TASC Report says Ireland will move Closer to US Levels of Inequality without Major Changes to Economic and Social Policy including Taxation

Press Release

Cherishing all Equally shows top 1% average income was €373,300 in 2011 compared to €27,400 for bottom 90%

A new report – Cherishing all Equally: Economic Inequality in Ireland – says that Ireland will continue to move closer to US levels of inequality unless there are major changes to economic and social policy, including taxation policy. The report was published today by the independent, progressive think-tank, TASC.

Cherishing all Equally is the first detailed analysis of economic inequality in Ireland. It looks beyond income and wealth at a range of other issues including public services, taxation, family composition, people’s capacities and the cost of goods and services. TASC intends to publish an annual report analysing economic inequality.

Dr Nat O’Connor, TASC’s Research Director and one of the report’s authors, highlighted some of the key statistics about Ireland’s rising economic inequality contained in Cherishing all Equally:

• According to Revenue data, the Top 1% of income earners in Ireland averaged €373,300 compared to €27,400 for the bottom 90%;
• The top 10% hold somewhere between 42% to 58% of Ireland’s wealth compared to 12% for the bottom 50%;
• Workers’ share of national income fell from 65% in 1990 to less than 56% in 2009.

Dr O’Connor said that such high levels of economic inequality in Ireland are not inevitable and stressed that the levels of economic inequality are not the same in every country – other European countries have much lower levels of economic inequality compared to Ireland due to different policy choices in relation to taxation and the provision of public services.

“Addressing economic inequality is important because we know that more equal societies perform better on a whole range of indicators such as crime, health and educational attainment. More equal societies are also more stable and have better chances of stronger and sustained economic growth. High concentrations of wealth and income can lead to disproportionate political power, and so more equal societies are better able to promote democracy and ensure the public interest is safeguarded in public policies.”

Nat O’Connor said that the causes of economic inequality are complex and that wealth and income are not the only factors leading to such inequality –public services and the cost of living are also important.

“A high cost of living makes the economy more unequal. When everyone faces higher basic costs, those who earn less have to spend a higher proportion of their income. In Ireland we focus on providing social welfare cash payments, but we have a cost of living that is 20% above the EU average. We also require people to put their hand in their pocket for many services, like GP visits, that might be free-of-charge or subsidised in other countries. This worsens economic inequality.”

Nat O’Connor said that some of the other factors that can have a decisive influence on economic inequality are people’s abilities to develop the skills needed to succeed in the modern economy as well as their availability for work due to disability, illness or care duties.

Co-author, Cormac Staunton said that the notion that that economic growth will tackle inequality is a myth.

“The instability of Ireland’s property-based growth in the 2000s and the increasingly unequal distribution of the benefits of our current prosperity show that growth alone will not reduce inequality. We need robust policies that will ensure prosperity is more widely shared across society.”

Indeed, Mr Staunton pointed out that the World Bank has said that nations with economic inequality have difficulty in sustaining economic growth and stability over time. Cormac Staunton then went on to highlight the importance of a 2014 International Labour Organisation (ILO) report on wage-led growth and said that we need a radical shift in economic policy to ensure decent work is available for everyone.

“The ILO’s study proposes an alternative to the unsustainable debt-led and export-led growth model pursued in many countries in favour of a strategy based on wage-led recovery that would reduce household debt and allow for equitable and sustainable growth.”

Mr Staunton also highlighted TASC’s analysis of Ireland’s tax system. “The low overall levels of tax in Ireland — and especially low social insurance — mean that Ireland cannot provide the same quality of public services that are enjoyed and expected in many European countries." 

Cherishing All Equally: Economic Inequality in Ireland was launched 16 February 2015