue of the amount of time. I have no great problem with this amount of time being reduced even reduced greatly.

What I have a problem with is the idea that people should be punished for following the law.

Imagine a situation where the lower tax rate was set a 22% but you could be punished if you didn't pay 30% voluntarily. That would be nonsense.

Everyone pays their taxes within what the law requires. I don't pay more taxes than the government tell me I have to pay. Is that wrong of me?

If people have a problem with the 183 days that is where the focus should be. It shouldn't matter if the person has left for tax exile reasons or not. It shouldn't matter if the person has gone to a country with higher taxes. The only question that matters is if 183 days is a fair amount of time to be in the country to pay take. And this should apply across the board, not just to people who have the ability to move around a lot.

Jackie laughlin

When you say that you have no problem reducing the number of days, do you mean that you would favour reducing the number of days? To be in favour of a reduction implies that you think the present situation is wrong.

Of course no one should be punished if they obey the law. I never suggested that they should. I did say that citizens who disagreed with the present carry on should protest. Such potest will of course be disagreeable for the tax exiles but that's always the case; protest is aimed at human activity of which we disapprove and it makes someone unhappy.

Zombrex

Jackie laughlin wrote:

When you say that you have no problem reducing the number of days, do you mean that you would favour reducing the number of days? To be in favour of a reduction implies that you think the present situation is wrong.

To be honest I haven't thought about it that much to be in favour of it.

I would first need to see how many people are actually doing this, I would need to see the justification for the limit as it is (the 183 days is actually the status in the UK, I don't know what it is here), and I would need to hear arguments for why reducing it would be bad or good.

If the limit was reduced tomorrow I would have no strong feelings against that, as at the moment I can't think of much reason to get it as it is if people want it changed. But as I said I have not looked into it that much.

I am open to arguments why the number of days should be limited if you have them. But bear in mind these arguments should apply to everyone, not just the rich.

Jackie laughlin wrote:

Of course no one should be punished if they obey the law. I never suggested that they should.

Did you not suggest that tax exiles should be stripped of citizenship? Maybe that was someone else.

Jackie laughlin

I think I ruled out stripping someone of citizenship.

I don't particularly want to debate the number of days. I don't see that the numbers involved is relevant.

I was curious as to whether you thought the behaviour of these people was wrong as opposed to illegal.