# Is Ireland a highly taxed country?



## Brendan Burgess (5 Aug 2022)

In popular discussion, one would get the impression that Ireland is a highly taxed country with a squeezed middle.

The ESRI did a good report on effective tax rates.



			https://www.esri.ie/system/files/publications/RS110.pdf
		


Ireland is a low tax country for almost everyone:






With very low PRSI


----------



## Brendan Burgess (5 Aug 2022)

Do we have a squeezed middle?









						The squeezed middle: myth or reality ?
					

New evidence casts light on how middle earners can be caught by Ireland's tax and rent support systems




					www.irishtimes.com
				




_But what about the middle earners – the public servants, health workers and those in sectors such as administration and manufacturing typically on €22 to €28 an hour? The report shows that this group earns 42 per cent of the wages and salaries in the economy and pays 38 per cent of the income taxes and PRSI. Given the progressive nature of the tax system and the big take from higher earners, this shows that middle earners are paying a significant amount of income tax and PRSI.

...
What of the international position of middle earners? The latest OECD international comparisons show overall tax and PRSI contributions of an average Irish employee at 26.7 per cent of gross earnings, ahead of the OECD 24.6 per cent average, but slightly below the average of European countries.

But for single people on two-thirds above the average the tax take rises to 36 per cent, compared to an EU average of just under 30 per cent. Families with children do comparatively a bit better but two average earners with two children still pay 26.7 per cent of income in taxes and PRSI compared with an OECD average of 23.2 per cent._


----------



## Bow tie (5 Aug 2022)

Is the source data 5 years old? Anything more recent?


----------



## Bow tie (5 Aug 2022)

https://www.irishtaxrebates.ie/paye-explained/    "If you make anything over €35,300, 40% of the excess amount is also taken."  
That is high. Add USC, PRSI Rates on top and escalating the more you earn- even higher.

Take a two person married couple both on 45k, roughly the average now. No pensions.
*From taxbackeu: Tax Year: 2022*
GrossPay: 90000.0
Pensions & Ded: 0.00.0
Income Levy | USC: 1312.4451312.445
PRSI: 3600.0
Net Tax Due: 14480.0
Net Take Home Pay: 69295.11 
*Tax/USC/PRSI 19392/90K= 21.5%*

Then two higher earners- say 80k each.
*From taxbackeu: Tax Year: 2022*
GrossPay: 160000.0
Pensions & Ded: 0.00.0
Income Levy | USC: 3235.9053235.905
PRSI: 6400.0
Net Tax Due: 42480.0
 Net Take Home Pay: 104648.19 
*Tax/USC/PRSI 52115/160K= 32%*

I guess this is the progressive tax system as such. Whether the couple on average income should pay more or the higher earners less depends on your politics. 

Perhaps we should just get rid of USC as many were under the belief it was temporary: https://www.thejournal.ie/was-the-usc-meant-to-be-temporary-5683351-Feb2022/


----------



## Brendan Burgess (5 Aug 2022)

Hi Bow tie 

I have just started looking. This is the most recent. I doubt it has changed much.  We have not gone from a low tax society to a high tax society.

Brendan


----------



## Brendan Burgess (5 Aug 2022)

Bow tie said:


> Tax/USC/PRSI 19392/90K= 21.5%





Bow tie said:


> Tax/USC/PRSI 52115/160K= 32%



Both of these strike me as very low. 

Brendan


----------



## Brendan Burgess (5 Aug 2022)

Social Justice Ireland has published interesting figures: 






						Effective Tax Rates after Budget 2022 and Why Ireland remains a low tax country | Social Justice Ireland
					

Central to a thorough understanding of income taxation in Ireland are effective tax rates. These rates are calculated by comparing the total amount of…




					www.socialjustice.ie


----------



## T McGibney (5 Aug 2022)

Brendan Burgess said:


> Social Justice Ireland has published interesting figures:
> 
> 
> 
> ...


Social Justice Ireland is a joke Brendan. And an untrustworthy joke at that.


----------



## Brendan Burgess (5 Aug 2022)

What is the squeezed middle? Earnings around €55k?









						What is the truth about paying tax in Ireland?
					

The State is often seen as comparing poorly on personal tax rates – but is this an accurate view?




					www.irishtimes.com
				







These are the rates for single PAYE workers.

Effective tax rates are certainly not out of line.

