Notes on the Front

Using Revenue Commissioners data, Cliff Taylor shows there are a lot of taxpayers on very high incomes.

‘The number of taxpayers earning more than €150,000 will rise to close to 200,000 next year, from 80,000 in 2020, while over the same period the number of €200,000-plus earners has grown from 41,000 to almost 109,000 . . . higher-income households are now larger and more economically powerful.’ (bold own)

High-earners growing, in both numbers and power. 

So let’s check in on the 1% – the top 1% earners in the economy.  How are they doing?

Whereas middle-income employees earn €44,800, the top 1% take in €316,800 and earn twice as much as the high-income top 10% group.  And that gap is growing.  Between 2014 and 2024:

• Average earnings grew by 34%

• Earnings in the top 10% grew by 48%

• Earnings in the top 1% grew by 59%

So the next time someone tells you the rich get richer, don’t dismiss it as a cliché.  It is there in the data. 

However, this only provides part of the picture.  In addition to earnings (wages and salaries), households also generate capital income.  This is where the 1% really shines.

Capital Income

To capture capital income we can turn to the CSO’s Survey of Income and Living Conditions (SILC).  Unfortunately, we don’t have data for the top 1% – only for the top 10%.  Capital income is captured in the category of Other Market Income which includes rents, financial interest, dividends, and profits.  It also includes income for under-16s, foreign pensions, and retirement and redundancy lump sums – though these wouldn’t make up much.  Given the mixture of income sources, this should be treated indicatively. 

Annualising the weekly income, we find that the highest income group (the 10^th decile) received over €33,000 in capital income.  All other deciles received considerably less, with the rest of the population averaging €1,900.

And the gap between the top 10% and the rest of us is growing.

• Between 2020 and 2025, capital income increased by 67% across all households

• In that same period capital income for the top decile nearly doubled, increasing by 96%.

There is other data.  For instance, the comprehensive World Inequality Database finds that the top 1% own 23% of all assets in the state (property, shares, bonds, land, cash – minus debts).  However, this doesn’t refer to the top 1% of income earners; it refers to the top 1% of wealth holders.  Nonetheless, there would be considerable overlap.

Further, Public Policy.ie apparently found that the top 1% of capital income recipients take in 31% of all capital income generated in the state.  Unfortunately, this study dates back to 2016 and is seemingly not accessible on the website. 

* * *

The first reaction for many will be to ‘tax them’.  Nothing wrong with that.  If we can’t soak them at least give them a good splash.  

But the data above – earnings and capital income – are all pre-tax.  The inequality is embedded in the economy itself. We can, and do, reduce inequality through taxes and social protection benefit, but this entails a cost.  We need to go beyond tax and spend and address the actual causes within the economy.

We need structural strategies to tackle the market inequality between the 1% crowd and the rest of us.  Some examples from a non-exhaustive list: raise wage floors, introduce sectoral collective bargaining alongside enterprise-level bargaining, cap CEO pay as a ratio of employees, price regulation, strengthen in-work benefits (especially family benefits), de-commodify public services (childcare, housing, primary health, public transport, education), etc.

Bring on Budget 2027.