Should we benchmark taxes to lure back immigrants?

The government seems to think so.  Apparently its the income tax that is holding us back.

Reform of the income tax system to encourage emigrants to return home is being considered by the Government in the run-up to publication of the spring economic statement.
Under the plans, the tax system would be benchmarked against countries such as the UK, Australia, US and Canada.
The initiative, which would focus on the marginal tax rates and middle-income earners, is aimed at encouraging emigrants to come home as the economy improves. Ireland’s tax competitiveness, especially on personal tax, has been identified as an issue to be addressed.

Right. And if the government say it so and say it in the Irish Times, it must be so.

Lets see. The OECD are a mine of information. Amongst them is a wonderful subsite called “taxing wages” Its a lovely tool and gives a quick snapshot of the tax wedge. It looks at the incidence of income tax, employee and employer PRSI. It is a hard stark fact that the latter, the employer contribution to social security, which lowers Irish tax incidence. Unpalatable, unpleasant, but a fact…

Here is what it says for Ireland as of 2013 (remember things have gotten better since then…). Ireland is in RED, OECD average in BLUE.  No, this doesn’t take account of the cost of living, the water charges, the state of the roads or any other issue which gets conflated. Its about tax.  Still think we should lower tax on labour?

This trend, for Ireland to take a lower tax wedge than the OECD average, is a persistent feature of Irish tax policy.