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So these are the farewell tax cuts, then. And good riddance.
There is no problem with tax cuts per se, but the brutal policy condemned the concept to insignificant death.
The "end of tax cuts" was called by Labor MP Joan Burton who claimed that Fianna Fáil had dropped it as a promise, and therefore no one would campaign on this basis the next time. It may be too early to say and a little too premature to claim that Fine Gael is no longer subject to tax cuts.
Despite the traces of itching in government buildings, there may be no election before Brexit. Like anything related to Brexit, one can guess what an election will look like after the event. It is impossible to believe that it would still be possible to know who would cut taxes the most and where. Well, not quite impossible to believe, but if the campaigns were about something else, it would be a good riddance.
We will see but, for the moment, a change of approach can be detected.
The government has paved the way with its long-term investment plan of 140 billion euros. The magnitude of the housing shortage will make it risky for any politician to suggest that money should be diverted to tax cuts – although it will take more than just money. to solve the housing situation and other things are not in place.
The quasi-philosophical enigma as to what represents a tax reduction in an economy is expected to increase by 10 billion euros next year. It would be a good stall if even a temporary break allowed for a political discussion about what all the promises have accomplished up to here.
We could start with the surprising conclusion that all these years of bustling and frictions about tax cuts, regressive budgets and favoring one group over the other, is finally raised to a bean hill. Like the very bad poem about Queen Victoria, things are neither better nor worse – they are pretty much the same.
The conclusion comes from reading the recent ESRI report on the long-term trend of income and its distribution.
This is the last decade of research on the subject conducted by a team led by Tim Callan, whose results appear to have been overwhelmed by most politicians, lobbyists and commentators
. are even more surprising compared to the standard political discourse in this country. In addition to using current surveys of CSOs, the paper used earlier data dating back to 1987.
It finds that the distribution of disposable income between the rich, the poor and the means, is the same as that 39, before
. ] Almost exactly the same thing, which is a little surprising. There were a lot of dramas in those years but, like the dreary steeples of Fermanagh and Tyrone, when the deluges soothe, the same pattern emerges.
Very quickly too.
In 2007, at the height of the boom, disposable income was shared in a well-established way, with the poorest fifth earning less than 10pc of income and the fifth best-dressed 40pc, with the remaining 50pc sharing fairly evenly across the board. middle. There was of course a major jolt, caused by unemployment that soared when the accident occurred. But in 2014, the old actions had been restored.
Before determining whether there is an acceptable distribution (and if not, in which direction this is unacceptable), it must be said that it is not from an unusual distribution. European terms. Ireland is not particularly uneven. It lies in the middle, where its closest neighbors are France, Germany and the Netherlands.
It's the stability that is unusual. Governments come and go, arguments about tax cuts and spending increase rabies, budgets are over, ministers are accused of cringing the poor in favor of the rich (very occasionally, the reverse) but the end result shows that everything was a lot of noise for nothing
It's not the same as doing nothing. ESRI believes that if, as we have sometimes suggested, the finance ministers were replaced by a pbadive robot whose instructions would change everything according to inflation, poverty would be 50pc greater. and the poverty gap would double. What is important, it is that the incomes in Ireland have grown much faster than in the rest of Western Europe or the United States. This meant that Ireland was able to reverse the growing trend of inequality that has received so much attention in the UK, the US and overall from the OECD.
The latter finds that up to 40pc of low-income groups in the Member States have seen no improvement in their relative position since the crash.
Much of the international comment was prompted by the typical (median) statistic earnings in the United States barely increased in 20 years.
In Great Britain, they rose by 1.5pc a year, but in Ireland they were 3.23pc.
The rise in real wages by 70pc since 1987 has been enough to raise all boats and reduce inequality in Ireland, while increasing in the two large English-speaking countries and in many other countries in recent years.
While the top 10 employees in the UK did better than the median with an increase of 2pc, in Ireland they had less – an annual increase of 2.8pc. (You must be a very big support to the United States to get something.)
Ireland is an exception. It is fair to badume that everything that happens in Britain and America must happen here. As one editor said a long time ago; just stick a green hat on the story and send it. Often, however, things happen differently here. The distribution of income is one of them
The report identifies the main triggers of the different Irish experiences.
The main is hardly known now – the Commission on Welfare in 1987. In particular, its recommendations have increased lower rates of social benefits. Non-contributory pensions and jobseeker payments increased by more than 70% in real wages, with most of the adjustment occurring in 1987-94. , collapse – from the standard rate of 35pc to 20pc. This eaten bread has long been forgotten and the low entry point for the higher rate that has inevitably followed is now the subject of discussions about tax cuts. The arithmetic says that the conversation is all that will stay.
The entry point for income tax also increased faster as incomes increased, under the somewhat unfortunate phrase, "pull people out of the tax net"; which gives the impression that someone has the right to escape. So we are where we are or, to be more precise, more or less where we have always been.
Now, we can go to what point it is desirable. Should the policy be aimed at distributing income more equitably, as in Denmark and Finland, or even in Slovakia?
Or are things better arranged by having a wider dissemination, such as Spain and New Zealand, even if the UK is a step too far?
The real questions go beyond simple income distribution. Ireland's tax and welfare systems can leave it comfortably in the middle rank; but with almost the highest levels of private sector income in the OECD, matched by one of the largest proportions of jobless households.
This could produce the stuff of a serious policy. There have been too many arguments about the statistics that are there for everyone, and not enough about their causes and effects, not just about income but about overall well-being.
Indo Business
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