Top 10% of earners contribute 2/3 of the tax take

As always this analysis excludes employee and employer PRSI which is charged at a flat rate on most earnings. It’s set to yield almost €17bn this year.

Also recall that there are lots more taxes than income tax which is only about a quarter of all taxes received by government!
 


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Sarenco said:
Amazing to think that the top 1% of earners account for nearly 25% of income tax and USC receipts.

Considerably more than the bottom 80% of earners.
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It’s tax units, not earners.

Higher earners are highly likely to be married to each other and jointly assessed which skews the distribution. At the other end low earners are less likely to be married at all. Again this skews the distribution.

See above my point on PRSI which is now around half as much as income tax plus USC.

For sure Ireland’s system is highly progressive, but not as much as the analysis above suggests.
 
I'm all for a 20% flat tax across the board but including corporation tax


Will obviously never happen as politicians can't do any smoke and mirrors with a flawlessly simple system
 
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Dr Strangelove said:
It’s tax units, not earners.

Higher earners are highly likely to be married to each other and jointly assessed which skews the distribution. At the other end low earners are less likely to be married at all. Again this skews the distribution.

See above my point on PRSI which is now around half as much as income tax plus USC.

For sure Ireland’s system is highly progressive, but not as much as the analysis above suggests.
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is there a benefit to higher earners being jointly assessed rather than individually?
 
Married men earn more than unmarried men, this is known as the male marriage premium.

Why?

Either the marriage encourages/allows them to earn more = marriage productivity effect

Or

There is a selection bias: women select men with higher potential earnings into marriage = this is the marriage selectivity effect


It's only anecdotal, but my male friends with high earnings are all married, and a few lads who are on DA / alcoholics / don't own houses, are all unmarried.
 
Sarenco said:
Why would higher earners be more likely to be married than lower earners?
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Earnings peaks on average about 50 at which point you will probably have married if you’re going to and you’re probably not yet widowed.

Low income people are disproportionately but by no means exclusively young people at start of careers and old people on pensions.

For example I pay a lot of tax today as I’m near peak lifetime earnings but benefitted from free education until my 20s and will benefit from pensions and healthcare a lot when I’m old and not paying as much tax.
 
Fair enough but a lot of the high earners that I know have low (often zero) earning spouses.

I would have thought that it more or less balances out but perhaps not.

I still think it’s amazing that the top 1% of tax units account for nearly 25% of income tax and USC receipts.
 
T McGibney said:
Not really, but it's rare that it's beneficial for them to be separately assessed. An exception might be if the marriage is falling apart, but the benefits there wouldn't be monetary.
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I would have thought its at least as likely that two people are separately assessed and stay that way because there is no benefit in changing to a joint basis.
 
Sarenco said:
Fair enough but a lot of the high earners that I know have low (often zero) earning spouses.
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I personally know three couples where both spouses are hospital consultants. Data is not the plural of anecdote!

I’ve never seen anyone account fully for:
-earnings over the life cycle
-assortive mating
-tendency of higher-income people to be married

All three factors would reduce the progressivity of the results presented by Revenue.
 
yellowmoose said:
I would have thought its at least as likely that two people are separately assessed and stay that way because there is no benefit in changing to a joint basis.
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Of course there is an immediate and tangible benefit if either of them stops earning or endures an earnings cut for whatever reason.

It's impossible to switch to joint assessment for a current year if you miss the 31 March deadline for so doing. It's not difficult to imagine a scenario where that would leave a couple out of pocket after losing a job for example.
 
in my experience high earners are either in jobs where they know they won't lose them or they are marketable enough not to worry about it

I don't see any basis for saying higher earners are more likely to be jointly assessed than not
 
yellowmoose said:
I don't see any basis for saying higher earners are more likely to be jointly assessed than not
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Higher earners are more likely to be married and married people are more likely to be high earners. There are decades of economic research on this.

This of course is true on average only, there are lots of low income married people and low-earning unmarried people.
 
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