Are income tax rates really too high in Ireland

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ClubMan

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I see several posters here and in other threads claiming "income tax is too high in Ireland". Is that really the case? This research seems to suggest that this may not be the case.
publicpolicy.ie

Comparing Irish Income Taxation Rates with other EU Member States - Public Policy

In 2019 Irish income tax revenue accounted for €23 billion or 40% of total tax receipts. Taxation of labour income accounts for the greatest share of total income tax receipts: with Pay As You Earn (PAYE) and the Universal Social Charge (USC) amounting to €16 bn and €4 bn respectively in 2019
publicpolicy.ie publicpolicy.ie
 
I haven't read the article you linked but it may be the case that the value realisation / capital allocation decisions from the income tax take is poor rather than the tax take itself being the problem.
 
A lot of people are not able to hold down a job and must/should be helped.
A lot of people chose not to work and are paid not to.
A lot of the population are of an age where they collect money by means of a pension.
All children in this state are paid an allowance, it's given to the parent/parents.
On top of the above cash, many more allowances are also handed out.

Most people paying high tax don't agree with paying all of the above.
Many people getting most of the above, think more people should be paying more.

To pay the above requires a lot of tax-payers money. If it continues, more tax will be required.

Goverments will rise and fall on either giving, or taking.

Are taxes too high now? For some, yes. For others? No.

Maybe we need a 3rd rate of tax?
 
noproblem said:
To pay the above requires a lot of tax-payers money. If it continues, more tax will be required.
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Or less/more effective spending. I'd like to see the Comptroller and Auditor Generals annual report have more clout.

Protocol said:
Effective income tax rates are not very high, no.

However, the entry point to the top marginal tax rate MTR is very low.

You reach 48.5% at about 36k, that is crazy.
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Is this not a contradiction. The MTR just raises the effective rate. For example, you could say the effective rate at, say 40k is too high and should be reduced by raising the entry to the MTR to 40k?

Effective tax rates - Single person

13k
0%​
15k
1%​
20k
8%​
30k
14.8%​
40k
19.8%​
50k
25.5%​
60k
29.4%​
70k
32.1%​
80k
34.6%​
90k
36.5%​
100k
38.1%​

If you raise the entry to the MTR, you reduce the effective tax for those in between the bands.
 
You can't look at Income Tax in isolation, you have to look at the overall tax burden.

Firstly you have PRSI and USC and USC can be called what ever they want to call it but in essence, it is a tax on income.

Secondly you should look at consumption tax, VAT in Hungary is 27% as an example, 25% in Norway and Sweden.

Thirdly you have to look at other taxes, e.g. our property tax is amongst the lowest in Europe, it's a pittance in comparison to Local Council Tax in England. I lived in England for many years and the council tax on my modest 4 bed terraced house in Essex is 8 times what I pay for a 4 bed semi here. Throw in the free water here and I'm already €2k better off then if I lived in the UK

So there are pluses and minuses and the overall tax burden on individuals is what should be looked at, not just income tax
 
The rates aren't too high but the band at which the highest rate is paid is too low.
The income at which the lower rate is paid is too high.
Basically the base is way too narrow. Not only should income taxes be less progressive but non income related taxes are way too low and things like property tax should be much higher.
 
I don't think the rates are too high rather it's increasingly difficult to see what services I'm getting in return without having to pay an additional premium such as the Drugs Payment Scheme, GP/Hospital charges.

If services were on a par with northern Europe I would happily pay a higher rate.

It seems to me that tax is increasingly spent on welfare, public sector pay, private sector contractors providing poor value (such as HAP, care provision, infrastructural projects) rather than service provision/delivery.
 
Peanuts20 said:
You can't look at Income Tax in isolation, you have to look at the overall tax burden.
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But it's a thread about income taxes:)

I personally would have a gentler schedule so same average tax rate overall, with the lower rate kicking in earlier and higher rate a bit later.
 
