Taxation and Social Welfare

Some reflections/ research problems emerging from Brian Nolan and Tim Callan’s article: Taxation and Social Welfare in ‘Bust to Boom’.

The main research problem (for me) that emerges form this article is the question: who gains and who loses from the tax and welfare changes over the past 15 years?  The article is interesting (though technically/quantitatively complex) in that it inquires into the relationship between the social welfare and taxation system in Ireland. The relationship between the two, and the impact this has upon the type of ‘welfare regime’ that emerges requires further investigation.

Essentially, budgetary policy has allowed the lowest incomes fall further behind average incomes, and significantly favored top income earners.

Also, the importance of income tax to overall revenue is unusual in Ireland. This is not because Ireland has high rates of income tax (quite the contrary) but Ireland has very low rates of social insurance contributions. Why? to ensure a competitive labour market, i.e. employers pay very little tax on labour as well as capital-profits. What difference, if any, would increased social insurance contributions make to the institutional framework of Ireland’s welfare state?

Main research problem: If the removal of poverty is a primary objective of the social welfare system, how effective has Ireland been? Do structures or levels of payment make the most impact upon poverty reduction?

The ‘purchasing power’ of low income groups may have improved, but what about these incomes relative to average income/wealth?

Furthermore, it is often argued that Ireland has a pay-related welfare state. Whilst minimal levels of security and service are guaranteed to all citizens, the tax breaks afforded to the middle classes (i.e. private health insurance and private pensions), reinforce rather than mitigate market inequalities. Those with advantages generated in the market supplement their basic rights with their own private resources. Does this create a two-tiered system? These are normative questions that emerge from empirical studies of Ireland’s tax and welfare regime.

One response to “Taxation and Social Welfare

  1. Great going Chief. Trying to get through the rest of the reviews. As someone who has departed the academic field but retains interest it’s hard to keep up with new research; you’re doing a fine job of summarising at least some of it.

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