The earliest rounds in the general election campaign are being fought with the artillery of tax policy.
No doubt social welfare, education, and other social policies will feature in later rounds, but all the talk at present seems to be about tax.
The Taoiseach was recently reported as indicating a US-style approach to tax rates, making Irish income tax rates comparable to those prevailing in the US.
Rates are one thing, but we need to be careful what we wish for.
We have already borrowed bits and pieces of the US system, and it is not all good. In the mid-1960s, figures were published in the US which suggested 100 or so high-income families were paying no income tax.
At the time, this caused quite a public furore, leading to the introduction of a system called the alternative minimum tax (AMT) in 1970.
AMT has been through a few modifications and iterations since its inception, but the broad principle has not changed.
If you claim allowances and reliefs to bring your income and hence your tax bill below a certain threshold point, those allowances and reliefs get disregarded. Instead you pay an alternative minimum amount of income tax, based on a different set of rules.
We borrowed this AMT idea when new income tax rules were brought in here in 2007, which had the similar purpose of ending, or at least restricting, tax breaks for high-income individuals. The Irish version of AMT is known as the high-income earner restriction (HIER).
According to the Revenue Commissioners, only a few hundred individuals annually feel the fullest rigours of the restriction. There is however a tension between putting tax reliefs in place ostensibly to meet public policy objectives, and then telling taxpayers that they can’t avail of them.
That is something worth remembering if you hear an economist or a politician calling for the abolition of this tax relief or that tax relief. In Ireland the tax relief bandwagon for higher earners has long since stopped rolling. Political debate on their treatment has not.
In the context of an election campaign, the high earner will always be defined as somebody other than the person whose vote you are trying to court.
For the present Government, the touchstone figure seems to be around €70,000 in income.
That is the marker beyond which the modest cuts in income tax and universal social charge in the past two years ceased to have additional effect.
The rate at which tax is charged is very important, but as AMT and HIER show, you have to compare the systems as a whole.
A review of income tax collected worldwide by accountants Urbach Hacker Young and published earlier this year showed Ireland in a very favourable light for people on lower incomes.
Someone earning approximately €25,000 will pay twice as much tax in the US.
At the other end of the scale, people earning about €250,000 will pay far more here than they might in the US.
Mr Kenny is quite right in wanting Ireland to be competitive on all fronts. But when it comes to tax there is more to being competitive than just comparing income tax rates.
It is really about looking at how much taxpayers have left to spend after they have paid their income taxes.
* Brian Keegan is director of taxation at Chartered Accountants Ireland
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