Ireland vs US: Taxation

The fourth of July is one of the most widely celebrated national holidays in the United States. In 1776 the Continental Congress declared that the 13 british colonies were to be free from the confines of British rule and would become a new, independent nation. Within the Declaration of Independence, there were 27 grievances against the current and former actions of King George III; Thomas Jefferson, an advocate for independence, wrote almost all of these. 

Grievance 17 focused mainly on taxation without representation, which to this day is still a widely supported part of the Declaration and Constitution. Although this outcome is supported by both US political parties, the amount of income that is taxed and what the taxed money is used for is highly contested.  

In the United States, taxation occurs at the local, state and federal levels. For income, the United States imposes a bracket system on the amount of income you earn. In 2018, the tax rate started at 10pc of total income until you were to earn above $19,050. Between the incomes of $19,050 and $77,399 you would pay 12pc, between $77,400 and $164,999 22pc. These rates increase sporadically as income increases until earnings are above $600,000. If you are to earn anything above $600,000 as a married couple, you will only be required to pay 37pc of this to the federal government.

This taxation method has both positives and negatives, but it seems that it is not impacting the small percentage of rich Americans in the same way that it impacts the poor. Luckily, there are deductions that can be made before initial taxation which include claiming dependents and charitable giving. 

Taxation continues for Americans based on how their state and local government collect taxes. States tax anywhere from 0 to 13.3pc of the remaining income, meaning that you may pay more or less depending on where you live. 

Ireland’s taxation system is much less complicated and taxes everyone in the exact same way, unless you are eligible for breaks. In 2018, the tax rate for a married couple/civil partner with two incomes was 20pc taxation on up to €69,100 and 40pc on the balance remaining of untaxed income. This is the same for each person, no matter their income level. In this system, there is a much larger emphasis on taxing those who make an exorbitant amount of money, unlike the US. 

In this article it is impossible to get into all of the nitty gritty details of taxation both in Ireland and the United States, but it is easy to see that there is a huge discrepancy in the percentage of taxation each person is responsible to pay to the national government based on their income based on their country.

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