Any good report on how much income tax is paid by different groups?

Brendan Burgess

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I had a look at the Revenue Commissioners Statistical Report for 2013 and it's not easy to read or prepare a table from.

In the past, there were tables with information such as

The Top 10% of earners earned 30% of all income and paid 50% of all tax.
The Bottom 10% of earners earned 2% of all income and paid 0.1% of all tax.

Sometimes this is given in answer to Dail questions, but I can't find it.

Brendan
 
Hi Brendan,

Interesting table. It would be more interesting if those earning more than 275K were further broken down, say 275,000 - 500,000, 500,000 - 1,000,000 and 1,000,000+
 
If I'm reading those figures correctly, the top 10% means that block of 240,000 "tax units" earning the most, which would put a little over half of the 75000 - 100,000 income range into it.
The small print says that a married couple can equal one tax unit. The average industrial wage is approximately €40,000 per year. So a couple where both persons are earning the average wage could be in the Top 10% of earners if they have chosen joint assessment?
Probably they would just miss out on the "Top 10%" but they would certainly be in the same income bracket as some of that Top 10%.
 
Hi Odyssey

That is correct.

But even adjusting for this, it shows that the higher earners pay most of the tax.

Brendan
 
Brendan,

I don’t think that the top 10% ever paid 50% of all taxes.


The 2011 figures showed that they had:
6.33% of gross incomes and paid 12.87% of overall income tax and USC

The 2012 figures showed that they had:
6.58% of gross incomes and paid 13.61% of overall income tax and USC


I agree with Firefly that it would be more informative if incomes in excess of €275,000 were further broken down and also that the income grouping for all categories was consistent.

As the figures stand, the income groups that paid the higher percentage of overall income tax and USC were:

2011 - €75,000 - €100,000 with 14.56% and
2012 - €100,000 - €150,000 with 15.28%

However, as mentioned these percentages may be distorted due to inconsistent income groupings.
 
Sophrosyne, I don't know where your 6.58% figure comes from.

Based on these stats, 283674 tax payers, or couples, earn over €75K. This is 11% of the total number of tax payers.
The total tax paid by these tax payers is €11B which is more than 50% of the total tax take.

However, the 413,000 tax payers who earn less than 10K are distorting the figures. The average earnings in this group is 4K.
Also the total number of tax payers, at 2.4M higher than the size of the workforce, I think. Therefore, a lot of the very low paid must be students with summer or evening jobs.

If you remove them ( which is a generalisation, I know), the total number of tax payers is 2M.
Then, 8.6% of pay payers earn over 100K and they pay 46% of the tax paid.
 
The figure of 6.58% is taken from Revenue's income distribution tables for 2012.

Gross income charged All ranges = €m 79,369.42
Gross income €750,000 + range = €m 5,221.91 - (6.58% of gross income charged)

The total number of cases in the €275,000 + range is 9,700
Total number of cases in the under €10,00 range is 376,631- (2.11% of gross income charged).
 
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I don't understand how this is the top 10% of tax payers. The number of tax payers is 2.4M. The labour force is 2.1M.


 
The top 10% of income earning units paid 56% of income tax & USC according to the 2016 budget ready reckoner.

Including 69% of the €75k to €100k units.
The top 2.2% paid 29% of total income tax & USC.
 
Just to clarify, rather than the top 10% of cases, I was referring to Revenue’s top income grouping, those with incomes greater than €275,000. I am also looking at the latest actual figures – those for 2012. The 2016 figures are projections.

Sorry for the confusion.

The top 10% would include those with incomes:

Over €275,000
€200,000 – €275,000
€150,000- €200,000
€100,000 – €200,000
€75,000 – €100,000, and
a portion of those
€60,000 – €75,000

The lowest 10% would all have incomes under €10,000, with 2.11% of overall gross income and 0.06% of overall tax paid.

I think a highest and lowest 10% grouping covers too many income deciles and does not give an informed picture of the progressivity of the Irish tax system.

Is it helpful to group people with incomes of €60,000 with those who have incomes in excess of €1m?

The percentage of income and tax paid by the highest 10% varies within their income groupings.

For instance, those with incomes between €75,000 – €100,000 had 11.25% of overall gross income and paid 14.67% of overall tax.

Those with incomes of over €275,000 had 6.58% of overall gross income and paid 13.61% of overall tax.

As mentioned previously, a breakdown of those with incomes over €275,000 would be helpful.
 
Sophrosyne said:
As mentioned previously, a breakdown of those with incomes over €275,000 would be helpful.
Click to expand...

Minister Noonan gave a breakdown of the top earners a couple of years ago - here's a report:

http://www.irishexaminer.com/busine...earners-will-earn-4m-average-each-251833.html

On the 2012 Revenue figures, the top 1% of all income tax cases were responsible for 9.1% of the income and paid 30.4% of the taxation. As a proud member of the 99%, I would like to offer them my thanks and to wish them a prosperous new year!
 
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Here are the actual numbers from the Revenue Commissioners estimates for 2016



The highlighted bit shows that the top 11.8% of cases earned 39% of the income and paid 61% of the taxes.

The top 1.2% of cases earned 11% of the income and paid 22% of the taxes.

So it's reasonable to say that the top 1% of cases earned around 10% of the income and paid 20% of the taxes.
 
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Sophrosyne said:
How did you arrive at 30.40%?
Click to expand...

It's IBEC's figure (which I believe includes USC, but excludes PRSI).

I appreciate that these calculations are always somewhat contentious but the OECD reckons we now have the most progressive income tax system (including social security contributions ) in the OECD, according to their own criteria.
 
Here is another approach. It is from the CSO's 2014 Survey on Income and Living Conditions. (Scroll down to bottom of page and click on Table A2)

It takes in all the income and social transfers received.

It measures the Equivalised Income - A single person with an income for €30,000 has an equivalised income of €30,000. A couple without any dependents both of whom earn €30,000 each have an equivalised income of €36k (€60k/1.66). A couple with 2 kids with a total income of €30k have an equivalised income of €13k (€30k/ 2.32)

I have adjusted the figures so that Occupational Pensions are moved from social transfers to Direct income. People earn their occupational pension.



This ties in with the figures I have heard mentioned before. The top 30% of people fund the bottom 60% who are net recipients.
Brendan
 

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Brendan,

What is the source of this table and what year does it represent?
 
The Irish Tax Institute has a good pre-Budget briefing on its [broken link removed]


from which I compiled the following

 
Note that everything so far ignores indirect taxes.

Also note that as market earned income is so skewed in Ireland, you would expect the higher earners to be paying most income tax.

Of course the top two deciles pay most income tax, because in those deciles are found most dentists/doctors/landlords/solicitors/CEOs.

The key question is - why do so many people have so little direct earned income?
 
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