The recent Budget, and much of the commentary which accompanied it, contained recurring references to ‘middle-earners’ – almost all of it without any basis in the various numbers available on the Irish income and earnings distribution.
New data from the Revenue Commissioners, published following Budget 2016, offers a chance for a more informed view of the structure of earnings in Ireland. The Revenue’s projection for next year is based on the most recent completed taxpayer statistics uprated to account for increase in earnings and changes in the composition of the population and labour force. The data looks at the gross income of ‘taxpayer units’ where a unit is either an individual or a jointly assessed couple.
The Revenue’s projection is summarised in the chart and shows that:
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just over one-third of tax cases record incomes below €20,000;
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30% of tax cases lie between €20,000 and €40,000;
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21% record an income of between €40,000 and €70,000;
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overall, 86% of tax cases are below €70,000 per annum;
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at the top of the distribution, 7.5% have incomes between €70,000 and €100,000, 6% of tax cases had an income in excess of €100,000 and just over 1% had an income in excess of €200,000.
So, where is the middle? Statistically, the middle income earners are those tax cases with income of between €27,000 and €30,000. Looking at this another way, the middle 20% (quintile) of income taxpayers lie between €25,000 and €40,000.
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Complementing this data is a number of other sources:
Indicator 4.5a in the latest edition of the NERI’s Quarterly Economic Facts (Section 4 p75-76) provides a further insight into the latest completed (not projected) income taxpayer distribution data from the Revenue Commissioners.
A recent NERI research inBrief took a closer look at earnings on an individual, rather than tax unit basis, and is available here: