# Compilation of reports on who pays what tax



## Brendan Burgess (25 Jan 2015)

The discussion of Irish tax policy is not very often based on hard facts.

There is a perception that high earners pay very little tax and that the so-called "squeezed middle" pay very high taxes.

Yes, a single person does start paying the the top rate of tax at €33,800 but what is the effective rate of tax for someone earning that amount?

Some argue that Ireland is a very low tax country and others argue that it is a high tax country.  It's easy to argue either viewpoint by excluding prsi from the argument or by measuring taxes as a percentage of GNP, or GDP if you want them lower. 

There is a tendency to select statistics to support one's own argument.

Many of the reports are deliberately misleading e.g. confusing households with individuals.

So I thought it would be useful to compile a list of hard data and reports on who pays what taxes in Ireland.


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## Brendan Burgess (25 Jan 2015)

The fairest and most properly compiled comes from TASC, “an independent progressive think-thank whose core function is economic equality and democratic accountability” published a paper How much tax do people pay on their incomes? Although TASC works closely with the Nevin Institute on many projects, they came up with very different figures from the Nevin Institute. They correctly distinguish between single people and married people.  TASC does not shirk from publishing good evidence, even if the evidence is not in their interest.





So, when people argue that someone earning €33,800 pays 51% tax on their income, in fact, it can be seen that a single person earning €32,500 pays an effective rate of tax of 17.9% while a married couple earning €32,500 between them pays 10.4%


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## Brendan Burgess (25 Jan 2015)

Note: See Sophrosyne's critique of these figures at 
* Tax Institute comparison of Irish income tax rates with other countries*

How does this compare with other countries?

The Tax Institute did a comparison.  It shows very clearly for single employees, using the theoretical tax rates: 

The lower paid in Ireland pay very little tax compared other countries 

The middle paid e.g. someone earning €35,783 pays lowish levels of taxes
Someone earning around €75,000 pays about the average - not too high or too low
The higher paid pay higher rates compared to other countries


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## Brendan Burgess (25 Jan 2015)

From Ronan Lyons 

*Paying tax in Ireland: Where the richest (and poorest) pay*

**
*This is misleading for the bottom decile. The average income is €9,500 but their average expenditure is twice that. So of course, the VAT and Excise Duty is going to be a high proportion of their income. *


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## Brendan Burgess (25 Jan 2015)

The OECD calculates that the Irish Tax system is the most progressive in the EU.  A single person on 67% of the average income pays 11.5% of their income in tax and PRSI, whereas someone on 167% of the average income pays 31.5% of their income in tax and PRSI.  This is the highest ratio in the EU. 


*Progressivity of Irish Income Tax System from Publicpolicy.ie *

**


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## Brendan Burgess (27 Jan 2015)

From the Revenue's [broken link removed]. This shows the Income Tax and USC paid by the different income groups. It does not include PRSI. 

My summary:


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## Brendan Burgess (27 Jan 2015)

From Enda Kenny in the Dáil on 20 January 2015 

(Presumably these figures are for some year later than 2011?) 

_The top 1% of earners pay 21% of all income tax and USC, the top 24% of earners pay 80% of all income tax and USC and the bottom 76% of earners pay 20% of all income tax and USC. In addition, the Government has ensured that 410,000 people do not have to pay USC and we intend to increase that number to 500,000 in 2015._


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## Purple (27 Jan 2015)

Brendan Burgess said:


> From Enda Kenny in the Dáil on 20 January 2015
> 
> _The top 1% of earners pay 21% of all income tax and USC, the top 24% of earners pay 80% of all income tax and USC and the bottom 76% of earners pay 20% of all income tax and USC. In addition, the Government has ensured that 410,000 people do not have to pay USC and we intend to increase that number to 500,000 in 2015._


And he said it like it's a good thing... and that's our "right wing" party!


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## Conan (30 Jan 2015)

Brendan,
I think you could do the country (and some late night TV viewers) some service by sending these tables to Vinny Browne. He seems convinced that our taxation system discriminates against the lower paid in favour of the higher paid.


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## 44brendan (30 Jan 2015)

Are you serious Conan!!!!! You actually think that VB will let the facts influence his polemic views on most issues!!!


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## Conan (30 Jan 2015)

Apologies 44 Brendan,
In a moment of weakness I thought that Vinny was actually a journalist ("fair and balanced" like Fox News). Silly me.


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## Brendan Burgess (1 Feb 2015)

Vincent Browne is not the only one, surely? 

Almost all politicians and journalists seem to think that low earners are paying too much tax.

