The marginal social cost of taxation in Ireland

Abstract

The purpose of this paper is to examine the deadweight losses associated with different forms of taxation in Ireland. Hitherto this aspect of the tax system has been neglected. We find that the high rates of taxation combined with the narrowness of the tax base lead to losses which are very high. Depending upon the assumptions made regarding redistribution of the revenue and the corrective content of the taxes, the losses are in the neighbourhood of one pound per pound of revenue raised at the margin.