The IMF's latest Fiscal Monitor Report (10th October) has implied that Ireland's top marginal tax rate (55 per cent) could be raised to almost 70 per cent while still maximising the potential return for the exchequer. This appears to blow a hole in the argument constantly being made by some lobby groups for lower taxes for high earners.
The real problem in Ireland is that top rates kick in at extraordinarily low income levels, This should be addressed without increasing the overall tax take and, if the IMF is correct, without encountering the law of diminishing returns by raising marginal rates for high earners.
Giving more discretionary income to mid-income tax payers would be far more beneficial to national morale and the domestic economy than lowering marginal tax rates for very high earners who, as it stands, benefit from much more moderate effective tax rates on the totality of their incomes.
Letter published in the Irish Times on 12th October 2013.
