IT: Tax base vulnerable to changes in higher earner income tax receipts

"As the income tax take has risen, the reliance on higher earners has crept higher, as a report by the Parliamentary Budget Office (PBO) underlined this week. While the PBO was working from final figures for 2021, more recent Revenue Commissioners figures estimate that about 10 per cent of taxpayers units earning more than €100,000 will pay 55 per cent of all income tax in 2024....

...the Department of Finance has warned that “the five sectors which account for the largest share of income tax receipts also account for around 85 per cent of corporation tax receipts”. It added: “Any shock to the activity in these sectors would, therefore, not only affect corporation tax receipts but also spill over to income tax receipts. This highlights the vulnerability of the public finances to the activities of a small number of multinational-denominated sectors.” Turning the measure around, the top five sectors for corporate tax account for more than 50 per cent of all income tax paid."

It's a very interesting point - that the growing income tax take from high-earners is directly related to the corporation tax take (presumably given the generally high salaries in much of that sector.) Of course the left and far-left parties want to tax both cohorts even heavier...

This point needs to be discussed in the same breath when discussing Ireland's corporation tax vulnerability. When one goes, the other will inevitably follow.

Take out public service and multinationals from the economy.

What’s left is pretty low-productivity activity with low wages and consequently a low tax take.

Dr Strangelove said:

Take out public service and multinationals from the economy.

What’s left is pretty low-productivity activity with low wages and consequently a low tax take.

Click to expand...

But the "high productivity " of the multinationals is not really about the workforce in Ireland, multinationals put alot of profits through Ireland to maximise the low corporation tax, therefore the productivity of the work force is exaggerated because of those revenue flows, it's the same argument about GDP and GNP, GDP figures are distorted in Ireland. Therefore it is not the case that domestic sector workers are unproductive its just that those industries are way less profitable than the multinationals because the multinationals are dominant in technology

joe sod said:

But the "high productivity " of the multinationals is not really about the workforce in Ireland, multinationals put alot of profits through Ireland to maximise the low corporation tax, therefore the productivity of the work force is exaggerated because of those revenue flows,

Click to expand...

It’s a bit of both.

MNCs pay well in Ireland and that’s where the skilled workers prefer to work.

Even absent the profit-shifting a global MNC simply is simply more productive and so will be the workers.