Politics and the ‘squeezed middle’

Taxation, social inclusion and equality of opportunity

Sir, – Kathy Sheridan implies that Fine Gael is once again looking after the “elite” (“Fine Gael’s squeezed middle are actually the country’s top one third”, Opinion & Analysis, May 31st). She does not acknowledge that the low paid in Ireland are noticeably under-taxed relative to their counterparts across Europe or that the unemployed enjoy generous benefits denied to those who choose to work low-paid jobs; neither does she acknowledge the unfairness of a top rate of tax kicking in at the average wage; neither does she ask why we have only two tax rates – copying the British system as usual – but applying the top rate at a much lower threshold. Moreover, she never acknowledges that wages belong to the person who goes out and earns; in a civilised society we pay for common goods and welfare safety nets but ultimately monies earned exist because someone went out and did something. You don’t have to be a raging libertarian to feel disgruntled at the State reaching into one’s pay-packet at taking half of a pay rise or hour’s overtime. I meet many Irish people who work outside of Ireland, and they invariably appreciate the fact that they keep more of their own earnings, and yet enjoy similar public services. Whether it is in Dubai, Australia or Malta, many of Ireland’s most productive young people have voted with their feet. Does Kathy Sheridan want to welcome back people who earn good salaries or not? – Yours, etc,





Sir, – Pat O’Brien makes several good points about the Irish tax burden on those making middle incomes (Letters, May 30th), but his claim that Ireland is unique among developed countries in that “about 40 per cent of income earners do not have an income tax liability” is debatable. According to the non-partisan Tax Policy Center in the US, 57 per cent of US households paid no federal income taxes in 2021. While this figure was skewed upwards by Covid-relief measures – it was only 44 per cent before the pandemic – it is high for the same reason that the Irish percentage is, because of immoderate pretax-income inequality. Paying no income tax does not sound so enviable when one reflects that those who are exempt earn only €17,750 a year or less, considerably lower than the annual full-time minimum wage.

Economists use the Gini coefficient as a statistical measure of societal inequality, with zero representing theoretical complete equality (everyone’s income is exactly the same), and one complete inequality (one person has all the income; everyone else has none). Ireland is unique among OECD members in having the organisation’s most progressive tax and transfer system, ie the greatest difference between its pretax and post-tax Gini coefficients. According to the latest (2021) OECD Government at a Glance country fact sheet, Ireland’s 2018 pretax-and-transfers Gini coefficient was 0.48, the highest of the European OECD nations (and behind only the relatively underdeveloped Latin American nations of Costa Rica and Chile), whereas its post-tax-and-transfers ratio was 0.29, ranking moderately unequal in 15th place out of 34. It is arguably a good thing that successive Irish governments have been more devoted than most to closing the gap between the haves and the have-nots via taxation and redistribution; it would be better yet if policies could somehow be enacted that reduced the need to close such a large gap from the outset by promoting greater social inclusion and more equality of opportunity. – Yours, etc,


Dún Laoghaire,

Co Dublin.