OPINION:Revenue data shows the notion that top earners are hard pressed by income tax is ludicrous
VERY INTERESTING data on income and taxation was published in this newspaper last week. The data came from the Revenue Commissioners and it was hugely revealing about the scale of income inequality here and the scale of income inequality even after the levying of income tax.
The salient features of the data were as follows:
* The bottom half of earners (49 per cent) get just 17 per cent of total income, an average of €14,893 per year.
* The top 6 per cent of earners get 28 per cent of total income, an average of €190,699 per year, 13 times the average earnings of the bottom half of earners.
* Even after tax, the top 6 per cent of earners get on average €139,096, more than nine times the average earnings of the bottom half of the earning population.
* While it is true that this top 6 per cent pay almost half of all income tax raised, the average proportion of their income paid in tax is just 27 per cent.
* The average gross pay is €42,961 and the post-tax pay is €36,378. The average income tax is 15.3 per cent of average income, about €6,600 per earner, on average.
Some in the upper middle income brackets don’t do badly either.
More than 100,000 (106,772) earners get between €80,000 and €100,000. They are 5 per cent of all earners and they get 9 per cent of all income. They pay 19.4 per cent of their income on income tax and their average post-tax earnings is €71,662, twice the national average and almost five times the earnings of half the population.
A few in the higher echelons do very well indeed.
* Almost 24,000 earn between €200,000 and €500,000. They comprise just 1 per cent of all earners but they get 6.8 per cent of all income. Their post-tax annual pay is, on average, €204,207, which is more than 5½ times the national average and 14 times the post-tax earnings of the bottom half of the population.
* Almost a further 4,000 (3,946) earn between €500,000 and €1 million. Their average post-tax income is €464,452, which is almost 13 times the national average and 32 times the income of half the State’s earners.
* And then there are those in the top bracket, earning more than €1 million. There are 1,447 of these and they earned post-tax income on average of €1.6 million. That is 44 times the national average and 110 times the average income of half of all earners.
The suggestion that the top 6 per cent of earners are hard pressed by income tax is ludicrous, although Brian Cowen has been saying this for three years now and this has become almost a mantra among Ministers of late, in the process of softening us up to imposing higher income taxes on the lower paid.
If in the coming budget €2 billion were raised in additional income tax over a full year, we would be on our way to resolving the fiscal crisis.
I have a proposal.
The top 6 per cent of earners paid a total of €7.8 billion of income tax in 2008 on their earnings of €29 billion, a tax take of just 27 per cent. What would be so bad if taxes on this segment were increased by, say, €1.5 billion, so that they paid €9.3 billion, 32 per cent? That’s not so bad, 32 per cent. Hardly draconian? And then a further €500 million from the segment earning between €50,000 and €100,000. They earned a total of €33.4 billion and paid tax of €5.5 billion, just 16.5 per cent. What if they paid a further half a billion, bringing their tax burden to 18 per cent? Not too bad. Just an extra €1,000 a year, in addition, on average.
And then we could leave everyone earning less than €50,000 alone, as far as income tax is concerned. Yes we would still have a grossly unequal society. But it would be a start in doing something about it.
And then we could impose duties on drink, cigarettes and petrol to bring in another billion, which would mean the cuts in public expenditure would not be that bad. Getting rid of the 20 Ministers of State and their entourages, getting rid of all but six Oireachtas committees, abolishing the Senate, capping all public-sector pay at €150,000, including the pay of the Taoiseach, the President, Ministers, judges, civil servants, hospital consultants (sorry, the contracts recently endorsed would have to go), RTÉ personnel, contracted or otherwise, taxing the tax exiles, a cent on text messages (close to another billion) and, hey presto, we are there.
Oh yes, a special VAT rate of 30 per cent on legal, accountancy, banking and stockbroking fees. For starters. The rip-off culture has got to go.
And just one thing further: please, please, no talk even of a new scrappage scheme for cars. No boosting of the motor car industry under any guise. The motor car did wonders for private transport of the elite when there were few cars. Now that the populace has cars they are a blight. One of the heartening features of the recession has been the collapse of car sales. Long may it continue.