The Structure of Ireland’s Tax System and Options for Growth Enhancing Reform

Abstract

This paper explores the structure of Ireland’s tax system. Considerable attention is given to GDP and GNP as measures of Ireland’s taxable capacity but how appropriate are either of these measures given the structure of Ireland’s economy and how does the structure compare internationally? The paper also examines the distribution of income tax and the threshold for the top marginal rate as a percentage of the average wage and identifies Ireland as an outlier
internationally in terms of the rapid progression to the highest marginal rate. Consideration is then given to the microeconomic and macroeconomic impacts of various forms of tax what lessons emerge from the literature in terms of growth enhancing reforms to the overall tax structures and how that might apply to Ireland. The results of simulations suggest permanent increases in GDP and employment from a revenue neutral shift from labour to consumption or property taxes.