Wednesday, August 5, 2009

A profile of Ireland’s self-employed ‘fat-cats’!

celtic tiger I hope it would not be too impertinent too suggest that a symptom of an advancing society is an evolving middle class and that their evolution is reflected in a sense of growing prosperity and rightly so.  What was the purpose of The Celtic Tiger is it was not to achieve that outcome?  I spent an hour, or so, this afternoon analyzing the fortunes of two cohorts: self employed earning between €100,000 and €200,000 between 2002 and 2006 and self-employed earning over €200,000 during this time-frame. 

My preference for this five-year period is that I have fairly complete and accurate data from which to base my comments. 

I will write separately on another day with my analysis of those with unearned income and dividends! Stay tuned Wilma!! 

Unfortunately, the consequences of an Irish banking system that has collapsed to something comparable to that of the fringes of the Third World will ensure that this data reflects a high-point rather than a waypoint because he Irish economy is somersaulting into somewhere natural light never penetrates.

The Department of Finance published the July Exchequer Statement today.  This shows that income tax receipts to the end of July at €6.356 billion compared to €6.879 billion last July,  The adverse difference is €523 million.  Last April, after the second Budget, the Department of Finance forecast income tax receipts of €6.541 million so this component is off target by €185 million, or 2.8%. Total tax receipts in July 2009 are 17.6% lower than 12 months ago.  That, in money terms is €3.98 billion after the seventh month of this year.

The Report of An Bord Snip Nua sought cuts of €5 billion and that has created a feeding frenzy among the subsidy hunters.  The banks have pocketed €11 billion this year and their begging habit is unlikely to abate.  It would take an inspired mystic to figure out where this country is heading economically. 

Most government departments have pared spending with the exception of the Department of Agriculture, Fisheries and Food which has dished out €218 million more than a year ago to appease the egg-throwing hobby farmers.

Capital investment at the end of March 2009 was down 34.1% compared to a year earlier.

The number of redundancies notified to the Department of Enterprise, Trade & Employment in July – 6,350, were 65% more than last July.

There is so much misalignment between income, costs, confidence and aspirations that the economy may be castrated and I hope that the details below are not an episode of ‘Gone With the Wind’!

Silver Club: 
Self-employed earning €100k to €200k

The number of self-employed earners increased by 66% from 8,227 to 13,677.  While the number of earners increased, their average income slipped ever so slightly from €137k to €135.6k.  Their cumulative tax payments increased from €246.79 million to €358.84 million.  But their tax wedge dropped from 21.9% in 2002 to 19.3% in 2006.  I bet we will hear more from the subsidy bounty-hunters about this.  They will see this group of under 14,000 as a target to hunt for higher and higher taxes to that they can feed bountiful subsidies to their clients and take national credit for it!

Platinum Club:
Self-employed earning €200k+

This, of course, is a more prestigious club but it did manage to increase membership from just shy of 5,000 to almost 9,400 by 2006.  But, unlike their junior partners in the Silver Club, their average earnings increased quite significantly from a tad over €400,000 in 2002 to a sliver under €600,000 in 2008.  The tax payments in Platinum Club are more muscular.  Their collective contribution to the national kitty increased from €541.52 million to €1.46 billion and they managed to maintain their tax wedge at around 26%. 

A glance at the annual reports of various state agencies would convince you that among the many virtues and advantages that Irish society confers on them is saturation political patronage.  They simply love button upholstery made from well tanned hide!

Demographic Profile

Silver Club: €100k to €200k

Number of Taxpayers



& Change

Single males




Single females




Married, both earning




Married, one earning

















Platinum Club: over €200k 

Number of Taxpayers

2002 2006 % Change
Single males 494 1,193 141%
Single females 171 416 143%
Married, both earning 2,474 5,379 117%
Married, one earning 1,738 2,226 28%
Widowers 54 106 96%
Widows 31 67 116%
TOTAL 4,962
9,387 89%

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