Should Irish tax exiles be told to stay away?

Judt

Jackie laughlin wrote:

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.

Is it your place to say if it's right or wrong? If you were earning a few million and you had to pay 40odd percent tax on it, can you honestly say you wouldn't consider skipping town for at least half the year? Besides which, I don't think this is as black and white as you make it out to be when, despite not having their personal wealth taxed, many of these people contribute large amounts of money to the country through the business which generated their wealth in the first place.

Lastly, I have to repeat that this is a cost of doing business, in any country with rich people. They make themselves rich and, in the process, bring a lot of money to the table in terms of corporate tax, VAT, income to their workers (which is then taxed) and so on... you can't buy a chocolate bar in this country without the taxman getting his slice. So if business pays workers then more business=more money for people to spend on chocolate bars, if you get my wider meaning.

Zombrex

Jackie laughlin wrote:

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

Of course the numbers are relevant, they are the only thing that is relevant.

As far as I can tell the only question that needs to be asked is how long does someone have to be resident in this country in a given tax year before they have to pay tax here.

You clearly seem to think that less than 183 (say 150) days is long enough to have to pay tax. I don't have any strong objections to that being lowered.

But you also need set a limit on how far that goes. If someone is only resident for 40 days in a given year do they have to pay take?

Jackie laughlin wrote:

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

Well I probably wouldn't do it. But then that doesn't mean it is wrong.

I think there are far worse things someone can do with tax loop holes, such as all the self-employed people getting grants for their kids to go to college just because they officially declare hardly any tax. That is one thing that pissed me off in college, as those people were normally the ones leading the march to have the grant raised.

But at the end of the day if someone doesn't live here for any great amount of time I don't see any strong reason why they should pay tax here.

One can argue that people should want to pay tax here if they have to pay tax anywhere, since they should feel a responsibility towards their native country. But that isn't really something that can or should be enforced.

Sleepy

It was myself that originally argued that a tax exile should have their citizenship stripped and tbh, if there was a legally definable metric by which one could identify the type of guttersnipe who thinks that simply being wealthy excuses them their responsibilities to their fellow countryment, I would be in favour of this. I find the notion of someone who's already vastly wealthy ducking out of paying their tax completely repugnant.

In reality, however, as OscarBravo has pointed out there's no simple metric we can use to identify which are tax exiles and which are simply those who's lives and businesses are primarily conducted abroad. As such, I think my viewpoint is moving rather to the notion that any Irish citizen resident in this country and conducting their business here for more than two months a year (or 40 working days) should pay their taxes here.

Zombrex

Sleepy wrote:

who thinks that simply being wealthy excuses them their responsibilities to their fellow countryment, I would be in favour of this.

It isn't being wealthy that excuses them, it is not living here for a significant amount of time within the tax year. Poor people who don't live here either don't have to pay tax.

Jackie laughlin

Wicknight,
I don't know why you won't take a position on this one. You thought a different tax loophole wrong.

I would hope that if I were rich, I would stay and pay my way. Not all rich people flee in order to avoid tax. Some are honourable. I have two friends who would pocket more money if they lived abroad for half the year but they wouldn't dream of doing so. Moreover, when we get to talking hundreds of millions, paying tax becomes irrelevant to all but the exceedingly mean.

Sleepy

Wicknight wrote:

It isn't being wealthy that excuses them, it is not living here for a significant amount of time within the tax year. Poor people who don't live here either don't have to pay tax.

TBH Wicknight, I think you're playing devil's advocate here.

I think it's clear that the individuals being discussed here are those who can afford, and choose, to live abroad for a significant amount of time within the tax year in order to pay their taxes abroad at a lower rate than in their native country.

As Jackie laughlin points out, when you talk about the likes of Bono, McManus, O' Brien etc. the tax burden placed on them in Ireland isn't going to negatively affect their lives. It's simple meanness that prompts them to duck their tax liabilities, not some humanitarian desire to pay their taxes in a country which needs their money more than Ireland.

Zombrex

Jackie laughlin wrote:

Wicknight,
I don't know why you won't take a position on this one. You thought a different tax loophole wrong.

Leaving the country to avoid paying tax is not a loop hole, its just the law.

If you don't spend more than 183 days in Ireland you don't pay tax here. It is pretty similar to saying that if you don't earn more than 35,000 (or what ever the high tax bracket is at the mo) you don't pay tax at the higher rate.

If someone is abusing this system, for example hiding the amount of time they are in Ireland, or spending more time in Ireland due to some bizarre loophole, then the book should be thrown at them.

But if they aren't, then the issue becomes simply the question of if the number it is set at fair, just like the issue with the tax brackets is about what number it should be set at.

As I said I've no problem with the number being lowered, though lowered to what exactly is a different question.

Jackie laughlin wrote:

I would hope that if I were rich, I would stay and pay my way. Not all rich people flee in order to avoid tax. Some are honourable.

I don't see it as a question of honour. I see it as a way to make money.

If you had the option between a job that paid €50,000 in Paris and a job doing the same thing in Ireland that paid €35,000 would you take the one in Ireland because you felt it was your moral obligation to pay tax to the Irish state rather than to the French state even if that meant you made less money? I seriously doubt it.

Jackie laughlin wrote:

Moreover, when we get to talking hundreds of millions, paying tax becomes irrelevant to all but the exceedingly mean.

That isn't really true.

When you are talking hundreds of millions paying tax also involves paying out hundreds of millions. If the vast majority of your earnings are taxed at the higher tax bracket you are paying out nearly half your earnings to the state.

The very rich person would makes 12 million a year would probably argue why does he have to paying 5 million in tax a year for exactly the same public service that someone who pays 10,000 in a year in tax gets?

Of course the answer is that tax is fixed at a percentage of earnings because that is how it was decided as the fairest way of doing it.

I agree with that system 100% and I think everyone should be totally honest to the government about their real earnings. I do not like people who hide their real earnings from the State and then take advantage of schemes for low earning families, such as the college grant system.

But I can certainly understand why some rich people are annoyed at how much they have to pay in tax and I can understand why some people would be so annoyed that they decide to legally leave the country to get out of doing it.

Sleepy

Wicknight wrote:

When you are talking hundreds of millions paying tax also involves paying out hundreds of millions. If the vast majority of your earnings are taxed at the higher tax bracket you are paying out nearly half your earnings to the state.

The very rich person would makes 12 million a year would probably argue why does he have to paying 5 million in tax a year for exactly the same public service that someone who pays 10,000 in a year in tax gets?

Because at the end of the day when you're obscenely wealthy, you're obscenely wealthy. There's feck all real difference between living off 7 million a year or 12 million a year. We're getting into the Simpsons 'ivory back scratcher' levels of wealth.

Most of us in Ireland pay a large percentage of our income in tax. And most of us don't utilise very many public services.

If someone genuinely lives abroad for most of the year because their business and personal life is there, of course they should be paying their taxes in whichever country it is they spent most of their time in. It's when people decide to move to avoid paying their taxes that their actions become immoral imho. As Jackie points out it is particularly galling when these same individuals return for the exact number of days possible under the tax laws and make a big show of their 'generosity' to charities and the media making them out to be 'great Irishmen' (which I'm sure helps their business on the international plane).

Even if the level of these 'generous' donations matches exactly the figure that their tax liability would have been, I still can't approve of these actions. Sure, I'd like the facility to determine where my tax was spent (i.e. on education rather than PR lessons for Bertie) but the facts are that if we could all do this, there's effectively no point in having a government. We as a nation elect our politicians to run the country; to wisely utilise the resources (tax revenue) we provide them with. Sure, our current government are about as good as that as a child in a sweetshop with a hole in his pocket but that situation needs to be fixed by working within the system not by evading it.

Zombrex

Sleepy wrote:

It's when people decide to move to avoid paying their taxes that their actions become immoral imho.