The lower paid pay very little in Ireland.

It would be lower again for married couples with children.

Brendan


----------



## TRS30 (5 Aug 2022)

Not for companies, corporate the most glaring difference a little more than a third of EU average (assuming Ireland is included in the average so probably less than a third if removed).


----------



## ashambles (5 Aug 2022)

It's more than just the tax, it's the disposable income.

Tax rates for higher earners are close to Swedish levels.

However in return the Irish get far less.

No final salary linked state pension
No universal health care
Less child care
Expensive and inadequate public transport
Unlike a Swede an Irish person is buying health insurance, putting income into private pensions, paying for child care, buying heavily taxed cars when they'd prefer not to. 

Disposable income for someone earning 100k on Sweden would probably be higher than here despite more income tax. 
In France according to that chart it's even better as less tax, and generally good public services.

Many of these countries stop their equivalent of employee PRSI at a threshold - as the pensions and benefits there really are "Pay Related".


----------



## Brendan Burgess (5 Aug 2022)

Looking at tax as a percentage of GDP (GNI* for Ireland) ,  Ireland is mid table according to the ESRI



			https://www.esri.ie/system/files/publications/BP202201.pdf


----------



## ClubMan (6 Aug 2022)

T McGibney said:


> Social Justice Ireland is a joke Brendan. And an untrustworthy joke at that.


Maybe. But do you dispute the figures in their table?






						Is Ireland a highly taxed country?
					

In popular discussion, one would get the impression that Ireland is a highly taxed country with a squeezed middle.  The ESRI did a good report on effective tax rates.  https://www.esri.ie/system/files/publications/RS110.pdf  Ireland is a low tax country for almost everyone:    With very low PRSI



					www.askaboutmoney.com


----------



## T McGibney (6 Aug 2022)

ClubMan said:


> Maybe. But do you dispute the figures in their table?
> 
> 
> 
> ...


I didn't bother looking at it. For the same reason that I wouldn't bother looking.at figures presented by People Before Profit. Respect is earned.


----------



## Protocol (6 Aug 2022)

Overall, taxes are not high in Ireland.

Direct taxes on low earners are zero, or very low.

PRSI is lower than typical rates elsewhere.

However, the entry point to the 48.5% rate is very low, at about 36/37 k.

The income tax system is very progressive, for example the gap between the direct income taxes on somebody earning half average earnings and somebody earning double the average is very wide.


----------



## ryaner (6 Aug 2022)

How are the capital tax rates so low? Are they including housing to bring it down or something that I've missed in the report?
DIRT 33%, CGT 33% with only a small exemption, normal investments are 40% with no exemption.


----------



## Zenith63 (7 Aug 2022)

ryaner said:


> How are the capital tax rates so low? Are they including housing to bring it down or something that I've missed in the report?
> DIRT 33%, CGT 33% with only a small exemption, normal investments are 40% with no exemption.


Appendix 1A of the report gives a sense of what goes into the Capital calculations, it’s much broader than just CGT/DIRT - “…
the sum of taxes on the income or profits of corporations, taxes
on financial and capital transactions, capital taxes, current taxes on capital, taxes on winnings from lottery and games, stamp taxes, and other taxes on production”


----------



## T McGibney (7 Aug 2022)

ryaner said:


> How are the capital tax rates so low?


Very simple. When CGT is high, people are very reluctant to create tax bills for themselves by disposing of assets.  When CAT is high, people are very reluctant to create tax bills for themselves by gifting assets.


----------



## Nicklesilver (7 Aug 2022)

all that economic activity includes high value exports which are taxed at a low level of corporate tax. This skews the tax take figures on this metric. The marginal personal tax rates in Ireland are very high up to 55 %. On top of income tax is property tax, stamp duty, and 23% vat On most things we buy. We need far more work on how and where the money is spent and how we can create wealth for our people


----------



## Laughahalla (7 Aug 2022)

Squeezed middle is not all about the tax we pay. It's both tax and the cost of living. I would say the middle earners are squeezed.


----------



## Nicklesilver (7 Aug 2022)

had anyone worked out what the % tax take is on domestic output compared to other countries? A more realistic figure. One pharmaceutical plant just paid 3b in dividends!!


