Is Ireland a highly taxed country?

Brendan Burgess

Brendan Burgess

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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.


Ireland is a low tax country for almost everyone:

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With very low PRSI

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Do we have a squeezed middle?

www.irishtimes.com

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 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.
 

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

www.irishtimes.com

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 www.irishtimes.com

1659712859977.png

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
 
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).
 
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".
 
T McGibney said:
Social Justice Ireland is a joke Brendan. And an untrustworthy joke at that.
Click to expand...
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
 
ClubMan said:
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
Click to expand...
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.
 
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.
 
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.
 
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.
Click to expand...
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”
 
ryaner said:
How are the capital tax rates so low?
Click to expand...
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.
 
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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
 
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