More equality is better for everybody, including the economy.
Social Justice Ireland
Right-wing governments are predictably reluctant to impose a wealth tax on their friends. But in a time of multiple crises—not just the coronavirus and its effect on the economy, but also the perennial favourites in health, housing, climate action, and so on—there’s nothing to be gained by endlessly cutting the national cake into ever thinner slices in an attempt to make it stretch further. We’ve been determinedly doing that for four neo-liberal decades, refusing to admit that the national budget isn’t St Brigid’s cloak[i].
And look how well it’s working. In the sixth richest country in the world (according to the International Monetary Fund), Social Justice Ireland estimates that approximately one-in-five full-time workers is earning less than the Living Wage—the average gross salary that will enable an adult in full-time employment to afford a socially acceptable standard of living based on needs, not wants. One child in five is living in a family with an income below the poverty line. One in four is living in a household experiencing deprivation of two or more basic necessities. And 110,000 children are surviving consistent poverty, both living below the poverty line and with persistent deprivation of basic necessities.
These stark figures present very serious policy implications for Ireland, not least for the success of these children within the education system, their job prospects in the future and for Ireland’s economic potential in the long-term. How long more can we afford to ignore these children and their living standards? (Poverty Focus 2019)
There are one million people on healthcare lists waiting for treatment for months and sometimes for years. There are upwards of 70,000 families waiting up to 12 years for housing. Focus Ireland report that eight and a half thousand homeless people spent last Christmas being shunted around ‘emergency accommodation’ in B&Bs and hotel rooms while being stripped of their dignity. About one-third of them were children.
Is this what it feels like to be rich?
Investing in people
Realistically, if we are to provide a first-class free-to-all-at-point-of-delivery health service, and build sufficient housing so that everyone has somewhere to live, and nationalise the schools to produce better educated, more motivated, and more productive graduates at every level and from every socio-economic group, then we need to collect more taxes. And when it comes to asking where we should get that extra tax, the majority of us are in complete agreement: from the rich.
Why pick on the rich? Because, as Cliff Taylor says, about 90 of the wealthiest people in Ireland pay income tax at a lower rate than the average taxpayer. One in four high-net-worth individuals declare taxable income of less than the average industrial wage.
Just 10 taxpayers from the group were responsible for 85 per cent of the €473 million income tax bill owed in total, meaning that many of the rest paid relatively little. Some declared little income for tax here, presumably due to tax residency elsewhere, while others successfully used a range of credits and reliefs to shelter income from tax.
If this group continue to underpay their taxes, the rest of us will once again get saddled with paying for the loans that we will need to rebuild our economy after the pandemic. Paschal Donohoe has thrown out €20 billion as a guestimate of how much debt the lower-paid will be expected to take on. And we’re not going to like that.
So, let’s tax the rich.
David McWilliams describes accumulated wealth as the low hanging taxable fruit, because it’s ‘tied up in property and land and can’t—by definition—leave the country’. You can’t move your refurbished castle offshore.
Imagine we decided to introduce a sliding wealth tax of between 0.5% and 5% on wealth, on the top 1% or top 5%. Even using the more modest HFCS numbers, the State could raise close to a maximum of €20 billion (5% on the top 5%) or a minimum of €2 billion (0.5% on the top 1% ).
Let’s further imagine we collected that top figure, 5% on the top 5% (who own almost half of the total national wealth); in a single year, at an estimated build cost of €250,000 per unit, €20 billion would build enough houses or apartments to house all the homeless, clear the housing lists, and leave us with a surplus to take care of future demand.
Or alternatively, that €20 billion would pay for the complete implementation of Sláintecare in one go—even at the dramatically higher level suggested by the Irish Hospital Consultants Association (IHCA):
The cost of implementing the proposals in the Sláintecare Report has been understated and will actually cost the taxpayer €20bn if implemented over 10 years, compared with €2.8bn stated in the Report. (healthmanager.ie)
But even at the bottom end of McWilliams’ scale (0.5% on the top 1%) €2 billion annually would build ten thousand plus houses each year. Or replace a currently unquantifiable number of leaking water pipes. Or retrofit an unknown number of existing houses to passive levels. Or replace the current bus fleet (by then, hopefully, renationalised) with all-electric buses. Or any combination of some, all, or none of the above each year.
Somewhere between those two options—a maximum of €20 billion or a minimum of €2 billion from the small number of people who own more of the national wealth than the rest of us combined—lies the immediate cost of fixing our post-coronavirus economy while reducing the amount of borrowing we’ll have to do.
Sounds fair enough to me.
Before I go
It would be impossible to calculate what it has cost the majority of us to enable a minority to hang on to power and privilege. Imagine how much better our health service would be if we stopped subsidising private hospitals and invested that money in improving the public system. Imagine how the life of the community would change if all of us had decent, stable, and affordable accommodation built with taxes collected from the vulture funds. How many DEIS schools could be raised to compete with Blackrock College if the money we pay teachers in private schools were used to hire more teachers for the public system, reducing class size significantly?
And whatever way it’s counted, we’ve paid a high price in suppressed talent simply because some people have the wrong accent or eircode. We’ll never know how many working-class students failed to get into the university of their choice, no matter what their grades, because the system is rigged to benefit private-school students and graduates. How many excellent working-class doctors, lawyers, teachers, and professors have we missed out on?
We need to put pressure on the Government and feet on the streets the way we did over water charges. But this time, we won’t stop until they fix it. All of it.
[i] Legend has it that Brigid asked the King of Leinster for land on which to build her monastery. He refused. She asked again, this time only requesting as much land as her cloak would cover. He agreed. Brigid told her four helpers to each take a corner of the cloak and walk in different directions; as they did so, the cloak began to grow and spread to cover sufficient land on which to build her monastery.