Brendan


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## Sophrosyne (2 Feb 2015)

Does the average person ever bother to check the veracity of statistics?


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## DerKaiser (5 Feb 2015)

Great work on compiling this Brendan. I'd draw a few conclusions.
1) The lower paid pay relatively little in terms of income related taxes, but it is difficult to say whether this is appropriate unless you look at the balance between these taxes, the level of non-income taxes and the level of social benefits (healthcare / social welfare / etc) covered by these taxes
2) We move rapidly from a 'low income tax' economy to a 'high income tax economy' from incomes of €35k to €75k
3) Probably the most absolute thing the data tells us is that those on very high incomes are very highly taxed


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## DerKaiser (5 Feb 2015)

one other point from the table above.
There's 100,000 'cases' earning above €100k p.a.
These people (5% of cases) earn €17.5bn (23% of total) and pay €6bn (40% of total) in taxes.

This 'wealthy' group has been repeatedly targetted by left wing groups, despite the fact that couples earning little more than €50k each would be included.

If this group were to pay an extra 5% tax on incomes above €100k (pushing the marginal rate up to a very penal 60% for the self-employed!), it would generate a mere €375m p.a. from my calculations.

Anyone presenting the idea that taxing incomes in excess of €100k amounts to some untapped pot of gold should be called out by these stats.


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## ColmFitzgerald (8 Feb 2015)

Great thread
In the public sector, tax rates are significantly higher. Are there estimates for those in the public sector?


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## Brendan Burgess (8 Feb 2015)

As far as possible, I want to keep this thread on authoritative reports on tax rates, rather than on the debates on the rights or wrongs of the issues.   Colm has raised a valid point, which deserves its own thread, so I have moved it to here: 
*Public sector employees pay higher taxes than private sector employees*


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## Sophrosyne (9 Feb 2015)

I think it is also important to note that of the 2,049,617 cases mentioned in Revenue’s table IDS20 above, only 1,223,910 cases were effectively liable to income tax for 2011 - Revenue table IDS17


825,707 (40.29%) were exempt

32,830 (1.60%) were entitled to marginal relief

836,149 (40.8%) 20% tax band*

354,931 (17.32%) 41% tax band


* The figures at the 20% income tax rate include taxpayers whose nominal liability at 41% is fully covered by their tax credits.


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## Protocol (15 Apr 2015)

New OECD data on income tax paid across countries:

http://www.oecd.org/tax/oecd-tax-burdens-on-wages-rising-without-tax-rate-increases.htm

http://www.oecd.org/tax/taxing-wages-20725124.htm

The "tax wedge" on an average single worker ranges from 10-55% across the OECD.

The average is 36% of labour cost.

Irl, as expected, is below average, at just over 30%.


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## Sophrosyne (5 Jun 2015)

According to the latest income distribution statistics from Revenue (2012) the number of tax cases increased from 2,049,617 in 2011 to 2,107,208, an increase of 57,591 cases.

By far and away, the largest case increase (12,014 or 20.86%) was in the €10,000 or less income band.

The next largest, with exactly the same case increase (4,626 or 8.03%) were in the €30,000 - €35,000 and €50,000 to €60,000 income bands respectively.


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## Brendan Burgess (8 Sep 2017)

Any recent updates on this?


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## Protocol (8 Sep 2017)

http://www.oecd.org/ctp/tax-policy/taxing-wages-20725124.htm

http://www.oecd.org/tax/tax-policy/taxing-wages-ireland.pdf


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## Brendan Burgess (8 Sep 2017)

Thanks Protocol 

I should have specified that I was looking for the up to date information on the following: 

The top 20% of taxpapyers pay x% of all income tax. 

Brendan


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## PMU (8 Sep 2017)

The government's tax policy group has a paper on income tax but nothing after 2012.  [broken link removed].  I could find anything more recent, which is a pity as I think this is a good document, but it shows that 6% of income earners paid 31% of USC and 5% of earners paid 43% of income tax.  No reason to believe things have changed.

This might also be of interest
https://ec.europa.eu/taxation_custo...ation_trends_2017_country_chapter_ireland.pdf


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## Protocol (8 Sep 2017)

Brendan Burgess said:


> Thanks Protocol
> 
> I should have specified that I was looking for the up to date information on the following:
> 
> ...



I'll have a look now.

http://www.revenue.ie/en/corporate/information-about-revenue/statistics/index.aspx

[broken link removed]


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## Protocol (8 Sep 2017)

Interesting, Revenue are now using the CSO database to provide stats:

[broken link removed]

Data up to 2015.


