Enough Said about the Wealthy in Ireland?

Nat O'Connor: A quote from The Irish Times (2 May 2014): "RTÉ's managing director of news and current affairs Kevin Bakhurst said one of the ways broadcast news was under pressure was through increased and costly legal challenges and threats. He said RTÉ was facing legal actions from “some well-known political figures”. While some actions were fair, others were “spurious, expensive and are a public game of who-blinks-first, with a major price tag attached on our side – and where we are dealing with public money.” He added there were “a small number of extremely wealthy and extremely litigious individuals who seek to use the courts to shut down any public debate or discussion of their affairs – which in most cases would be perfectly legitimate areas of exploration or discussion. I think probably enough said on that one.”

Given the rise of inequality in Ireland, it should be of major public concern when a senior manager in the national broadcaster talks about “a small number of extremely wealthy and extremely litigious individuals who seek to use the courts to shut down any public debate or discussion of their affairs – which in most cases would be perfectly legitimate areas of exploration or discussion.”

The "extremely wealthy" are obviously a small minority, and we don't have accurate data on their incomes and wealth, other than 'Rich Lists' or Top 100 lists published by newspapers or magazines. And it would be a mistake to simply assume everyone in the top 100 is included in Mr Bakhurst's statement.

But we do know about the rise in incomes of the top 0.5 per cent of tax units (individuals or households). Using the World Top Incomes Database, which is based on tax data, we know that the top 1 in 200 taxpayers in Ireland have incomes that average €500,000 - five times more than their average income of €100,000 (in today's money) in 1977.

We also know that this represents a greater share of all income, at 7.5 per cent, doubled from around 3.7 per cent in 1977.

Who are the one in 200 on this income level? Revenue figures for the number of income tax payers in 2011 shows over two million cases (2,0,88,443). One in 200 represents around 10,000 income tax payers (individuals or couples making a joint declaration). Actually many of them may not have incomes of €500,000 because people on even larger incomes will skew the data, but that is still a lot of households with incomes of several hundred thousand.

In more detail, Revenue reports 9,830 cases of income tax payers declaring more than €275,000. Between them they declared a total collective income of €5.1 billion, giving an average income of €522,062. Of course, hidden in the data a couple might make separate tax declarations of €250,000 each, yet not appear in this top income group.

As an aside, for anyone who is still worried about Ireland's legendary 52% marginal tax rate. These high income tax payers paid an average of 30.1% effective tax. (That's 0.1% above the new legal minimum of 30% for high earners. Someone's tax accountant/lawyer slipped up there).

But Mr Bakhurst is hardly talking about one in every 200 taxpayers. So the "extremely wealthy" presumably have much higher incomes. Unfortunately, we don't know anything as much about wealth - which allows people to pay capital gains tax rather than income tax, or to hold their personal wealth at arms length in companies and trust funds.

And of course, many extremely wealthy Irish people do not pay income tax in Ireland. So they are not even contributing to the public funds that have to pay the legal expenses of the national broadcaster when it is hauled into court by them for daring to encourage legitimate public debate or discussion of their incredible privileges.