Government proposals to change the Universal Social Charge would give greater benefit to people earning higher incomes than those earning lower incomes, according to a study by Social Justice Ireland.

The study, published today, indicates that the impact of some proposals being considered would be "an expensive and unfair policy path" as it would only favour higher earners.

The measures examined in the study included:

- the elimination of the current 1% USC rate – that applies to income below €12,012 (full year cost €247m);

- the elimination of the current 3% USC rate – that applies to income between €12,012 and €18,668 (full year cost €471m);

- the elimination of the current 5.5% USC rate – that applies to income between €18,668 and €70,044 (full year cost €2,024m); Total full-year cost of this income taxation package = €724.9m

The study claims that the total impact of these changes would be €2,742m in a full tax year; equivalent to 13.7% of the expected income taxation yield in 2016. 

Resulting in a "dramatically unfair" impact on the USC with gains “heavily skewed” towards those on highest incomes.

The results show the dramatically unfair impact that would flow from these changes to the USC.

The gains are heavily skewed towards those on the highest incomes. 

Social Justice Ireland is claiming that:

- Single earners above €70,044 gain €3,145 per annum, more than 4.5 times the gains for a worker on €25,000.

- Couples with two incomes totalling €125,000 gain over €4,000 per annum, almost three times the amount that goes to a similar middle-income couple on €50,000.

- Looked at as a proportion of gross income the regressive nature of the tax change is further visible. As income increases so too does the proportional gain, peaking at a value of 4.2% of gross income for single earners at €75,000 and peaking for couples with two incomes at an annual income of €100,000.