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Wealth Inequality Policy for a Reunited Ireland.
Irish
reunification goes beyond addressing historical injustices and
aligning laws; it offers a unique opportunity to establish
institutions that promote justice, sustainability, and shared
prosperity. Evidence indicates that severe income and wealth
disparities undermine democratic legitimacy, erode trust in public
institutions, and heighten the risk of collective conflict. To
realize the promise of reunification, policymakers must prioritize
redistributive policies, such as progressive taxes, comprehensive
social protections, affordable housing, and public investments in
education and healthcare. Furthermore, reforms that democratize
economic decision-making and ensure responsible management of
natural resources are crucial. This strategy will help reduce
grievances, enhance economic stability, and foster a resilient,
inclusive society capable of maintaining peace.
Economic freedom and systemic
advantages:
The leading cause of income and wealth inequality in modern democracies,
including Ireland, is the decline of middle-class households and
their combined share of the country's total wealth. If this trend
continues, the wealthiest 20% of households will keep increasing
their share at the expense of the other 80%. If unchecked, this
could threaten the stability of functioning democracies, including
social cohesion, government institutions, and economic systems.
This disparity in income and wealth
distribution primarily arises from economic freedom, a core element
of democracy and a key force behind market economies. However,
beyond economic freedom, other factors influence how wealth is
distributed, including economic policies, private equity, trading
platforms, professional networks, inherited wealth, and various
other tangible and intangible assets accessible mainly to the
wealthiest. While it may seem unfair, these wealth-related
advantages are not illegal. Still, since this wealth can generate
passive income, it would be liable for a separate wealth tax,
especially for the ultra-wealthy.
The challenge faced by democracies adopting mixed-market economic
systems is ensuring that national wealth, resulting from factors
such as income, household savings, and asset returns, is distributed
as fairly as possible among households. There is no doubt that the
system favors wealthier households, which have the resources,
knowledge, and networks to exploit it. If a mixed-market economic
system inherently favors more affluent families, what measures can
be taken to support the disadvantaged and create a level playing
field for less privileged individuals?
Middle class burdened by taxes and
costs:
The middle class in Ireland primarily comprises practicing professionals,
skilled tradespeople, small business owners, and productive farmers.
It is the primary engine of the economy, providing the intellectual
property, knowledge base, expertise, and labor necessary to sustain
the economy.
The distribution of wealth should
reflect this reality, but because of an uneven progressive tax
system and high living costs, many middle-class households have
little or no disposable income. They rightly see themselves as
victims of social decline, shortsighted government policies, and
greed-driven inflation: issues that, if left unaddressed, could lead
to an uncertain future for middle-class families. As a result, many
of Ireland’s brightest sons and daughters are leaving in search of
better opportunities.
Statistical evidence on inequality:
The data on
wealth inequality in Ireland is from the Household Finance and
Consumption Survey (HFCS) 2020, published in May 2022 by the Central
Statistics Office (CSO). In the survey's Income and Wealth
Inequality section, Figure 8.2 shows the distribution of cumulative
income and wealth across households along a Lorenz curve.
The Gini
coefficient is a statistical measure of inequality that ranges from
0 to 1, where 0 indicates perfect equality and 1 signifies complete
inequality. Along with the Lorenz curve’s graphical depiction of
inequality, the following data, derived from the HFCS survey, is
based on cumulative totals.
·
10% of households held 1.8% of gross household income
and -0.6% of net household wealth.
·
30% of households held 9 % of gross household income and
0.4% of net household wealth.
·
50% of households held 21.4% of gross household income
and 7.8% of net household wealth.
·
70% of households held 40.4% of gross household income
and 23.3% of net household wealth.
·
90% of households held 70.1% of gross household income
and 54.3% of net household wealth.
·
The top 10% of households held 29.9% of gross household
income and 46.6% of net household wealth.
·
The Gini coefficient for gross household income was 0.43
and for net household wealth 0.65.
Although these percentages indicate
significant inequality in gross household income and net household
wealth, they align with those of most other European countries with
market-based economies. However, some European countries have lower
Gini coefficients, including Norway’s 22.7%, Slovakia’s 23.2%, and
Slovenia’s 24%, compared to Ireland’s 29.2%.
Source: Gini Coefficient by Country
2024 (worldpopulationreview.com).
Analyzing the Lorenz curve in the
linked HFCS survey clearly shows that middle-class households are
disproportionately represented in terms of their share of the
cumulative national income and wealth. The main reason for this is
that middle-class households face proportionally higher taxes than
upper-class households, which often have other sources of income or
are independently wealthy.
Tax system overhaul:
Wealth
inequality would be a top priority in the proposed federal republic
outlined in this publication. Recognizing that the mixed-market
economic system currently driving Ireland’s economy would continue
to do so in a reunited Ireland, as it remains the best system
despite its flaws and is also the system most Irish people want,
every reasonable effort would be made to close loopholes that skew
the distribution of the nation’s wealth toward the higher
percentiles of households. Regulations and loopholes that favor the
upper classes at the expense of others would be eliminated or taxed
fairly and equitably. Manipulating the current system of taxes and
social programs would not create a sustainable solution to wealth
inequality. To achieve this goal, the existing tax system would be
reformed entirely to ease the burden on the middle class. To offset
the resulting revenue shortfall, a wealth tax would be imposed on
the ultra-wealthy.
Income inheritance reform: Another
issue related to wealth that needs updating is the inheritance tax.
The key question is how much of the billions held by some
individuals can be passed down to future generations as inheritance.
Logically, it’s impossible for anyone to earn billions in a lifetime
through honest work or well-managed investments. Such a massive
fortune could only be accumulated by exploiting the system.
Therefore, the amount of a large fortune that future generations can
inherit must be limited, as they do not have a constitutional or
divine right to live privileged lifestyles at the expense of
ordinary citizens. The era of dynasties is over.
Social services review:
Along with
overhauling the tax system, a comprehensive review of the social
services system and related programs would be conducted to evaluate
their effectiveness and fairness. This review seeks to understand
why issues like poverty, homelessness, addiction, lawlessness, and
similar problems continue to grow and take up a significant portion
of the nation’s resources. This would be completed before allocating
more resources to services that do not address the root causes.
It’s understood that a certain
percentage of any population, through no fault of their own, would
need help to survive. It’s a national duty to make sure their needs
are met. It’s also understood that some individuals manipulate the
system to collect welfare or other benefits they are not entitled
to. To fix this, eligibility criteria, compliance, and enforcement
must be core parts of the welfare system.
Social services decentralization:
As Ireland
transitions to a Federal Parliamentary Republic after reunification,
social services would no longer be solely the responsibility of the
national government. Instead, regional authorities would oversee
delivery systems, eligibility criteria, quality assurance,
compliance, and enforcement. An inter-government agency would manage
policy development, draft legislation, regulations, and procedures
for quality and compliance, and promote best practices. The agency
would also handle all data storage and retrieval systems for the
regions.
Giving local and regional control over
service delivery means testing, quality assurance, compliance, and
enforcement would help resolve many issues associated with
centralized control.
In conclusion, this document
offers a strategic vision for redistributing national wealth in a
reunified Ireland, anchored in broad goals and guiding principles.
It is not an action plan, but a conceptual framework: a foundation
for future planning, a catalyst for collaboration, and a commitment
to shared prosperity in a renewed republic.
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