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Poorest 10% of households pay a larger share of income in tax than richest 10%

New research on the total amount of tax Irish people pay finds that the poorest 10% of households pay a larger share of their income in tax than the richest 10%.  When income tax and indirect taxes such as VAT are included in the calculations the study conducted by the Nevin Economic Research Institute finds that:

  • The poorest 10% of households pay just over 30% of their income in taxes - mostly in the form of indirect taxes levied on the things they spend money on.
  • The richest 10% spend 29.5% of their income on tax - mostly in the form of direct income tax.

The combined tax burden produces a u-shaped graph, with the bottom and top of the income distribution paying most, and those on lower middle incomes paying least.

The research was conducted by Dr Micheál Collins, a former member of the Commission on Taxation.  It highlights the importance of Government thinking more broadly when considering changes to taxation.  The whole system needs to be addressed when changes are being made, not just the income tax system.

The full text of the paper may be accessed here.

Further information is available on the Nevin Institute's website.