Income Inequality

Bits_n_Bobs

Have there been any medium term (say 20 years) studies carried out on post tax income inequality in Ireland? It featured strongly in an interesting speech by Obama last week and was wondering if there are any Irish numbers available?

Geuze

See the EU-SILC survey here, for a start:

http://www.cso.ie/en/silc/


Here is the most recent report:

http://www.cso.ie/en/media/csoie/releasespublications/documents/silc/2011/silc_2011.pdf

Geuze

http://www.esri.ie/research/research_areas/taxation_welfare_and_pensions/?

You could have a look here as well.

carpejugulum

One glaring income inequality that's not discussed in the media is between people who contribute nothing to the economy - AKA long-term unemployed - and low earners. People on welfare can often be better off.
It may not look like that on paper because welfare recipients often don't own anything, but they have the most expensive and worrisome expenses sorted.
And Irish welfare system is also a good way to channel wealth to the rich. And it's a good way to trap people on welfare in a welfare trap.

Nody

carpejugulum wrote: »

One glaring income inequality that's not discussed in the media is between people who contribute nothing to the economy - AKA long-term unemployed - and low earners. People on welfare can often be better off.
It may not look like that on paper because welfare recipients often don't own anything, but they have the most expensive and worrisome expenses sorted.
And Irish welfare system is also a good way to channel wealth to the rich. And it's a good way to trap people on welfare in a welfare trap.

Ok you got me; how the heck is it suppose to "channel wealth to the rich"? Do you think rent allowance (only thing coming to mind) is some huge income source for the rich or something?

Cookie_Monster

Nody wrote: »

Ok you got me; how the heck is it suppose to "channel wealth to the rich"? Do you think rent allowance (only thing coming to mind) is some huge income source for the rich or something?

Child allowancenand pensions not being means tested perhaps?

antoobrien

Cookie_Monster wrote: »

Child allowancenand pensions not being means tested perhaps?

That depends on the definition of rich used. Given the fact that we got less than 100,000 people out of 4.8m earning less than 100k a year, the claim is a bit more than a stretch.

Bits_n_Bobs

What prompted the question was a an article I read in NY Times (I was waiting on a train and just discovered the site is bookmarked on my phone...honest!) where he mentioned it an increase in income inequality as a key contributor to social problems in the States.

I remember reading a study a few years ago (I think it was in the Economist), which laid a lot of social blames at the foot of income inequality, and specifically what is often referred to as the squeezed middle.

Most of the studies I've seen have a focus on ( or 'at risk of') poverty. The articles I have read (and Obamas speech) focus on the disparity between middle income and high-earners (top 1% I guess). The widening of this seems to be a real threat to the cohesion of society. As I said - I've read a few half remembered articles and I'm no expert, but it is something I'm curious about.

NY Time article is http://www.nytimes.com/2013/07/28/us/politics/obama-says-income-gap-is-fraying-us-social-fabric.html?pagewanted=all

antoobrien

Bits_n_Bobs wrote: »

What prompted the question was a an article I read in NY Times (I was waiting on a train and just discovered the site is bookmarked on my phone...honest!) where he mentioned it an increase in income inequality as a key contributor to social problems in the States.

In fairness that's an old bugbear of the Democratic party in the states where CEOs of large companies get outrageously large "compensation" packages but mange to pay damn all (relatively) in taxes.

Might I suggest reading through old revenue reports for the declared incomes, the report you're looking for is the income distribution report (cant remember the correct title offhand).

Nody

Nody wrote: »

Ok you got me; how the heck is it suppose to "channel wealth to the rich"? Do you think rent allowance (only thing coming to mind) is some huge income source for the rich or something?

It is in effect the landlords dole and underpins the rental market.
Have a look at how huge of an impact it is:

95,000 households are supported by rent supplement, which the Department of Social Protection says is about half of the total private rented market in Ireland.

In 2009 the Department paid over €500m in rent supplement.

http://www.rte.ie/news/2010/0610/rent.html

Nody

Nody wrote: »

Ok you got me; how the heck is it suppose to "channel wealth to the rich"? Do you think rent allowance (only thing coming to mind) is some huge income source for the rich or something?

Also jobbridge

antoobrien

Deleted User wrote: »

Also jobbridge

That's a laugh, considering that there are shops out there that have to hire 2/3 people for 15-20 hour weeks instead of 1 for a 40 hour week because of the combination of pay being too low (or the job seeker wanting higher pay), welfare being too high and the ability of those on three day weeks to supplement their income with welfare.

srsly78

Cookie_Monster wrote: »

Child allowancenand pensions not being means tested perhaps?

