Ireland: NERI Reports On Irish Tax Distribution
13 August 2013
Posted by: Author: Jason Gorringe
Author: Jason Gorringe
The combined impact of Ireland's tax and welfare systems helps to reduce income inequality, a new report has claimed.
The Nevin Economic Research Institute (NERI) has researched household incomes pre- and post-redistribution, and outlines the structure of Ireland's income distribution across households. It looked at direct income (earnings), gross income (earnings plus welfare), and disposable income (earnings plus welfare, minus income taxes and social insurance).
NERI found that the top 10 percent of households receive 38 percent of all market income, 30 percent of gross income, and almost one quarter of all disposable income. In contrast, the combined direct income share of the bottom 50 percent represents just 8 percent of all of Ireland's direct income.
However, as the report states, "the redistributive system, through both welfare and taxation, decreases the scale of these initial income divides." The poorest 10 percent, on earnings of just EUR23.93 (USD31.91) a week, are left with disposable income of EUR164.70, once taxes and welfare benefits are taken into account. Those earning EUR2,782.81 a week take home EUR1,992.14.
To calculate the impact of the redistributive system, NERI used the Gini coefficient, which measures income inequality on a scale of 0-100 percent. The latter figure represents complete inequality, and the former signals "perfect equality," whereby all households have the same income. Pre-distribution, Ireland's direct income inequality stands at 86.45 percent, but drops to 31.06 percent after distribution.
The 55 percent reduction therefore "highlights both the effectiveness of the redistribution system and the scale of pre-distribution income inequality," NERI concluded.