So are you saying, in relation to the question I asked Jackie, that you would not move countries to make more money because you feel obligated to pay taxes in Ireland?

I'm proud to be Irish, I love this country, and I'm happy to pay taxes here. But if someone offered me a job in say Paris or New York that paid a huge amount more than I'm making now, the obligation I feel to pay Irish taxes would be the last thing on my mind.

Sangre

Sleepy wrote:

As such, I think my viewpoint is moving rather to the notion that any Irish citizen resident in this country and conducting their business here for more than two months a year (or 40 working days) should pay their taxes here.

Thus creating a situation where a person involved in a multi-national business or corporation or is just self-employed yet needs to travel a lot is liable to declare his taxes on all his income in several different countries.

This thread seems to becoming almost a capitalist vs socialist morality debate.

Sleepy

Wicknight, you're comparing apples with oranges. The question you should be asking to make a fair comparison would be: "would you move to Paris to do your current job, from a different location for the same salary if it meant you'd pay less tax than you currently do".

Sure, I'd have more money in my pocket but you're not equating like with like. Say for argument's sake my salary is 50k p.a. (tbh I don't earn that much but it's a good round figure). As a single person on PAYE I'd be paying approximately 27% of that to the exchequer or about 13,500. Now, If I was to move to a country where I'd be paying 15% of that salary in tax instead i.e. €7,500 instead of €13,500 the tax gain from being an exile would be roughly €6k. Not a huge amount of money, but an extra €500 a month wouldn't exactly be insignificant for most of us but it's hardly enough to allow one to maintain two residences or to be honest to make it worth one's while to forgo regular interaction with one's family or friends.

As we all know, when a person's salary goes up, the extra amount it takes to influence that person to inconvenience themselves goes up too (or it does for most people at least). When you get to the point where you're earning millions per year, is it really worth moving country for the majority of the year for the sake of saving 12 - 15% of your salary? To me at least, it'd only be worthwhile if your main motivation is greed. Like I said, there's not much of a difference between living on a million a year or two million a year.

Now there does seem to be a tendency for many of our tax exiles to return as often as they legally can and to be quite generous with the money they've saved in their tax bill in terms of ego-inflating donations to their alma maters, local hospitals etc. but should we really celebrate these people for any of these donations when what they're donating is merely money that should have gone to the public coffers in the first place?

Zombrex

Sleepy wrote:

Wicknight, you're comparing apples with oranges. The question you should be asking to make a fair comparison would be: "would you move to Paris to do your current job, from a different location for the same salary if it meant you'd pay less tax than you currently do".

That is pretty much what I'm asking.

At the end of the day these people don't do this just to not pay tax. They do it to make more money.

So it is the same as you moving to Paris for more money in your salary. At the end of the day it is all about money.

You could say these people don't need more money, but equally I'm sure a African worker on a dollar a day might think you mad to move from a job that pays €40,000 to a job that pays €45,000

Sleepy wrote:

When you get to the point where you're earning millions per year, is it really worth moving country for the majority of the year for the sake of saving 12 - 15% of your salary?

Well firstly it isn't 12-15% of the salary. It is 13% of your salary because most of your salary is taxed at the lower tax bracket and you have tax allowances.

If you make €5,000,000 a year salary you keep €2,800,000 while the rest (€2,200,000) goes to the State, assuming of course this is all declared salary.

Secondly whether it is worth it or not is largely up to the person themselves. I would imagine a lot of people would think 2.2 million is quite a lot of money, even if you already have 2.8 million.

Now I personally would not mind paying out close to half my income to the government (well, maybe not this current government), but I can understand why some would.

Sleepy wrote:

To me at least, it'd only be worthwhile if your main motivation is greed.

When it comes to salary isn't most people's main motivation greed?.

One of the reasons I left my last job is because the current company I'm in was willing to pay me quite a bit more money.

Are you saying you would not move from a job where your tax home after tax was 36,000 to a job where your take home after tax was 70,000, even if it meant moving to another country?