Contributory pension is not means-tested, so that means they are just getting what they paid for. Consider that someone may pay over 5% of their income over 40 years just to qualify for that small pension.

Child allowance however is a valid point, Michael O'Leary himself has pointed out how crazy this is. Then again, rich people pay ****loads of tax - I doubt they get back more than they put in.

Consider finally that low earners simply don't pay any income tax at all, so how could this be unfair to them?

jester77

Cookie_Monster wrote: »

Child allowancenand pensions not being means tested perhaps?

They get back a lot less than they put in, so if anything they are the ones who are getting the raw end of the deal. Here in Germany your pension is calculated based on what you have contributed during your life time of work. A much fairer system imo.

Scortho

Cookie_Monster wrote: »

Child allowancenand pensions not being means tested perhaps?

On the pension I'm 21. Ill be working the next 45 years of my life paying into a pension that's worth a pittance. I'd rather not contribute and have my own self administered pension.

Cody Pomeray

Interesting article from the coverage of proceedings at the MacGill Summer School

http://www.irishtimes.com/news/politics/inequality-in-irish-life-criticised-at-macgill-1.1480626

The richest minority in Ireland have seen their wealth rise during the course of the economic crisis, the MacGill summer school has heard.

Kathleen Lynch, professor of equality studies at UCD, claimed that the rise in wealth of an already comfortable minority when so many others suffered was an indictment of the Irish model...

“Conservative nationalism and anti-intellectualism in Irish public life – religious, unions, businesses, professional groups, politicians have all worked to maintain inequality,” she said.

Geoff Meagher, national president of St Vincent de Paul, said demands for the services of his charity has grown...

Ivan Cooper, director of advocacy at The Wheel, complained of the concept of the citizen on the sideline and “learned helplessness”.

Judge Michael Reilly, Inspector of Prisons, claimed the lack of care shown the vulnerable and the poor also extended to those in prisons...

“I have not found one person who has been improved by prison,” he said.

carpejugulum

Nody wrote: »

Ok you got me; how the heck is it suppose to "channel wealth to the rich"? Do you think rent allowance (only thing coming to mind) is some huge income source for the rich or something?

Who owns most businesses?

ugly_mug

jester77 wrote: »

They get back a lot less than they put in, so if anything they are the ones who are getting the raw end of the deal. Here in Germany your pension is calculated based on what you have contributed during your life time of work. A much fairer system imo.

are you referring to pensioners ?

the majority of pensioners draw down far more than they ever contributed , for two reasons , the level of PRSI contributions nesscessery was low and need not have been paid for that long , second , the state pension has trebled in the past sixteen years

Geuze

http://www.cso.ie/en/releasesandpublications/er/silc/surveyonincomeandlivingconditions2014/

2014 SILC published today.

No big changes in income inequality.

andrew

Here’s an interesting (short) presentation about income inequality in Ireland. Taxes and transfers in Ireland actually do a really good job of reducing income inequality; the difference between the Gini coefficient (a measure of inequality) before and after tax is higher in Ireland than any other OECD country. In addition, after tax income inequality in Ireland fell during the crisis and has remained at a lower level.

experiMental

I don't want to make sweeping statements, but according to official research, about 21 - 22% of all jobs in Ireland are low paying ( i.e less than 23,000 Euro per year - see this article here : http://www.thejournal.ie/ireland-has-a-lot-of-low-paying-jobs-1696421-Oct2014/ )

Some high paying jobs depend on low paying ones, and can't exist without them. For example, there are a lot of retail outlets, and they employ a lot of low wage workers. However, the owners of those retail stores are very highly paid, especially if their chain of stores is listed in the stock market. So given this situation, there will be income inequality. The real solution is to create better jobs. Easier said than done though.

Godge

experiMental wrote: »

I don't want to make sweeping statements, but according to official research, about 21 - 22% of all jobs in Ireland are low paying ( i.e less than 23,000 Euro per year - see this article here : http://www.thejournal.ie/ireland-has-a-lot-of-low-paying-jobs-1696421-Oct2014/ )

Some high paying jobs depend on low paying ones, and can't exist without them. For example, there are a lot of retail outlets, and they employ a lot of low wage workers. However, the owners of those retail stores are very highly paid, especially if their chain of stores is listed in the stock market. So given this situation, there will be income inequality. The real solution is to create better jobs. Easier said than done though.

