Fergus Finlay


Tax avoidance laws for the rich yet outrage still reserved for the poor and 'undeserving'

We can get so angry about people we see as undeserving, and be so sanguine about people who are living really, really well, writes Fergus Finlay

Tax avoidance laws for the rich yet outrage still reserved for the poor and 'undeserving'

Where are the trolls this week? Why isn’t the internet ablaze? Why have all the people who wax so indignantly on social media gone so silent?

They were all fierce busy when the story of Margaret Cash was in the papers. But in the face of an astonishing report from the Comptroller and Auditor General (C&AG) about the wealthiest people in the country, they have nothing to say.

Here’s one simple basic fact from that report.

“Looking at taxable income, 140 HWIs (42%) had taxable income of less than €125,000. Of these, 83 (25%) had taxable income of less than the average industrial wage.”

The C&AG adds the helpful information in a sidebar that the average industrial wage is €686 a week.

Because of the way we define it (other countries are less generous) a HWI is a high worth individual. He or she has to have €50m in assets before they fit the definition. We have 480 of them.

So that’s 480 people with at least €50m each.

If you put them all into one place (and of course it would have to be pretty plush before they’d agree to go there), you’d be looking at a total of €24,000,000,000 in wealth. That’s €24bn for short.

A quarter of the HWIs paid income tax as if they were earning the average industrial wage. Let’s put that another way — 83 people, with a combined wealth of at least €6,000,000,000 between them, were treated by the tax system as if they each had an income of about €35,000 a year.

A clerical officer in the civil service, provided he or she has 13 years’ experience, will earn precisely that. That’s where a teacher starts. A nurse with five years’ experience will get there too.

It must be really comforting to them to know that they are all in the same tax bracket as people with €50m in assets. Never mind that not a single nurse or teacher or public servant on that kind of money will be able to afford a mortgage, or that raising a family on those salary levels will be a mighty struggle. What they need, obviously, is a good tax adviser.

Because that’s what makes the difference if you’re really, really rich. To paraphrase Samuel L Jackson in Pulp Fiction, when you absolutely, positively, have to pay as little tax as possible, accept no substitute for a good tax advisor.

The C&AG report puts it much more soberly, of course.

"Almost all HWIs use professional tax advisers and may be more likely to have opportunities to engage in the use of bespoke tax avoidance schemes. HWIs typically have a higher international mobility than other taxpayers. HWIs are more likely to have economic interests and assets in more than one jurisdiction, which may make compliance more difficult.”

So, we shouldn’t be angry about this, I suppose. Our high worth individuals do pay some income tax, of course. The C&AG report refers to €437m between them — that’s an average of around €900,000 each. Seems like a lot, doesn’t it?

But averages are misleading. Of the €437m paid, just over €400m of it came from 10 taxpayers. And at the other end there were some (the report doesn’t say exactly how many) who paid no income tax at all. (They did pay USC, thank goodness.)

These very rich people come from a variety of sectors, and no doubt have all earned their money. Well, I hope they have. According to the C&AG, 60% of them have either inherited their money or acquired it in “real estate activities”.

The bottom line in all of this, from the C&AG’s point of view, is essentially that the Revenue Commissioners are applying the law as they find it. There aren’t significant recommendations in the report and no particular criticism of how the Revenue goes about its business.

But there are, in my view, two issues here, and one of them is an issue of double standards.

When a single mother, who also happens to be a Traveller, found herself in a garda station with her six children, sleeping on benches because they had nowhere else to go, the internet exploded with anger.

And a huge amount of it was directed at her: The photographs had been staged; she was in receipt of an enormous amount of income from the state; she had pictures of herself on Facebook having a good time. Why should we feel any responsibility for her when the father of her children clearly didn’t?

But when an official report is published that demonstrates that some of the wealthiest people in the country are paying little or no tax, we shrug our shoulders. Nothing to be seen here, nothing we can do about it.

Our rich folk tend not to cavort on Facebook, of course, and the days when wealth was routinely flaunted are over (for the moment, anyway).

But there is still something weird about the fact that we can get so angry about people we see as undeserving, and be so sanguine about people who are living really, really well and not contributing what they should.

Because the other issue is the morality of all this.

We’re going to have a budget in a week or so. The Finance Minister is going to tell us how constrained he is, how little we can afford. We could afford a bit more if the rich were paying their fair share.

Margaret Cash's children in Tallaght Garda Station
Margaret Cash's children in Tallaght Garda Station

For example, and I know I’m beating a drum that I’ve beaten before, if these high worth individuals were paying on average €2m a year, instead of the less than a million they pay now, that would entirely cover the cost of free primary education in Ireland.

It would mean that every child going to school (including their own children!) would find books waiting for them when they got there. They would travel on free transport, and their parents would never need to be asked for a voluntary contribution.

That's the sort of impact you could see if the rich were paying a fairer share (actually, just a slightly more modest share). The C&AG report lists 11 specific tax avoidance schemes, and identifies the potential loss to the Exchequer from each of them.

You’d really wonder why rich people need so many. People in ordinary jobs get a break on their health insurance, but that’s just about the only tax avoidance they’re allowed.

The argument that’s often put forward in favour of this is that we need to incentivise risk-taking and entrepreneurialism. There’s no breakdown in the report about how these 480 people got so rich — how many risks they took, how many people they employ (apart from personal accountants), and so on.

When you see a figure that says 60% of them inherited it or got it from property deals, you’d really wonder what we’re trying to incentivise.

We’re very quick in Ireland to divide (let’s say) families in homelessness into the deserving and the undeserving poor. Why is it, I wonder, that we don’t have a similar view about the rich?

The more you have, it seems, the more you deserve.

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