Friday, 27 March 2015

Economic Inequality: Frequently Asked Questions

Cormac Staunton: Since launching our report Cherishing All Equally: Economic Inequality in Ireland we have received a number of questions from a wide range of people interested in the subject. We are encouraged by the level of debate the report has generated and look forward to continuing to discuss this important topic. 

In the meantime, here are our answers to some of the most common questions. 

Monday, 23 March 2015

The Top Income Tax is at its Lowest Rate

Paul Sweeney: This year, Ireland’s top tax is at its lowest rate for many years. Yet inequality is now recognised as the biggest economic challenge of the 21st Century and progressive tax is one of the key instruments in reducing it. Income tax is probably the most effective progressive tax. Why is the top rate being reduced?

Wednesday, 18 March 2015

Incarceration and Equality

Oisín Gilmore: Last month the Oscars got some press attention for the unusually politicized nature of many of the acceptance speeches. While Patricia Arquette’s call for gender wage equality got perhaps the most attention, here I want to look at some recent research relating to an issue raised when the award for best song was given to the movie Selma.

Friday, 13 March 2015

Data on Wealth in Ireland

Paul Sweeney: There has been no study of the distribution of wealth in Ireland by any government body until recently. Now the CSO has undertaken such a study which examines net and gross wealth and its distribution. It can be found here

There was substantial wealth destruction in the Crash of 2008, and this impacts on current levels of wealth today and will do so for some time because the debts incurred by some subtracts from overall net wealth.

This perhaps is the most interesting lesson from the CSO study. It is that had we not had the seven bubble years from 2001 to the crash in 2008, Ireland and a lot of our people would be a lot better off. This is best illustrated by negative equity, the person in a home for which they paid a great deal more than its present value. The debts built up in that period greatly reduced the net assets accumulated in the good years.

Monday, 9 March 2015

Arguments for a gendered investment plan

Paula Clancy: As a consequence of austerity policies the programme for gender equality in Ireland has been hard hit.  Ursula Barry’s recent TASC paper ‘Gender Equality and Economic Crisis: Ireland and EU’ highlights how gender equality in Ireland has been marginalised as an employment policy objective. This is similar to what is happening in Europe more generally, exemplified by the absence of a gender equality guidelines in the most recent 2010-2020 European Employment Strategy (EES).

Since the crisis women have been more exposed to pay freezes, job cuts and reduced pension entitlements.  Women have been more affected by cuts to public services since they are the more likely to depend on these services and women are also more likely to assume the extra unpaid work resulting from cuts to public services (European Commission, 2012).

Don’t sell, buy: Paul Sweeney on Aer Lingus in Irish Times

Paul Sweeney, Chair of TASC's Economists' Network, wrote a strong opinion piece on Aer Lingus in The Irish Times on Friday, 6th of March 2015.

You can read it here (behind a paywall)

Friday, 6 March 2015

Mathematically Progressive or Socially Progressive?

Cormac Staunton: You don’t measure how peaceful an area is by counting the number of peacekeepers. If anything, the presence of peacekeepers is an indicator of war, not peace.

We have heard lately from various sources that Ireland has “the most progressive tax and transfer system in the OECD”. This measure refers to Ireland’s income inequality before and after taxes and transfers are taken into account.

But is this a measure of peace or of peacekeepers?

Wednesday, 25 February 2015

Aer Lingus Watch #5

Paul Sweeney: I began Aer Lingus Watch 3 by saying that the government will not sell its stake in Aer Lingus. The Taoiseach had said that he wanted “a cast-iron guarantee” on the slots from IAG. That will not be forthcoming, I said. Cast-iron means no, if it is plain English because such a guarantee can't be given and enforced. And I thought the case was closed. For a time it appeared as if it might be opened again when a few key players in positions wavered. But the government has now sensibly rejected this bid.

That is not to say another won't materialize.

Tuesday, 24 February 2015

Why ‘gross’ income inequality matters

Cormac Staunton: Cherishing All Equally has prompted a discussion of economic inequality in Ireland. In a previous post I discussed why looking only at incomes is insufficient, and why we also need to look at public services and the cost of living.

In this post I want to show that when talking about income in the context of economic inequality it is important to look at gross income inequality (before taxes and social welfare), not just net income inequality (after taxes and welfare).

Friday, 20 February 2015

Five Progressive Views on Greece

Nat O'Connor: Queries: The European Progressive Magazine circulated five articles about the Greek crisis, all of which are relevant to Ireland.

More on Ireland's Low Taxation and Income Tax Progressivity

Nat O'Connor: The OECD provides a table of its member states showing total tax revenue as a percentage of GDP. In 2012, Ireland's total tax revenue was 28.3% of GDP. The lowest in the OECD was Chile on 20.8%. The highest was Denmark on 48%. Of all EU members of the OECD, Ireland has the lowest total tax revenue.

Ireland's low overall taxation is mostly due to very low social insurance charged on people's incomes. As shown in the three charts below, people on low and average incomes in Ireland pay much lower taxes than what they would pay in other countries. People on above average incomes pay less tax than they would pay in European countries, but slightly more than they would pay in English-speaking countries (including the UK).

