Business Irish

Friday 29 August 2014

Irish people pay too much income tax, claims 'rock star economist' Thomas Picketty

Brendan Keenan

Published 20/06/2014 | 17:21

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Most Irish people pay too much income tax, “rock star” economist Thomas Picketty has told Independent.ie.

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It is “nonsense" to impose high tax rates on average earnings, as happens in Ireland, according to the French economist whose book on global wealth has become an international bestseller.

Thomas Piketty said he had been surprised to learn that marginal rates of over 50pc apply to above average earnings in Ireland.

“You have to be vary careful about the marginal rate you apply to average earnings,” he said. What was needed was at least three rates of taxation, which could go as high as 80pc for earnings over €1m a year. “The top rates should start at €100,000, with another for those earning more than €500,000, and the very top rate above one million,” he said.

Mr Piketty, a professor at the Paris School of Economics, and his colleagues have mined up to 200 years of data and claim that the wealth of the rich accumulates faster than economic growth. The greater the wealth, the faster the increase, they find.

“What you see is that the bottom 50pc all almost nothing, the next 40pc own up to a third of a country's wealth but the remaining two thirds is held by the richest 10pc. I think, in the interests of fairness and democratic stability the share of that top 10pc to be reduced, mainly by taxation.”

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