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Reducing the Top Tax Rate

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Three questions for Budget week:

  1. Why should someone earning €50,000 pay tax at 42% on incremental income while an earner of €250,000 might pay only 20% on all income and personal capital gains? 

  2. Why give investment tax breaks directly to individuals when companies are the natural vehicles for making investments?

  3. Why tinker with tax credits for PAYE workers when those with the highest earnings, and therefore the greatest capacity to pay tax, can avail of massive allowances to escape taxes?

The logical answer is to reduce the current top rate and apply it 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. If people wish to make investments, let them make them through companies where they can avail of allowances and a tax rate of 12.5 per cent. Done this way, all distributions and gains from companies could then be taxed in the normal way, without further relief, at a reduced top rate.

Surely, the top tax rate should apply equally to all taxpayers.

Lead letter was published in the Irish Times on 5th December 2006.

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This page contains a single entry by Brian published on December 3, 2006 4:40 PM.

If Ireland was Privatised was the previous entry in this blog.

Privatisation of Hospitals is the next entry in this blog.

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