Thursday, 19 February 2015

Aer Lingus Watch #4: Did Privatisation Make Aer Lingus Profitable?

Paul Sweeney: A number of commentators have claimed that privatisation was the best way for Aer Lingus and that it was the making of the company because it became more profitable. The facts demonstrate that this is patently not true.

Timmy Dooley of Fianna Fail defended that party’s un-strategic decision to privatise Ireland’s strategic aviation bridge to the rest of the world, claiming that the company had performed poorly before it was sold off and he claimed that it has done better since their mistake of privatisation.

Wednesday, 18 February 2015

Getting Beneath the Surface of Gross versus Net Income Inequality

Nat O'Connor: TASC's new report, Cherishing All Equally: Economic Inequality in Ireland, is designed to provoke deeper debate about what is and is not working in Irish economic and social policy.

The report points to the international debate on the problematic growth of income and wealth inequality to show that the issue is important and needs to be talked about in a different manner. Part of the problem in Ireland is that any mention of inequality is treated as left-right politics as opposed to a description of a major social or economic problem that merits serious analysis by everyone in the political spectrum. (An 'inconvenient truth' about our economy perhaps?)

Super rich or super angry: where are you on Ireland’s income pyramid?

Paul Sweeney: Many of us did not care how much others earned during the Celtic Tiger and bubble years. But now we are rightly angered about growing inequality.

How do your earnings compare to others? For the 1.9 million people at work last year, average annual earnings were €35,600. But it’s a bit more complex. This Central Statistics Office (CSO) data does not include many of the highest paid, e.g. many sole practitioners, doctors, accountants or solicitors in partnerships, nor the incomes – including gains made – of the very wealthy.

Tuesday, 17 February 2015

IAG: Predator or Saviour?

An Lámh Eile: Once again the full privatization of a state company is on the agenda.

Much is being made of connectivity. Connectivity is an issue for two key segments, tourism and business. But will connectivity be affected by an IAG takeover? There is substance in the comments that argue that if the demand is there for connectivity, the market will provide it. And if that is true, the IAG takeover of Aer Lingus is immaterial to connectivity. Private airlines decide on the basis of the bottom line in initiating a new route or further development of an existing one. In the short-term, the bottom line rules in the market. But are there cases where loss-making connectivity should be sustained for some long-term broader reasons than short-term profit?

Monday, 16 February 2015

Ireland's 'Progressive' Income Tax System

Nat O'Connor: Some commentators keep referring to the progressivity of Ireland's income tax system, as if it was the silver bullet that makes economic inequality in Ireland OK, or at least as good as it can get. This is vastly over-simplified.

Focusing in on the effect of income tax, USC and PRSI, the progressivity in Ireland's income tax system is real - but it is NOT due to taxing high incomes more than in other EU countries.

Response to Dan O'Brien's 'Bunkum' Article

Nat O'Connor: Dan O'Brien writes that "claims about great inequality in Ireland are just bunkum". Having had a look at the arguments in support of this position, there is much data Dan O'Brien is ignoring.

DOB: "it has always been clear from the available data that the gap in Irish incomes between the richest and the poorest at any given time has been in line with averages in peer countries."

We have data on the Gini coefficient of overall income inequality, which shows us that it is slightly lower than the EU average. But this statistic doesn't give us fine detail about the mix of high, low and and middle incomes across society. Different countries can share the same overall level of income inequality, but have different combinations of high and low income.

Inequality: a Real and Growing Threat to the Irish Economy

Nat O'Connor and Cormac Staunton: Economics has always been about the study of who gets what, when and how. This issue has come into sharp focus due to the problems that growing economic inequality is causing. International bodies like the OECD, World Bank, IMF and World Economic Forum have all stressed the challenges and risks posed to developed economies by economic inequality. Economists and leaders across the spectrum have called economic inequality ‘dangerous’ (free market advocate Alan Greenspan), ‘the most important problem we are facing today’ (Nobel laureate Robert Shiller), and ‘the root of social ills’ (Pope Francis).

TASC’s first annual report on economic inequality, Cherishing All Equally, shows that this global phenomenon is a very real threat for Ireland too.

Friday, 13 February 2015

The “Two Irelands”

Cormac Staunton: Christian Aid hosted a conference in Dublin yesterday on the “Human Rights Impact of Tax and Fiscal Policy”. There were a number of interesting speakers and contributors on issues of global tax policy and how it links with human rights, sustainable development and equality.

In this post I want to focus on a discussion between two panelists that I found particularly interesting. To many of those present it might not even have been the most interesting discussion in that session. But to me it spoke volumes about the central importance of inequality.

Wednesday, 11 February 2015

Economic Inequality: More than Incomes and Wealth

Cormac Staunton: When discussing economic inequality, there is a tendency to focus on income inequality (or sometimes wealth inequality). This is because there is more data on incomes, and income inequality can be (over) simplified with measures like the Gini Coefficient.

However, economic inequality is about more than just incomes and wealth. TASC’s forthcoming report, Cherishing All Equally, is the first study to take an overall view of economic inequality in Ireland. To get a full picture of economic inequality we need to look at a range of other factors, a few of which are discussed here.