The Optimal Taxation of Individual Income (Based on the Cases of Ireland and Other EU Countries)

The tax system is one of the most important parts of the financing systems in every country. It plays a vital role because it is still one of the most efficient sources of public revenues. Therefore, countries decide on different tax solutions in order to derive maximum benefits for their economies. Because of the process of tax harmonization in the European Union, the EU member states have more flexibility in creating tax systems when it comes to income tax area. The main purpose of this paper is to analyse the efficiency of the Irish income tax system in comparison with other economies from the European Union. Furthermore, this article is an attempt to answer the question how EU countries include personal living conditions in the process of income tax assessment. The comparison of income tax systems in different European countries may also allow drawing conclusions on tax solutions which would be most beneficial for both economies and societies. Personal income taxation in European Union have been harmonised only in marginal aspects. It has got a direct impact on differences in their fiscal and non-fiscal role.