A dumb idea (who’s time, hopefully, has not come)

3450-original-bag-o-hammersSome ideas are bad. Some are stupid. Some are both. One such is the balloon floated that there should be a reduced tax rate for new immigrants/returning emigrants.

The proposal is that as we are in “global race for talent” we should, in effect, start to race to the bottom in labour taxes. We have already seen where that ends up in corporate taxes.  There is a relentless push to the bottom, with some countries having zero tax rates on corporate profits, and others engaging in tax arbitrage. Are we now to see the rise of a global cadre of elite workers (as opposed to the rest of us) who will flit in and out as tax dictates? In the limit we cannot engage in this race as there is a bottom – zero tax on wage income, zero tax on corporate income. What is left to fund the state? Leaving aside the suspicion that starving the state of revenue, for ideological rather than economic grounds, is exactly what some want, the remaining ways are through debt or taxes on consumption. Debt is problematic – it can’t be used for long to support current spending and it is hard to see the culture warrior cheering a shrinking state to allow it to be used for capital. Consumption taxes generally tend to be regressive – but hey, someone has to pay, right?

Anyhow, how would this idea work? Will be have John, returned from the UK where he has spent the last decade, paying 30% while beside him Mary, who stayed and stuck it out through the recession, paying 53%? Will we have Jose, newly arrived from Spain,  defined as a ‘skilled foreign worker’ paying €1800 less tax than Piotr, doing the same job but who has been here since he left Wroclaw in 2012?  Way to incentivize Mary and Piotr.  Would that even be legal?

Unfashionable as it may be the emigrants of the last wave were not all spalpeens on coffin ships to Belle Isle, nor young lads without much formal education destined for the hod in Birmingham. They tended to be reasonably to well educated, leaving because well, who could blame them? A better life, better conditions, perhaps less tax but for sure better services, a chance to see the world and to up skill.  One estimate of emigrants suggests up to 45% were educated to degree level (https://www.ucc.ie/en/emigre/emigrereport/) . So, while it was trite and clumsy of Michael Noonan to say emigration was a “lifestyle choice” there was an is a kernel of truth in it.

Emigration is not nor was it easy. But neither was it easy to stay; to see the promised revolution of 2011 wither and die before it started ; to see the ease at which FG and Labour adopted the same jobs for the boys insiders only mentality as FF; to see doublespeak become routinised in government communications; to see, if one was one of the hundreds of thousands providing public services, one being vilified  as parasites and thugs and leeches; to see NAMA save the very people who broke the economy while the smaller and household debtors were pursued; to see the banks remain as bourbon as ever; to see political reform run into the sand; to see it through and see it out, to work and strive to make it a place fractionally more worth coming back to than leaving. And for this we are to be differentially treated?

There is an argument, not one I subscribe to but a coherent one anyhow, that labour taxes are too high. There is for sure a problem with incidence and cutoff points, but to leap forward to the notion that this now is the way we must compete, that is a leap too far. If FG want to cut taxes then say so. But that has consequences. It is of course too much to hope for to expect mature, sober debate in the run up to an election. But hope springs eternal

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4 thoughts on “A dumb idea (who’s time, hopefully, has not come)

  1. Robert Anderson

    The principle exists already with the SARP programme, although this is circumscribed by certain conditions.

    Reply
    1. brianmlucey Post author

      Not really. SARP is for Jose who is sent from SAP to work in Ireland for a bit. Its not for Johnny who left in 2008 and now wants to come back, or Jose who takes up a job here with no immediate intention to go back.

      Reply
      1. Robert Anderson

        I understand that, but SARP introduced the principle of different income tax rates for individuals earning the same salary. In any event, it is a lack of well paid jobs which is preventing the return of most emigrants who do wish to return. If Johnny who left in 2008 wishes to come home, I don’t think that ~€33pw less tax will figure much in his decision.

  2. Harmless Drudge

    Cogent on the taxation issue but you know it’s only wishful thinking on the part of those who want someone to bribe their kids to come back before they are too settled.

    The rest is depressing and completely accurate. FG and Labour as shameless as FF ever were back in the days of Charlie Haughey, the most cretinous politician we ever had. I will be voting for an independent if I can be bothered to vote.

    Reply

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