Friday 22 November 2019

Relief caps force high earners to pay €33.1m

For 318 taxpayers earning between €125,000 and €400,000, they paid tax at an effective rate of 19.35pc and, when including USC, 28.4pc. (stock photo)
For 318 taxpayers earning between €125,000 and €400,000, they paid tax at an effective rate of 19.35pc and, when including USC, 28.4pc. (stock photo)

Shawn Pogatchnik

Some 439 top earners paid €33.1m in extra 2017 taxes because of caps designed to pull them into the tax net, new figures show.

The High Income Earner Restriction, introduced in 2007, caps the reliefs they can use as tax write-offs.

Previously, high earners could accumulate breaks to reduce their tax liability to little or nothing. The policy seeks to ensure that people earning more than €400,000 pay at around a 30pc rate.

Yesterday's figures show that 121 taxpayers with income exceeding €400,000 paid an average effective tax rate of 29.9pc. When USC is included, that average rate rose to 40.2pc.

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Had the caps not applied, 44 would have paid no tax, and €22m less would have gone to Revenue.

For 318 taxpayers earning between €125,000 and €400,000, they paid tax at an effective rate of 19.35pc and, when including USC, 28.4pc.

This produced an €11.1m tax gain. Without the use of graduated caps, 153 of them would have paid no tax.

Irish Independent

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