Myth: The rich don't pay much income tax

No, PRSI was not paid on all income, so the effective tax rate would not rise by 4%.

No such thing as USC in 2009.

Welcome to 2012, where the PRSI ceiling does not exist, USC applies and tax reliefs relating to PRSI & USC have been removed.
 
The health levy applied in 2009 and was applicable to all income; it was only PRSI that had a ceiling for payment.

When looking at the revenue stats, there's a couple of things to bear in mind: the income refers to cases/tax units which could be a married couple so a 275K unit income could be 2 people earning 137.5K each. Also, the tax is net of any tax breaks, pension contributions etc. - so someone could (and should) be paying their full scheduled tax but then getting offsets/tax breaks.

I have dug out my 2009 tax spreadsheet to see what actual taxes should have applied:

A single person on 275K had an effective deduction rate of 44.9% ~ 36.9% income tax and 8.0% PRSI, health levy and income levy.

A married couple with a combined 275K income had effective deductions of 43.6% (35.5% income tax) and a married couple, single income of 275K had an effective deduction rate of 40.9% (32.8% income tax).

A single person earning 500K had effective decuctions of 47.3% (38.7% income tax).

I have no doubt that the revenue numbers are correct so it looks like the apparent 'underpayment' is due to tax breaks, pension contributions etc. not because tax rates are too low for 'the rich'. I personally would have no problem with ALL tax breaks being removed so that everyone just pays the scheduled amounts per the tax rates and bands - not least because it would reduce calls to tax 'the rich' more as the structure of the revenue's tax statistics is not that well understood.
 
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