Ireland has the most progressive income tax.. system

koheim

..in the World!!

Why is Ireland so different from rest of EU?

http://www.publicpolicy.ie/progressivity-of-irish-income-tax-system-2013/

Dannyboy83

Because the cost of living here is so high, they cannot tax low earners at all, as they would then qualify for social assistance.

For example,

Ireland is world's fourth most expensive for petrol.
A typical Irish driver pays about €2,754 a year in fuel and €1,652 of this is tax.

And then the higher rate of tax kicks in so low, worse than any other country in the OECD unless I'm mistaken (see graph), to attempt to compensate for this.

American Chamber of Commerce demands changes to Ireland's tax regime

"The high marginal tax rate and the low entry point to that rate are major barriers to attracting and incentivising key talent which must be addressed. Widening the tax bands would reduce the income tax burden on all PAYE workers and would stimulate badly needed economic activity in the domestic market".

This is why there have been growing calls for a middle tax band.

In Ireland, someone with a gross income of €32,800 is considered a high earner according to the tax system.
Yet the average wage in Ireland is 35k...

Idbatterim

dear god, I knew it was outrageous, but its probably even more outrageous than I thought it was!

Sheldons Brain

The entire band system needs to be looked at. Such a high marginal rate at a gross income of €32,800 is not good, but why should the marginal rate double in a single step? In the old system you could have a third 30% rate somewhere, but better would be a new system with a gradually increasing marginal rate. The present system is designed to be "simple", but in an era when anyone can get an app for their phone a slightly more sophisticated calculation could be used.

sock puppet

Sheldons Brain wrote: »

The entire band system needs to be looked at. Such a high marginal rate at a gross income of €32,800 is not good, but why should the marginal rate double in a single step? In the old system you could have a third 30% rate somewhere, but better would be a new system with a gradually increasing marginal rate. The present system is designed to be "simple", but in an era when anyone can get an app for their phone a slightly more sophisticated calculation could be used.

The only way to implement a 30% rate would be to introduce it at a lower band or cut tax credits. Can't imagine that being too popular.

edit: also when talking about progressivity it's important to remember that some other countries have refundable tax credits for low earners so they pay a negative rate.

murphaph

Flat tax FTW. Never agreed with "progressive" systems tbh.

Shelflife

Its a serious joke of a system that penalises those that work hard and make a few euros.

I recently looked at a project about an hour from me, costed it up and on paper it looked viable, would have employed 4-6 people.

Trouble was after tax, a marginal rate of 55% just kills any incentive to do the project.

They want you to take the risk, invest your own money and then if it pays off you get raped with tax. Pity really , its only 6 jobs but thats worth about a €100k of a difference per year to the exchequer being the difference between being on the dole and paying tax into the system.

makes no sense to me.

Idbatterim

I work in the family business, here is another way to look at it, 52% Paye, PRSI, USC + 10.75% employers PRSI. So to pay myself over the threshold, say €10,000, I have to pay the government €6275, to pay myself €3725!

zielarz

It's an envy driven tax system which has nothing to do with fairness.

creedp

Idbatterim wrote: »

I work in the family business, here is another way to look at it, 52% Paye, PRSI, USC + 10.75% employers PRSI. So to pay myself over the threshold, say €10,000, I have to pay the government €6275, to pay myself €3725!

How much of the €6,275 can be set off against the family business tax liability?