TASC have published a very good paper
Do you think so? I agree there are some useful information and views presented in new ways but, possibly from an agenda getting in the way, I don’t think their conclusions are supported (or even discussed) in the main body of the report. Honestly, this report annoyed me almost as much as the Neri one.
Paraphrasing the report:
1.
Our tax system only appears to be one of the most progressive in the world because the low paid pay so little (true – thanks for drawing attention to this – there’s your solution right there)
2.
Middle income earners don’t pay even close to international average taxes (I agree, another potential solution there)
3.
We should introduce a third band to tax the highest earners even more (what?).
If Ireland had a third rate – for example, a 48% rate charged on incomes above €100,000 – the ‘highest rate on average earnings’ argument would be obsolete.
Well isn’t that a great reason to introduce a huge new tax band? – to stop people being annoying about getting to the top band too early… Who cares if it’s fair or not or if the higher earners already pay international norms.
And also, a particular bugbear of mine:
It would be regressive to target tax cuts at middle income earners if those on lower incomes are being asked to pay the same amount of tax as previously.
This is such an unfair general attitude. It’s basically saying that what goes up can’t come down. Higher earners were hit first and most often to protect the lower paid (and no paid) – so why can’t they have some of the pain reduced first? E.G. if higher earners were hit by 20%, middle earners by 10% and low earners by 5% - why can’t the high earners be first to claw back maybe 5%? Or if higher earners were hit by 20% and others not at all - why can't a change be made that only improves the higher earners? [But it’s not faaaaaiiiirrrrrr….] If the system is overly progressive, why shouldn't it be rebalanced?
One unsubstantiated statement in the Tasc report is the bolded bit here:
2. Ireland has a relatively flat ‘two rate’ system rather than having a more steadily progressive system, with further tax rates and bands for higher salary levels.
It is not very unusual to charge 41% on average earnings, but it is unusual not to charge a higher rate on very high income levels.
Where do they get that from and do they have data to support it? Their report is mainly about average wages and if that’s all they have data for, that’s all they should have commented on.
An interesting addition to the discussion for the Tasc report would have been the Tax Institute’s report that BB linked to in another thread.
The Tax Institute has published the following [broken link removed]
This shows average total tax take for a selection of 8 countries at 4 different salary levels (18K, 36K, 75K and 150K). And this supports the data and commentary in the Tasc report on taxes on average salaries – that Irish taxpayers on average salaries pay less than international averages. So at the 4 salary levels, the following shows the tax take % for Ireland (IRL), 8 country average (AVG), 6 EU country average (EU6) and the other individual countries.
Tax % by salary level:
SAL......18K~36K~75K~150K
IRL........05~22~38~45
AVG......15~25~35~41
EU6.......17~27~38~44
GER.......27~36~44~44
HOL.......20~32~40~47
ESP.......19~26~35~41
SWE......17~23~39~48
SWI.......06~19~29~35
UK........12~22~31~39
US........15~19~26~29
(e.g. Irish taxpayers on 18K pay 5% tax, those on 36K pay 22% tax,... German tax payers on 18K pay 27% tax, those on 36K pay 36% tax etc...)
How could anyone look at this and not conclude that the glaring difference between Ireland and other countries is at the lower/middle end and not the higher end? In the two upper salary levels, Irish taxpayers pay roughly the same as the EU average – but only about 30% of the EU average at the 18K salary level and 80% of the EU average at the 36K salary level. Look at how flat Germany is.
And as a final aside, no serious report should include the phrase ‘race to the bottom’…