The key to tackling Australia’s rising wealth inequality and helping middle-income Australians afford their own homes is an inheritance tax – so says a leading economist.
French economist Professor Thomas Piketty, who has earned himself the title of ‘rockstar economist’, told Lateline that Australia’s property tax system is not equitable and it’s making it nearly impossible for middle-income Australians to buy their own homes.
He suggested an inheritance tax would ease the nation’s growing wealth inequality.
Stating his concern about the dangers of allowing a concentration of wealth to remain in the hands of a small number of people, Professor Piketty said it would not be simply “to raise tax for the pleasure of raising tax”.
“The objective must be to reduce taxes for others and in particular for those with middle wages and lower wages.”
Australia, he said, was an outlier because its government did not impose taxes on those who have been bequeathed multi-million dollar properties. Whereas government in the US, Europe and Japan apply taxes of between 40 and 45 per cent to the same after-tax gifts.
According to Professor Piketty’s book, Capital in the 21st Century, which charts the progression of global wealth inequality throughout history, the three richest Australians are in possession of more wealth than the one million poorest.
The largest share of Australia’s national income is going to the top 10 per cent of people, making it considerably more challenging for the younger generation of Australians to own property than it was for their parents about 20 or 30 years ago.
Data shows that the top 10 per cent also happens to be comprised of mostly older Australians.
What do you think? Would an inheritance tax in Australia ease wealth inequality? Can you think of other ways the Government could make housing more affordable?
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