Income inequality shouldn't be an issue.

The real issue is wealth inequality and inheritance taxes.

Bits_n_Bobs

Godge wrote: »

Income inequality shouldn't be an issue.

The real issue is wealth inequality and inheritance taxes.

Listening to the details about the CEO of the IFA's income it is an issue...

I do agree that wealth inequality is the bigger issue, however along with inheritance tax you could add a host of other taxes (and government policies) that effect it - corporate tax and capital gains acquisition spring to mind.

lochderg

Bits_n_Bobs wrote: »

What prompted the question was a an article I read in NY Times (I was waiting on a train and just discovered the site is bookmarked on my phone...honest!) where he mentioned it an increase in income inequality as a key contributor to social problems in the States.

I remember reading a study a few years ago (I think it was in the Economist), which laid a lot of social blames at the foot of income inequality, and specifically what is often referred to as the squeezed middle.

Most of the studies I've seen have a focus on ( or 'at risk of') poverty. The articles I have read (and Obamas speech) focus on the disparity between middle income and high-earners (top 1% I guess). The widening of this seems to be a real threat to the cohesion of society. As I said - I've read a few half remembered articles and I'm no expert, but it is something I'm curious about.

NY Time article is http://www.nytimes.com/2013/07/28/us/politics/obama-says-income-gap-is-fraying-us-social-fabric.html?pagewanted=all

check this http://www.theguardian.com/commentisfree/2014/mar/09/society-unequal-the-spirit-level

However how much of this is to do with perception. The internet has made accesses to how other live much easier and that can change how people view their own position in society.

Eugene Norman

andrew wrote: »

Here’s an interesting (short) presentation about income inequality in Ireland. Taxes and transfers in Ireland actually do a really good job of reducing income inequality; the difference between the Gini coefficient (a measure of inequality) before and after tax is higher in Ireland than any other OECD country. In addition, after tax income inequality in Ireland fell during the crisis and has remained at a lower level.

We have huge transfers and low tax on low paid workers. Most of the GINI index is about how much the top 20% is earning relative to the rest of us.

Eric Cartman

I really don't get what the issue is with income inequality. Considering our overgenerous welfare state , us having a high level of income inequality would only mean that more super rich people came to Ireland. A thing thats hardly a bad sign considering the wealth trickles down with the goods and services those people need.

Geuze

Eric Cartman wrote: »

more super rich people came to Ireland. A thing thats hardly a bad sign considering the wealth trickles down with the goods and services those people need.

Nobody is suggesting that "rich people came to Ireland" - the inequality is domestic, not due to immigration of high earners.

"Trickle-down" - that phrase is open to dispute, and also make it sound like people should be happy for the crumbs they get from the rich people's table.

Bits_n_Bobs

Eric Cartman wrote: »

A thing thats hardly a bad sign considering the wealth trickles down with the goods and services those people need.

However there's no economic evidence of meaningful wealth actually 'trickling down'

eire4

Bits_n_Bobs wrote: »

However there's no economic evidence of meaningful wealth actually 'trickling down'

It certainly has not worked in the United States.

jimmycrackcorm

eire4 wrote:

It certainly has not worked in the United States.

Does the US not have one of the lowest unemployment rates in the world? Whilst the obvious retort is that equally it has a significant number of minimum pay jobs, the opportunities to improve ones lot is unrivalled world wide.

Bits_n_Bobs

jimmycrackcorm wrote: »

Does the US not have one of the lowest unemployment rates in the world? Whilst the obvious retort is that equally it has a significant number of minimum pay jobs, the opportunities to improve ones lot is unrivalled world wide.

Actually that's a bit of a myth;

http://www.epi.org/publication/usa-lags-peer-countries-mobility/

eire4

jimmycrackcorm wrote: »

Does the US not have one of the lowest unemployment rates in the world? Whilst the obvious retort is that equally it has a significant number of minimum pay jobs, the opportunities to improve ones lot is unrivalled world wide.

It has very high levels of jobs not just at minimum pay levels but at poverty levels. Many workers at low wage employers like Walmart are dependant on food stamps and other welfare programmes because the wages are so low. The gap between corporate executive pay and the average workers pay has growth enormously. Income inequality has grown enormously and the idea that the US is a beacon of socio-economic upward mobility opportunity is simply not true.
http://money.cnn.com/2013/12/09/news/economy/america-economic-mobility/
http://www.theatlantic.com/business/archive/2015/07/america-social-mobility-parents-income/399311/