BUSINESS OPINION:When did €100,000 become the new €500,000? At some point in the last year or so €100,000 has become the income threshold at which people move from being productive members of society to tax-dodging parasites.
Why is it the cut-off point after which the more painful tax hikes being trailed in advance of the budget are supposed to kick in? Earn €1 more than €99,999 and you become fair game for a higher universal social charge, no more children’s allowances and lower rates of pension tax relief.
Depending on which side of the €100,000 line you find yourself on, this threshold is either fair or manifestly unjust. But everyone must accept there is no particular logic for setting the bar at €100,000.
In theory, tax thresholds should be set by analysing incomes and trying to find the optimal balance between raising revenue, discouraging evasion and achieving whatever level of income redistribution society feels is appropriate.
That, of course, is impossible, so numbers tend to picked because they feel right and resonate with the electorate. A €100,000 threshold seems to sound right as the line that divides avarice and equity.
Not only that, it seems it is also becoming the maximum acceptable salary for bankers. The deputies of the Dáil Committee of Public Accounts (PAC) – salary of €92,000 plus generous expenses – have got great mileage out of bankers’ pay over the last four years. They have regularly hauled hapless bankers in front of them for public pillorying.
It makes for good television and has, in fairness, played some part in keeping pressure on the Government to do what it can to rein in the debilitating short-termism fostered by the bonus culture.
What is interesting is that as the months and years have gone by, the bar for what is considered a legitimate target for politicians’ self-serving inquisitions has been lowered.
Last Wednesday the bar hit the €100,000 threshold when the reply to a parliamentary question from Fianna Fáil TD Michael McGrath (salary of €92,000 plus expenses ) revealed 2,949 employees of the four banks bailed out by the taxpayer – AIB, Bank of Ireland, Irish Permanent and IBRC – earn more than €100,000.
It was duly reported in the newspapers and Mr McGrath must be hoping his constituents will look kindly on him come the next election for playing his bit-part in the holding to account the bankers who destroyed the country yet held on to their jobs and €100,000-plus fat-cat salaries.
He must also be hoping his constituents are rather simple and will not be troubled by the double standards of politicians who played their part in destroying the country and held on to their jobs and €92,000 salaries plus expenses jumping on to a hypocritical bankers’ pay bandwagon.
What is becoming apparent, however, is that the fertile political seam that is bankers’ pay may be getting mined out, which may be a good thing, as some believe it has passed a point where it is doing more harm than good.
In a cameo appearance at the PAC last week, Shane Ross TD (€92,000 plus expenses) quizzed National Treasury Management Agency chief executive John Corrigan about the salaries paid to its advisory committee led by former European commissioner David Byrne (€50,000). The other members get €25,000 for five meetings a year and include accountant Hugh Cooney, Bermuda-based banker Brendan McDonagh, Department of Finance secretary John Moran, Finnish civil servant Tytti Noras and Global LLC managing partner Donald Roth.
It is well-paid work and the question as to whether it is value for money is worth discussing. The issue is whether the way we are going about it – a succession of cheaper and cheaper political shots – is doing us any favours.
That said, Irish bond yields did not exactly wobble as a result of the valiant efforts of deputies McGrath and Ross to hold the centres of power to account, so maybe no one cares!
Still, it would be nice to have a more rational debate. Unfortunately it seems unlikely as long as the public wants blood and politicians can smell it.
We can look forward to more of the same before we settle on what is considered acceptable remuneration for banking. It will be interesting to see if €100,000 becomes some sort of benchmark. One suspects it’s on the low side.
It’s not going to be much fun for anyone working in a bank, but the process is not unlike the way an asset in priced in the market. That has a certain poetic justice.