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## TheBigShort (10 Sep 2017)

Just looking at the German levels of tax on €18,000...the obvious thing is the glaring difference of some 27% on first €18,000 compared to Ireland at 4% odd.
But looking at Wiki, there appears to be some €8,000+personal tax credit applied to German incomes. I could be wrong but it would appear that they operate a system similar to Ireland pre-Harney/McCreevey?
That is the tax allowance/credit is applied first, then the tax rate applied to the remainder? I could be wrong, but paying 27% on income of €18,000 seems extremely harsh assuming Germany is not, in general, any way particularly cheaper than Ireland?


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## Early Riser (10 Sep 2017)

TheBigShort said:


> Just looking at the German levels of tax on €18,000...the obvious thing is the glaring difference of some 27% on first €18,000 compared to Ireland at 4% odd.
> But looking at Wiki, there appears to be some €8,000+personal tax credit applied to German incomes. I could be wrong but it would appear that they operate a system similar to Ireland pre-Harney/McCreevey?
> That is the tax allowance/credit is applied first, then the tax rate applied to the remainder? I could be wrong, but paying 27% on income of €18,000 seems extremely harsh assuming Germany is not, in general, any way particularly cheaper than Ireland?



Running the figure of €18000 pa for a single person through the German tax calculator below suggests zero taxes payable (excluding Church Tax) but €3740 in Social Charges payable (Pension Insurance, Unemployment Insurance, Care Insurance and Health Insurance).

http://www.brutto-netto-rechner.info/gehalt/gross_net_calculator_germany.php

EDIT: I suspect I may have used the calculator incorrectly. The Insurance figures seem ok but tax of up to €800 euro may apply, depending on individual allowances granted/claimed. There seem to many claimable, with one site stating that €1000 is about a baseline standard . This in addition to standard individual/married allowance.


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## TheBigShort (10 Sep 2017)

Thanks for that, much appreciated.


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## Protocol (10 Sep 2017)

Germany has 20-21% employee social insurance.

There are no allowances, credits, just ceilings.

So on 18k there would be 20-21% SI plus tax.


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## Early Riser (10 Sep 2017)

Protocol said:


> Germany has 20-21% employee social insurance.
> 
> There are no allowances, credits, just ceilings.
> 
> So on 18k there would be 20-21% SI plus tax.



Are you sure, Protocol?  I understood there to be a "basic allowance" on which no income tax is charged. For 2017 this is quoted as being €8820 for a single person and €17640 for a married couple.

Is this wrong ?


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## orka (10 Sep 2017)

Early Riser said:


> Are you sure, Protocol?  I understood there to be a "basic allowance" on which no income tax is charged. For 2017 this is quoted as being €8820 for a single person and €17640 for a married couple.
> 
> Is this wrong ?


There are no offsetting allowances on social insurance contributions in most countries.  See the publication below which compares taxes in Ireland and other jurisdictions.  Page 27 shows a German on €18K paying €4,800 in tax (most likely all social insurance contributions).  An Irish person on €18K is shown as paying €600.

Page 19 shows what an outlier Ireland is at lower salary levels.

[broken link removed]


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## Sophrosyne (10 Sep 2017)

Early Riser said:


> Are you sure, Protocol? I understood there to be a "basic allowance" on which no income tax is charged. For 2017 this is quoted as being €8820 for a single person and €17640 for a married couple.
> 
> Is this wrong ?



You are correct Early Riser.

The first €8,820 and €17,640 for singles and marrieds respectively are taxed at 0%.


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## Protocol (11 Sep 2017)

Sorry, yes, I meant there are no SI credits, allowances, etc.

It's a straight 20-21% SI on income up to various ceilings.

Whereas we have had various PRSI allowances and exemptions.


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## Sophrosyne (12 Sep 2017)

According to the latest Revenue distribution statistics (2015) the highest earners (€100,000 upwards):

% of Total Cases  5.40%
% of Income      25.98%
% of Tax/USC    45.93%

The highest % discrepancy between % income and % tax/USC was that of two-income couples at 9.80% (Income 15.58%, Tax/USC 25.38%).

The lowest was that of widows at 0.16% (Income 0.20%, Tax/USC 0.36%).

Among income groups the highest discrepancy between income and Tax/USC % was for those with an income of €275,000 and over at 9.40% (Income 8.45%, Tax/USC 17.85%).

I see that the thread on the "squeezed middle" is closed but the statistics for the income bracket €50,000 to €60,000 are:

% of Total Cases  6.48%
% of Income        9.06%
% of Tax/USC      8.58%


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