Is Ireland's Income Tax High?

Paul Goldbrick-Kelly: A great deal of political debate in Ireland rests on the assumption that Ireland’s rates of taxation are prohibitive. This is generally taken to mean that Irish taxes on income, specifically, are particularly onerous. This perception is rarely, however, assessed with reference to available statistics.

Our study uses the Organisation for Economic Co-Operation and Development (OECD) data concerning estimates of the effective direct taxes paid by households of varying income and marital status in 2014 to assess Ireland’s rates of taxation on income relative to those observed in other comparable nations.

This inBrief is available here.

KEY POINTS

• Irish effective tax rates on gross income for single earners were generally substantially lower for most income levels relative to international comparators. 

• This was most pronounced at the lowest income levels.
• At the highest income levels for which data is available (200 per cent of average income), effective tax rates were slightly higher than the OECD average but remained below EU15 averages.
• Effective tax on income for dual income couples were similarly comparatively low at lower joint income levels, although rates were approximately equal to the OECD average for a single joint income of 200 percent and 167 percent of the average wage. EU15 average effective tax rates still exceeded Irish rates at these maximum income levels.

Paul Goldbrick-Kelly works at NERI.