Fairness and Changing Income Taxes

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Social Justice Ireland published Fairness and Changing Income Taxes: September 2018 on 18th September. The study assesses the fairness of seven possible income taxation options, each with a full-year cost of between €254m to €348m; equivalent to between 1.2% and 1.6% of the annual income taxation yield.  The seven options are:

• increasing the personal tax credit;

• reducing the 0.5% and 2% USC rates;

• reducing the top tax rate to 39%;

• reducing the standard tax rate to 19%;

• increasing the standard rate band;

• reducing the 4.75% USC rate; and

• reducing the 8% USC rate.

Overall only two changes lead to a fair outcome: increasing the personal tax credit; and reducing the 0.5% and 2% USC rates. Each of the two fair options would provide beneficiaries with an improvement in their annual income of around €90 - €130.