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Death and Taxes - A Year in Ireland - Part 2

So now that we are “legal” and have a job, checking account, a house, and a car; we are all set for “life” in Ireland. There is a saying in America that you can’t escape death and taxes. So far we have personally escaped death, but it is hard to miss it in Ireland. Also, as in the US, there is no escaping taxes in Ireland, although the taxes in Ireland are not as bad as many people in the US think. This post is a loose run down of death and taxes in Ireland.

Fortunately we have both been well in Ireland, and the same goes for our extended friends and acquaintances, so we have not directly experienced death in Ireland. But death is hard to escape in Ireland. Coming from the US, it is a little jarring to be listening to the “pop radio station” and realize that the somber DJ voice is reading the funeral and wake announcements. They can go on for 5 or 10 minutes. They go something like this:

Carol Donovan (née Sheppard) of …. Ireland. Reposing at St. … Mortuary… Removal tomorrow, Saturday … at 11 am with burial afterwards at St. ….


….We would like to take this time to extend our sympathy to the friends and family of the deceased … Now for our next pop hit song …

The funerals in Ireland are major social events. Co-workers regularly call in "sick" because they have to attend a funeral as a representative of the family. (Of course a trip across the whole country is less than 4 hours). Keeping up with funerals and the wakes in Ireland is so important that there is a dedicated website, ….That’s right, a dedicated website complete with “email a friend”.

Now, let’s discuss more pleasant matters … taxes ;-)

Comparing taxes between the US and Europe and in particular Ireland is not as straightforward as one might think, but I will make an attempt. Let’s start by discussing sales tax … moving on to income tax … property taxes … and other miscellaneous taxes.

Ireland and Europe don’t have a direct comparison to the US sales tax, although the Value Added Tax (VAT) is similar. Unlike the US, the value added tax is “included” in the price of an item. Europeans find it odd to pickup an item in a store labeled $1.00, and then be asked to pay $1.07 or $1.08 or ?? at the cash register. The VAT in Ireland varies with what you are buying, but ranges from 9-23%. This generally means that the prices in Ireland are about the same as in the US, but denominated in Euros. A $1.00 item in the US will generally be about €1.00 in Ireland, but with no additional sales tax. It currently takes $1.30 to buy one Euro.

In many places in the US there is a “car tax” that you pay to the state or county once a year. Some of these are based on the value of the car, and some are based on the size or weight of the car, and some appear to be arbitrary. Ireland also has a “road tax”, but it is based on the carbon dioxide emissions of the car. There are different “bands” or CO2 ratings for cars. In 2013, the taxes for the bands range from €120 to €2370 (this is not a typo). Our 2009 Toyota Yaris is in Band B and has a road tax of €270 for 2013. A new Toyota Yaris would be in the €170 to €200 range.

Additionally, petrol is €1.60 per liter, that is about $8.00 per gallon. Consequently because of the road tax, and the price of petrol, and other factors that I will describe later, the cars in Ireland tend to be extremely small by US standards. Because of the size of our car and the other factors, we spend less per month on petrol in Ireland that we did in the US. We generally buy one or two tanks a month, approximately €80 or €100 or $100-$130 per month. We doubled the miles we drove in 2012 when we drove round-trip from San Jose, CA to Tucson, AZ during our Christmas holiday.

Our Petrol Log for the Last Few Months

Ireland has an income tax, but it is generally much simpler and much more progressive than the US. The top rate is 41% and is not as high as many in the US think. For a married couple with one income the 1st €3,300 is not taxed. Up to €41,800 ($54,340) is taxed at 20% and all income over this amount is taxed at 41%. There are very few deductions in Ireland. You apply for your tax credits at the end of the year. If you don’t want to apply for your tax credits or you don’t have any, you are done. The income tax system in Ireland is described as PAYE (Pay As You Earn). In the US around the medium income level, one would likely be paying 28% marginal to the Federal Government and another 8% (GA) to 9.3% (CA) to the state... but since the US taxes are done twice, and are much more complicated, you end up spending a lot more on beer, antacids, tax accountants ...

Ireland has the equivalent of Social Security and Medicare payroll tax that is called the Universal Social Charge (USC). Unlike the US, this tax is also progressive. Any income over €16,016 ($20,820) is taxed at 7% and lower income amounts are taxed as little as 2%. In the US the FICA and Medicare tax rate is about 8% on all income up to about $100K. In Ireland this tax covers your state medical coverage.

Ireland has other taxes but is also missing some taxes that we take for granted in the US. In Ireland we have the “TV tax”. Carol and I call it the PBS tax. It is about €160. Theoretically anyone with an operating TV is liable for this tax (although, I haven’t figured out how this tax is enforced). It pays for the National TV and radio stations of Ireland We have RTE 1-4 on TV, although RTE 4 is in Gaelic (OK for watching a match in the pub since you can’t hear anyways). There are also several RTE radio stations. The quality is OK. Some of the classics playing on RTE television are Father Ted and Mrs. Brown’s Boys, both irreverent but funny, and even better after “a pint”.

TV Tax Receipt for Ireland

As I mentioned in a previous blog, currently there are no water bills in Ireland. Water is “included” as part of the rest of your taxation. Also until last year there was no property tax in Ireland. Last year, it was €100. This year it is slated to about double. This is almost a couple of orders of magnitude less than what we were paying in Texas.

The bottom line on taxes in Ireland versus the US for the average person:

  1. Income tax is a little more.

  2. Payroll taxes are less.

  3. Sales tax is more

  4. Very, Very Low property taxes

  5. No water bills

  6. No insurance premiums for basic health coverage

  7. TV tax is unique

  8. “car tags” are lower to much higher depending on your US state and the size of your vehicle

  9. Gas/Petrol taxes are higher (but not a bother given the culture)

The next blog deals with the Road Safety Authority (RSA) and escaping death on the roads of Ireland.

See You in the Pub!

Jet Lag Jack

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