'Most Irish are paying too much to Revenue'
Published 21/06/2014 | 02:30
Most Irish people pay too much income tax, "rock star" economist Thomas Piketty has told the Irish Independent.
It is "nonsense" to impose high tax rates on average earnings, as happens in Ireland, the French economist, whose book on global wealth has become an international bestseller, said.
He 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 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 own 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 should be reduced, mainly by taxation.
"Part of the reason for high unemployment is that we tax labour too much and apply too little tax to multinationals and rich people," he said.
He said it was the wrong approach to attract multinational investment with low taxes, as Ireland does. "In the end, that means you won't be able to pay for public services and investment without taxing labour more and more."
Prof Piketty was speaking at a conference in Dublin organised by Tasc, the think-tank which promotes policies to increase equality. He said it was an illusion to think that countries could have their own corporate tax policies.
"Most countries are too small to exercise that kind of national sovereignty. Even Europe is becoming a small player in the global context. The only way to spread wealth more evenly in Europe is to construct an integrated, quasi-federal entity based on the eurozone.
"The future for Europe in general, and Ireland in particular, lies in investment in education and skills, not in tax competition."