Sir, – As far as inheritance tax goes, I believe it should always be set at a higher rate than income tax. We need to motivate people to work, not to die nor to loaf about awaiting large inheritances. Meanwhile, the scenario recently being portrayed as a great tragedy – where homes which are so far out of the inheritors’ range of affordability that they cannot even pay the tax, and so have to sell them – is surely what a stagnant property market needs. The lack of houses for sale is a problem for much of the population, and inheritance tax is a quintessential first-world problem for a privileged few.
So, while I’d agree with David McWilliams on the unfairness of inheritance versus merit as paths to wealth, I disagree with his portrayal of inequality in Ireland (“Inheritance is not just a family affair – it’s a critical societal issue”, Opinion & Analysis, July 27th).
If you are travelling around the world and encounter someone who plays golf regularly at a high level, enjoys fly-fishing and owns a holiday home abroad, they will quite likely be a CEO or high-flying professional. In my experience, only in Ireland could they be a taxi driver.
Beyond anecdotal evidence though, the Irish tax system is often rated the most redistributive in the world. Our Gini coefficient, a number from 0 to 1 where low values indicate greater equality may be as low as 0.27 for disposable income, although various measures are used. But once taxes and charges are considered, it’s very low by international standards.
I am thus amazed at Ireland’s most recognised economist describing this everyday reality as “French Revolution-style figures”. Precisely the data he cites are that “the top 1 per cent of households . . . own about 15 per cent of the . . . wealth” and the top 10 per cent over half of it. This is not remotely comparable to pre-revolutionary France. While such data were not collected in that era, probably the foremost expert on the matter is the economist Thomas Pikety. In his book Capital in the Twenty-First Century, he concludes that “it is possible that the top decile’s (10 per cent) share attained or even slightly exceeded 90 per cent of total wealth on the eve of 1789 and that the upper centile’s (1 per cent) share attained or exceeded 60 per cent”.
The bottom 99 per cent in Ireland now own about 85 per cent of the wealth. Of course, this is not full equality, an outcome we are unlikely ever to get. But exempting massive inheritances from taxation is unlikely to help, and if its goal is to prevent property coming onto the open market, it is surely impossible to justify in modern Ireland. – Yours, etc,
BRIAN O’BRIEN,
Kinsale,
Co Cork.