Rates and rises: what we pay
Workers are taxed on the standard rate of 20pc on income below €32,800 for a single PAYE worker and €41,800 for a one-income family. The 41pc higher rate of income tax then kicks in – much earlier than in other European countries.
When PRSI and the Universal Social Charge (USC) are added, it means that workers are paying a top rate of tax of 52pc. The top rate of tax – known as the marginal rate – is even higher for a self-employed person, at 55pc.
It is widely acknowledged that the early onset of the top rate of tax acts as a disincentive to work. A common example given is when a worker is offered extra overtime – but tells his boss that it's not worth his while because he will be paying more than half of the earnings in tax.
Finance Minister Michael Noonan is now being given options on reducing when the top rate of tax kicks in by one of his most senior economists.
According to the recent Forfas report on the cost of doing business, the top rate of tax for a single worker earning a wage of €40,000 was 42pc in 2008. It is now 52pc. And while the top rate of tax was 43.5pc for a worker on €100,000 in 2008, it is now also 52pc.