@scrap it

That's a fairly fundamental political issue.

The leftist approach, taken in France and much of the rest of the EU, is to heavily tax income on a sliding scale. The government then takes that money and spends it for you on things like health, pension, public services etc. It leaves you some so you have a little discretionary spending power. Those in favour of this approach will say that it ensure that the less fortunate are looked after. Detractors will point out that it removes the incentive to work, since the state takes all your money & looks after you in some minimal fashion anyway, and so it is bad for the prosperity of the country.

The rightwing approach, popular in USA/UK/Ireland, is to tax income as little as possible, on the basis that individual choice is important. You should make your own decisions about what you spend your money on, and only if/when you choose to spend it is tax is then collected on what you choose to spend. Those in favour will say that it encourages savings and self-reliance and respects individual choice, which is good for the nation as a whole. Detractors will point out that it reinforces inequalities.

In reality neither one nor the other workds perfectly, so most countries go the middle course. The US still has income tax, and France has VAT, for example. Shifting the balance between them is far from simple, and is one of the reasons that a single currency (and hence fixed interest rates) will never (IMNSHO) work properly.