Carnmore said:
it's increasingly difficult to see what services I'm getting in return
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When you flush the toilet does your poo go away?
Do the streetlights come on when it's dark?
Are there roads outside your house?
Are there emergency services you can call?
If you have children are there schools that they can go to?
Are there hospitals you can go to if you are sick?

There are loads of things we get but there is gross inefficiency in how the State delivers services and, in particular, how it regulates and interacts with the private sector.

If we want Northern European levels of service we need serious structural reform to the State sector and the Unions won't let that happen. We also need much high taxes on low to mid level earners and that certainly won't happen.
 
Purple said:
there is gross inefficiency in how the State delivers services and, in particular, how it regulates and interacts with the private sector.
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My experience of a lifetime working in the private sector is that it's rarely a paragon of efficiency and common sense either. And that includes several US HQ'd publicly quoted multinationals where results are measured quarterly and by the markets. But it's a common trope to assume that such inefficiency is the sole domain of public services only.
 
ClubMan said:
My experience of a lifetime working in the private sector is that it's rarely a paragon of efficiency and common sense either. And that includes several US HQ'd publicly quoted multinationals where results are measured quarterly and by the markets. But it's a common trope to assume that such inefficiency is the sole domain of public services only.
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There is an infatuation with 'change' and paying huge sums to plan change across both public and private sectors.

I think Tax Rates are unfairly high for younger people, especially in the current economic environment. I think people who are in essentially services that are lower paid deserve better tax breaks than those working in non-essential services with higher wages. Private salaries are rising due to competition and the tax take I imagine will grow given the low threshold to hit the top income tax level.
 
ClubMan said:
My experience of a lifetime working in the private sector is that it's rarely a paragon of efficiency and common sense either. And that includes several US HQ'd publicly quoted multinationals where results are measured quarterly and by the markets. But it's a common trope to assume that such inefficiency is the sole domain of public services only.
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I agree with you that the private sector is nothing special either but the services delivered by the State are more important so it's more important that they are delivered well and efficiently.
 
Dublinbay12 said:
There is an infatuation with 'change' and paying huge sums to plan change across both public and private sectors.
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I agree. LEAN methodology is a good driver for change. It empowers people at every level to make the thousands of small changes that add up to a big difference. When the high volume of low value changes are made the big structural problems become more visible and are easier to fix.
 
Dublinbay12 said:
I think Tax Rates are unfairly high for younger people, especially in the current economic environment. I think people who are in essentially services that are lower paid deserve better tax breaks than those working in non-essential services with higher wages.
Click to expand...
I think the issue is more that we still have too narrow a tax base with too much tax on labour. That creates an unequal society where those starting off are disadvantaged.
 
Purple said:
I think the issue is more that we still have too narrow a tax base with too much tax on labour. That creates an unequal society where those starting off are disadvantaged.
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But as another poster said earlier, this thread is specifically about income taxes/deductions. :)

And the report that I linked to in my original post (split off from another thread) assesses the Irish income tax regime as generally fair - i.e. not onerous and very progressive.
 
Purple said:
I agree with you that the private sector is nothing special either but the services delivered by the State are more important so it's more important that they are delivered well and efficiently.
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On top of that, you generally don't get much in the way of choice when it comes to state services. If I want a product of the private sector, then I'll usually have choice and the more efficient company will often win that business by offering better value / quality.

Lots of private sector companies, including the big quoted ones fail and go bust due to inefficiencies, we just throw more money at state inefficiency.
 
ClubMan said:
And the report that I linked to in my original post (split off from another thread) assesses the Irish income tax regime as generally fair - i.e. not onerous and very progressive.
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"Fair" is a relative term. Why is very progressive regarded as fair?
 
Purple said:
"Fair" is a relative term. Why is very progressive regarded as fair?
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Ok, maybe I should've quoted from the report's abstract for those who haven't read it.
At average incomes and below, the Irish income tax burden is relatively low when compared to other EU Member States...

The Irish tax and welfare system is the most progressive and redistributive in the EU – in terms of offsetting household and market income inequalities.
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Why would a progressive tax system not be fair? Surely those who earn more should pay more?
 
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