----------



## ryaner (7 Aug 2022)

Zenith63 said:


> Appendix 1A of the report gives a sense of what goes into the Capital calculations, it’s much broader than just CGT/DIRT - “…
> the sum of taxes on the income or profits of corporations, taxes
> on financial and capital transactions, capital taxes, current taxes on capital, taxes on winnings from lottery and games, stamp taxes, and other taxes on production”





			
				ERSI said:
			
		

> The effective tax rate on capital income is given by:
> ...
> CAPT is defined as the sum of taxes on the income or profits of corporations


Thanks for pointing to that. I'd skipped over that because it says it included corporations, assuming there was something else broken for people since the original figure was next to income with corporate broken out by itself. With corps included I'm now wondering why it is so high


----------



## nest egg (7 Aug 2022)

ashambles said:


> It's more than just the tax, it's the disposable income.
> 
> Tax rates for higher earners are close to Swedish levels.
> 
> ...


Don't forget about the built infrastructure too which you get the benefit from.  

As one simple example, the town I lived in in France had not 1, but 3 council-run pools. They were cheap to access yet with facilities which easily beat the best private pools here. Just one of many examples which improve the quality of life.


----------



## Purple (8 Aug 2022)

Brendan Burgess said:


> Ireland is a low tax country for almost everyone:


What is striking there is how low our rates of capital taxation are. 


Brendan Burgess said:


> Both of these strike me as very low.
> 
> Brendan


But our marginal rates are high at relatively low income levels and that a disincentive to work.  


ashambles said:


> It's more than just the tax, it's the disposable income.
> 
> Tax rates for higher earners are close to Swedish levels.
> 
> ...


That's a measure of inefficiency in Public Institutions. We are inefficient in how we deliver services and so lots of money is wasted.


----------



## Shakespeare (13 Aug 2022)

Brendan Burgess said:


> What is the squeezed middle? Earnings around €55k?
> 
> 
> 
> ...


Hi Brendan
How can you say this. USC has stopped doing what was intended, aka make everyone pay something! Increasing the tax base has been whittled away by populism and a competition almost of "how many can we remove from paying USC" each year.
Also, if you take Eur100k or Eur150k Vs the Eur25k start point
At Eur25k - Switzerland is the only country where someone pays less income tax
At Eur100 or Eur150k - only in Sweden and Germany do people pay more income tax - how does that not equate to too few people paying far too much at too high rates of income tax at not extremely high incomes
Couple that with the more expensive everything in this country and it is any wonder, people stay at all !!


----------



## joe sod (14 Aug 2022)

Yes it is highly taxed, no question about it, while other countries like Germany and Scandinavian countries might have high taxes they also have a fixation on value for money and inflation controls. Therefore in Germany even though it is the most productive economy in the world you can easily get a cheap beer and pizza .
 This is not the case in Ireland because certain sectors like the legal profession have an inordinate level of power. I'm in Germany now, last night I saw girls and guys dancing precariously on a flimsy table, if one falls off its their own tough luck, in Ireland the bar would be closed because they would not be able to afford insurance.
The Irish government needs to radically overhaul the legal system in Ireland because the current situation is stifling the Irish indigenous sector


----------



## Zenith63 (14 Aug 2022)

joe sod said:


> I'm in Germany now, last night I saw girls and guys dancing precariously on a flimsy table, if one falls off its their own tough luck


According to Exploring Global Landscapes of Litigation, Germany is the most litigious country in the world, ahead of even the US; Ireland is not even in the top 10.


----------



## Protocol (15 Aug 2022)

Ireland has a very progressive income tax system:


----------



## Protocol (15 Aug 2022)

This is what really gets me, the entry point to the top rate:


----------



## Purple (15 Aug 2022)

Protocol said:


> This is what really gets me, the entry point to the top rate:
> 
> View attachment 6522


It's worse than it looks; Estonia, Hungary and Czech Republic have a flat income tax system, i.e. a single rate. Slovakia's highest rate is 25%, the low rate is 19%.  Therefore it's really only Belgium where the higher rate applies at a lower income within a similar income tax system.


----------



## nest egg (15 Aug 2022)

Protocol said:


> Ireland has a very progressive precarious income tax system


Much debate in the media about the (over) reliance on the corporate tax take, but comparatively little on income tax, the vast majority of which is paid by individuals working for the big corporates.


----------



## Protocol (16 Aug 2022)

A good blog post on optimal taxation:









						A totally off-the-news post about taxes
					

How I think it should work in theory




					www.slowboring.com


----------

