Tax policy impacts inequality
by Mehak Dugal

Income inequality should be a key focus in the general election, and proposed tax reforms should not increase the disparity between the rich and poor. So says the union-backed Nevin Economic Research Institute (NERI), which claims lower levels of inequality bring increased life expectancy and happiness, and less stress and crime.

In a blog last week, the think tank said moves to abolish the Universal Social Charge (USC) or raise the point at which workers enter the higher rate of income tax would disproportionately benefit higher earners while reducing the funds available for housing, healthcare, education, childcare and pensions.

It says Ireland’s system of tax breaks also continues to be a leading cause of wealth disparity by benefiting higher earners.

It also criticised policies to simulate housing demand through tax breaks or subsidies for buyers, saying they would ramp up house prices while contributing to the income divide.

NERI says Ireland fares really poorly in terms of household income inequality before tax and welfare is accounted for, and is only able to move to mid-table rank in the EU28 once tax and benefits are taken into account.

It argues that changes to tax policy should not increase income inequality, and only well thought out tax reforms should be pursued.

The full blog post outlining further results of the report on income inequality can be found HERE.

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