And if you were prepared to do that would that not be classified as greed?

Sleepy wrote:

Like I said, there's not much of a difference between living on a million a year or two million a year.

Not being a millionaire I couldn't say.

Sleepy wrote:

but should we really celebrate these people for any of these donations when what they're donating is merely money that should have gone to the public coffers in the first place?

Well I suppose it depends if you would hold to the view that the money would be better spend going into the public coffers. Considering the waste this government seems to be involved in, from paying way over the market price for land to build prisons, to spending 200 million on a health computer system that doesn't work, one would have to wonder.

Sangre

Sleepy wrote:

Like I said, there's not much of a difference between living on a million a year or two million a year.

Sure, why don't we just put a cap on people's income at €1million and tax the rest at 100%. Its not like there would be any difference.

Jackie laughlin

Sangre,
I'm can't see where capitalist/socialist comes into it but yes, this is a moral discussion.

Many, many people including me have declined greater income in order to remain in Ireland. Very few people are motivated solely by money. Frankly the majority so motivated are the poor as money is their prime - perhaps only - consideration.

Sleepy

Wicknight wrote:

Well I suppose it depends if you would hold to the view that the money would be better spend going into the public coffers. Considering the waste this government seems to be involved in, from paying way over the market price for land to build prisons, to spending 200 million on a health computer system that doesn't work, one would have to wonder.

Well, tbh, Wicknight, I think we share a dislike of the current yahoos in power in Ireland and yes I'd believe that I could better spend the money than the government. However, I don't believe that I have the right to make that determination. If we were all to pay our share of tax to our own pet projects and initiatives that we see as important, I'd be pretty sure that even more people would fall through the cracks than already do in our social welfare system.

The answer here is clear to me. If one has the means to do so and feels strongly enough about how the country is being run that they'll declare themselves resident in another country in order to determine where their tax goes (through their donations to charities etc), why don't they just run for office? Doesn't democracy decree the collective will more important than the will of the rich individual?

ronbyrne2005

We should do what the most capitalist nation on earth does and have a minimum tax for those earning over 250/500k etc and tax our citizens on worldwide income like yanks do too, you can not avoid income taxes if you are american. The corporate tax rate is very low in Ireland so those owning businesses here can keep profits in their companies and only pay 10% instead of taking a salary and paying 42%. Loads of Irish millionaires who live here pay zero income tax through all the tax incentives etc.

The Irish state provides these millionaires with a social and legal framework within to earn their fortunes so a reasonable level of taxation to pay for everything the state provides to make them millionaires is not too much to ask. Try earning a fortune in a country without a proper legal framework, security and emergency services , healthy employees, physical infrastructure , high levels of per capita GDP etc.

K-9

Sleepy wrote:

It was myself that originally argued that a tax exile should have their citizenship stripped and tbh, if there was a legally definable metric by which one could identify the type of guttersnipe who thinks that simply being wealthy excuses them their responsibilities to their fellow countryment, I would be in favour of this. I find the notion of someone who's already vastly wealthy ducking out of paying their tax completely repugnant.

In reality, however, as OscarBravo has pointed out there's no simple metric we can use to identify which are tax exiles and which are simply those who's lives and businesses are primarily conducted abroad. As such, I think my viewpoint is moving rather to the notion that any Irish citizen resident in this country and conducting their business here for more than two months a year (or 40 working days) should pay their taxes here.

The problem with that Sleepy is that residency takes precedence over citizenship in tax law. E.g. You mightn't have spent the majority say of the last 4 years in Ireland, but you still are an Irish citizen. You aren't tax resident but are a citizen. So you would have to change the citizenship laws so that they would lose that. The other point is if you are here for say 60 working days and 200 in another country the other country is going to see u as resident there and going to look for their take. 2 or even 3 countries if it's more split could see u as resident and all want their slice!

Jackie laughlin

There remains the quite separate question of why these petty people are feted in Ireland? I certainly wouldn't socialise with someone like that and I disapprove of the media treating them as celebrities.