Taxes are for Little People

Following publication this week of reports on tax schemes for property development etc, it is clear that the stable door is being belatedly closed. These reports point to the existence of a "black hole" which must rank alongside benchmarking, decentralisation and infrastructural overruns as clear evidence of imprudent and incompetent management of the State's finances. The reports prompt two basic questions:

1. Why should someone earning €50,000 pay tax on incremental income at 42% while an earner of €250,000 might pay only 20% on all income and personal capital gains? Surely, a top rate of tax should be exactly that. The current rate should be rebalanced and applied to everyone without exception. A new top rate of, say, 35% on income and personal capital gains could give same return to the Exchequer as the present inequitable regime.
   
   
2. Why give investment tax breaks to individuals? Surely, breaks should be only available (where strictly necessary) to companies via accelerated depreciation, once-off grants and special allowances which, with the low corporate tax rate, would enable investment reserves to be built up virtually tax free. Done this way, all distributions and gains from companies could then be taxed in the normal way, without further relief, at a rebalanced and reduced top rate.

Letter published in the Sunday Business Post on 19th February 2006.