Every so often, we read reports concerning the distribution of wealth among private individuals, nationally and globally. These reports often show that a tiny proportion of the population appears to own and control a massively disproportionate fraction of the wealth of our State, and sometimes it appears that this imbalance is worsening at the expense of the less well off.
In an era where money in the form of private capital is ever more free to travel and reside at the choice of its owners, we also encounter the phenomenon of non-resident citizens who, having accumulated major resources and incomes, change their tax residence so as to exempt themselves from our progressive income-tax rates in relation to their worldwide earnings.
It is hard to see how such a capacity on the part of the super wealthy to exclude themselves totally from tax liability to the State which has enabled their wealth to accumulate can be defended in terms of social justice. Why should the immensely rich be permitted to opt out fiscally from liability to the homeland that enriched them? Why should our progressive system of taxation be easily avoidable by those most in a position to contribute a fair share? Why should wealthy citizens continue to acquire, manage and control assets – commercial, agricultural and financial – in the State while paying little of their worldwide income to it?
You may be surprised to learn that, when in government, the Progressive Democrats repeatedly called for a minimum personal income tax regime to be applied to all citizens, regardless of their choice to reside outside the state for more than 183 days in every year.
Should the Irish State tax its non-resident tax expatriates at, say, 20 per cent or 30 per cent of worldwide income if they could not demonstrate that they had been liable for and had paid a similar proportion of their income in taxes elsewhere? Is it just or fair that by flitting around the world to tax havens or multiple temporary residences, the Irish super wealthy end up paying little or no income tax at all, while enjoying ownership of their assets worldwide, including in Ireland?
To be clear, I am not suggesting that the super wealthy should not be allowed to reside wherever they wish, as long as they can legally do so. I am merely querying whether any useful social, financial or political purpose is served by imposing progressive and redistributive tax burdens on those who cannot afford to live wherever they want.
The OECD has invested 25 years of effort into the project of minimum international corporate tax rates. But what would be wrong with requiring the super wealthy to pay minimum international rates of personal income tax? Does the world owe tax-free status to the super rich?
While globalists will defend mobility of capital, and while there may be some arguments for defending mobility of capitalists, I find it difficult to see any argument against nation-states insisting that super-wealthy members of their own community make a fair contribution in income tax – at least to the society which originally enabled them to prosper.
He may have his critics, but Ryanair’s Michael O’Leary has always affirmed his intention to remain Irish tax resident. And we can all be sure that a clever businessman like him will minimise his Irish tax liabilities, as he is entitled to do. But what about the other Irish super rich?
At one point, they almost succeeded in increasing the 183-day threshold for tax residence in exchange for making voluntary philanthropic donations to worthy causes in Ireland. Although they lobbied hard for such an extra concession and persuaded some Fine Gael ministers of its merit, ultimately their selfish project was abandoned.
Article 45 of the Constitution obliges the Oireachtas, as a principle of social policy “to promote the welfare of the whole people” by establishing “a social order in which justice and charity shall inform all the institutions of the national life”.
The Irish State and its parliament are bound by Article 45 to adopt policies that ensure that “ownership and control of the material resources of the community may be so distributed among private individuals and the various classes as best to subserve the common good”.
The same Article also requires the State’s policy to encourage ownership of agricultural land and allow as many family farms as possible to exist in economic security.
Are we missing something? Is there some economic or constitutional justification for pampering the super wealthy to the extent that we do?
If reasonably progressive taxation – which in Ireland means that the top 10 per cent of income earners pay around 60 per cent of income tax – is socially and economically justified, why does the world allow its super wealthy to opt out of any moral or legal obligation to pay their fair share? This is not a matter of right or left, so much as a matter of right or wrong.