TOP EARNERS SHOULD be hit with a tax rate of nearly 60% to fix Ireland’s growing divide between the wealthy and the average worker, TASC says.
The left-leaning Think-tank for Action on Social Change (TASC) wants the government to introduce a third income tax bracket of 48% for anyone earning over €100,000.
When social charges (PRSI and USC) are taken into account, its idea would mean top earners handed over 59% of their earnings above the threshold – or 62% if they were self-employed.
In its pre-Budget pitch, the think tank said the new tax rate would reap an extra €365 million for the government – money which could be given back to everyone through a 1% VAT cut and better social services.
The current top rate of 41%, or 52% including social charges, kicks in at €32,800 for a childless single worker under the two-tiered system.
Not a ‘high-tax country’
TASC rejected suggestions from organisations like the business lobby group IBEC that Ireland is already a high-tax country, adding that by European standards people were not being slugged too heavily when you looked at the amount they actually gave the government.
Its analysis showed that on average no-one handed over more than 30% in income tax despite the much higher headline rate because of tax breaks which favoured the wealthy.
TASC research director Nat O’Connor said hitting top earners with higher income taxes would not make Ireland less competitive in attracting overseas investment, as business groups have claimed, because the country’s corporate taxes were still low.
“(A 48% rate) would make Ireland a higher-income-tax country, except that only 5% or one in 20 income households would actually pay that and they would only begin to pay that for incomes over €100,000,” he said.
Too many low-paid jobs and too much money for the wealthy
TASC said Ireland has one of the largest shares of low-paid jobs in the EU with over 20% falling into the category and the top 1% of earners had been the ones who enjoyed the biggest windfalls during the economic boom.
Analyst Cormac Staunton said Ireland was stuck in a “low-tax triangle” like the US which meant people relied on tax cuts because the government spent little on public services.
“People still have to pay for school books in Ireland, which you don’t pay for in most countries, they’ll still have to pay for the doctor or prescription charges and this means that the cost of living is higher and people feel they can’t give any more in taxes,” he said.
If you used the surplus that they’re talking about now and, rather than cutting the higher rate of tax to benefit a few people, you invested in public services that made things easier for more people you would actually be able to go a long way into reducing this inequality.”
Taoiseach Enda Kenny has reportedly been looking at a 1% cut for the top tax bracket in the Budget which would bring the marginal rate down to 40%.
READ: Ireland is split between people who have good jobs – and people who don’t
READ: Ireland has the second-highest percentage of low-paying jobs in the world
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