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Irish households pay just under 24% in tax, a new study says

If you’re at the bottom or the top of the income charts, you pay more than the average.

THE AVERAGE IRISH household pays just 23.9% of gross income in tax, a new study by the Nevin Economic Research Institute has claimed.

The paper says that the true rate of taxation is considerably lower than the headline rate when exemptions and entitlements are taken into account.

According to the paper, “we tend to have a greater knowledge of benchmark taxation rates (both effective and marginal) than the actual rates households pay taking account of entitlements to tax expenditures”.

In other words, we think we pay more tax than we actually do.

The squeezed middle or the best off?

The author of the research, Dr Micheál Collins, also calls into question the theory of the ‘squeezed middle’, saying that the highest contributors in terms of both direct and indirect taxation are the poorest and the best off in society.


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“Households at the bottom and top of the income distribution contribute the most”, Collins argues, with the top 10% and the bottom 20% paying more than average.

This is thanks to the heavier load that direct taxation – income tax and Universal Social Charge, for example – has on higher earners, and indirect taxes such as VAT have on people with lower incomes.

Collins said that the paper “examines how much tax people ‘really’ pay. In doing so, it estimates both the direct and indirect taxation contributions of households across the income distribution”.

The paper shows that the most vulnerable in society, those in the lowest 10% of income earners, pay 30.64% of their gross income in tax. The figure is almost exactly the same for the top of the income distribution, who pay 29.69% in tax overall.

The best off in terms of their tax input are the those at the lower end of the middle part of the income distribution, who pay around 17% overall in tax.

Read: Would the Government’s proposed tax cut actually help people?>

Read: The exchequer tax take is €500 million ahead of target>

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