Myth: The rich don't pay much income tax

The level of income inequality can be seen in the SILC reports from the CSO:

PRELIMINARY
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FULL REPORT
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At least we've made massive strides in terms of addressing satellite dish deprivation (page 60)
 
Protocol said:
Seamus Coffey, UCC, has a good blog piece on the level of income inequality in Irl:

http://economic-incentives.blogspot.com/2012/04/distributional-effects-of-direct-taxes.html

Here is a quote:

"Ireland has by far and away the greatest level of inequality when it comes to original income. The level of original income in the bottom quintile is more than 15 times lower the level of original income in the top quintile. The next highest country is Lativa at 11.8 with a weighted EU average of 7.9."
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Why use original income as your measure (apart from the ‘omg we are the worst’ impact)? Original income is a poor indicator if you are trying to discuss income inequality – it could just as easily (and probably is in the case of Ireland) be caused by a high unemployment rate and/or a generous benefits system. Original income is income excluding cash benefits – in Ireland’s case 53% of the bottom quintile’s total gross income is provided by cash benefits compared with an EU average of 24%. So in using original income as your measure, you are only looking at 47% of the bottom quintile’s total income – hardly fair.
The article goes on to allow for cash benefits and direct taxation and reaches this conclusion “The concentration coefficients show that, in 2007, Ireland had a benefit system that was just as progressive as the EU average and a direct tax system which was the most progressive”. But also “On the other hand Ireland had the joint-third lowest level of direct taxes with only Cyprus and Slovakia taxing less”. So we have the most progressive tax system but overall we don’t pay enough – which just about sums up the big problem in the Irish income tax system – the rich pay their share but lower and/or middle income levels do not.
 
orka said:
So we have the most progressive tax system but overall we don’t pay enough – which just about sums up the big problem in the Irish income tax system – the rich pay their share but lower and/or middle income levels do not.
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You can't expect public debate to in informed by silly things like... facts... and the truth. Cop on.
 
One "fact" that is ignored in this debate is that the lower-middle income groups (not the very poorest) actually pay more than in any of the figures shown so far. Not perhaps in taxes but in many other ways.

The figures do not show that out of most western EU states the Irish pay the highest medical costs for perhaps the lousiest public health service . (Medical costs means visits to doctors, consultants, dentists, prescriptions, hospitals etc. )

Whilst the very poorest pay no fees those earning quite low salaries in 20s and 30s pay far more than their opposite numbers in France,Germany etc etc for medical care. Even the Brits with their moans about the National Health Service pay so very little compared to us-and for far better service.

Take commuter travel costs - subsidised in most west EU states. Paddy may pay €30 weekly to get to work. Pierre or Pedro pay half of that -and on a more extensive and efficient commuter network. And if Paddy buys a car he'll pay far more than Pedro due to higher taxes.

There are many examples where you can't just compare wages and taxes with other countries -and then completely ignore other costs of living and the services available.
 
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Oldnick, you are leaving out an important fact about the various items you list in the UK, France and Spain.

While William in England doesn't pay after he sees his GP he pays for this service in advance through taxation, whether he goes to the GP or not.

When Pierre and Pedro spend less on their weekly travel passes at the ticket machine they pay the difference in advance also through taxation whether they use the system or not.

There is no such thing as a free lunch when government is doing the subsidising.
 
Chris said:
There is no such thing as a free lunch when government is doing the subsidising.
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Is it not the case that some people are actually getting a free lunch but that someone else is paying for it? The free travel for pensioners in Ireland is free to them. The taxpayers are paying for it though.
 
Brendan Burgess said:
Is it not the case that some people are actually getting a free lunch but that someone else is paying for it? The free travel for pensioners in Ireland is free to them. The taxpayers are paying for it though.
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Indeed, and as you pointed out in a different thread the biggest beneficiaries of the bank guarantee were Irish depositors and pensions holders. Since pensioners account for the largest proportion of this group it seems that it is yet another subsidy the elderly are getting.

How about another thread titles "Fact - Pensioners are not paying their fair share while at the same time getting bailed out more than bankers or developers"?
 
Brendan Burgess said:
Is it not the case that some people are actually getting a free lunch but that someone else is paying for it? The free travel for pensioners in Ireland is free to them. The taxpayers are paying for it though.
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I guess it depends on the pensioner, but for most I would say that they are net receivers of funds. Some wealthy pensioners may well pay more in VAT and other taxes than they receive in direct payments and subsidies from the state .

You are absolutely right that some people do get more than they pay for, and I should have pointed out that there is no free lunch for everyone, as is sometimes insinuated by comments like the NHS being free for everyone.
 
First group earning from 100k to 150k.

Cases = 70,116

Av income = 119k

Av tax paid = 25.5k

Av effective tax rate = 21.5%
 
Second group earning from 150k to 200k.


Cases = 18,383


Av income = 171k


Av tax paid = 42k


Av effective tax rate = 24.8%
 
Third group earning from 200k to 275k.


Cases = 9,933

Av income = 232k

Av tax paid = 61k

Av effective tax rate = 26.4%
 
Fourth group earning from 275k upwards.

Cases = 10,677

Av income = 563k

Av tax paid = 163k

Av effective tax rate = 28.9%
 
Excellent summary Purple. Makes you wonder how people can argue that these people are not paying their fair share when 50%, or thereabouts, pay no income tax at all.

As an average income household I would like to extend my sincere gratitude to those high income earners who are burdened with way more than their fair share of taxes.
 
Loads of people pay zero income tax because their incomes are low.

Students, part-time workers, etc., earning 10k-15k.

Maybe income tax should kick in earlier, I'm not against that.

But people earning over 275k paying 28.9% seems too low to me.
 
Protocol said:
Loads of people pay zero income tax because their incomes are low.

Students, part-time workers, etc., earning 10k-15k.

Maybe income tax should kick in earlier, I'm not against that.

But people earning over 275k paying 28.9% seems too low to me.
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Is that just income tax i.e. at the 20% or 41% rate?

Would you add 4% PRSI to that rate to bring it to 32.9%?

Is the USC included? If not it would bring the tax take to just under 40%
 
DerKaiser said:
Is that just income tax i.e. at the 20% or 41% rate?

Would you add 4% PRSI to that rate to bring it to 32.9%?

Is the USC included? If not it would bring the tax take to just under 40%
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Yea, that's more like it.
 
Yes, just income tax.

No, PRSI was not paid on all income, so the effective tax rate would not rise by 4%.

No such thing as USC in 2009.
 
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