Money, money, money. It’s a rich man’s world.

The headline conveys a tale of acquisition, narcissism, and unimaginable wealth. The world is overflowing with money inherited, earned honestly or obtained through corrupt means. Nevertheless, little is acquired through equal opportunities. It is a world where the rich have a significant advantage. It is a rich man’s world.

Let’s begin our investigation with some sobering statistics.

Last year, before legislation to fix the problem, research by the Australia Institute showed that:

“… the cost to the federal budget of generous superannuation tax concessions was on par with the cost of the entire aged pension and more significant than the total cost of the NDIS as a whole in 2022-2023.”

And Oxfam’s latest report, “Inequality Inc.,” said that the income of Australia’s 47 billionaires doubled in the last two years to $255 million.”

If you are amazed by those numbers, you are not alone. I am, too. Never before have the wealthy been so well taken care of. 

Tax avoidance through family trusts is also an industry unto itself.

“Earnings can be allocated to family members with low income from other sources so that the taxable income attracts the lowest tax rate possible.

In some circumstances it is possible to reduce the tax bill to almost zero.”

As if that’s not enough:

“The rich also get rewarded with tax concessions to employ armies of lawyers, financial consultants, and accountants to arrange their tax affaires to avoid tax.”

While Australians face a cost-of-living crisis, billionaires have been raking it in. One report said that 897 self-managed super funds produced $1 million or more in income.

We now have “more wealth in the hands of 47 people than around 7.7 million Australians,” – just absurd.

And the wealth of:

“… the three wealthiest Australians, Gina Rinehart, Andrew Forrest and Harry Triguboff, has more than doubled since 2020 at a staggering $1.5 million per hour.”

That inequality of such magnitude should exist in a wealthy country like Australia should open our thinking toward a wealth tax.

SOS Australia rightly points out that:

“… the rest of the community bears the “cost of these tax concessions. It siphons off revenue that would be better used to fund schools, TAFE and universities, as well as other services such as health care, mental health, public housing, unemployment benefits and so on. As the economists Emmanuel Saez and Gabriel Zucman have observed, tax avoidance is ‘the triumph of injustice‘.”

They add that:

“To compound the injustice, the wealthiest families in Australia also benefit from over $1 billion a year in government funding for the elite private schools they send their kids to. Figures published on My School show that 126 of the wealthiest schools in Australia received $1.25 billion in government funding in 2020. Not only do the rich avoid paying taxes, but they get massive subsidies from the taxes paid by the rest of the community. The sheer scale of the avarice is gobsmacking.”

The Australia Institute also points out that tax concessions for super items “such as medical benefits are $31.3 billion, and assistance to the states for hospitals is $26.6 billion.”

You have to wonder how individuals accumulate large sums in superannuation while receiving such generous tax benefits, not to mention negative gearing, franking credits, and CGT (capital gains) discounts.

When you stop to consider it, the situation is quite scandalous. How did we get here? Is it the result of consecutive conservative governments being too generous while in power? Or is it due to the Labor government’s reluctance to take action? Once you’ve given something, it’s tough to take it back.

I wanted to understand why significant wealth inequality exists in our society. I wondered why both conservative and left-leaning governments tend to reward those who already have a lot of money rather than support those with less. It seems counterintuitive that this pattern persists across different political ideologies.

A conservative philosophy might suggest they should, but it doesn’t say it should be unfair. Conversely, Labor philosophy unequivocally supports the less well-off.

I typed into my search engine, “Why do the rich in Australia receive so many tax breaks?” Google provided a multitude of headlines to peruse.

As I wrote this, news hit the airwaves that the stage three tax alterations would advance more equitably. The Opposition is now up in arms, of course, but logic has won over politics. They will shout broken promises, but Labor can hardly go against its philosophy and still maintain respect with its supporters.

The Australian started its salvo with six stories on its front page about the tax cuts the day after the announcement – none with equality in mind.

Another article I read was by Aimee Picchi, from December 17, 2020, for MoneyWatch. Although it wasn’t Australian and a little dated, it contained a thread to what I sought. Picchi wrote that:

“The new paper, by David Hope of the London School of Economics and Julian Limberg of King’s College London, examines 18 developed countries – from Australia to the United States – over 50 years from 1965 to 2015. The study compared countries that passed tax cuts in a specific year, such as the U.S. in 1982 when President Ronald Reagan slashed taxes for the wealthy, with those that didn’t, and then examined their economic outcomes.” 

The analysis discovered one significant change:

“The incomes of the rich grew much faster in countries such as the USA, where tax rates were lowered, but instead of trickling down to the middle class, the tax cuts for the rich accomplished much more. Reagan inadvertently or deliberately helped the rich become more wealthy and exacerbated income inequality.”

Although the report doesn’t cover the period of Trump’s Presidency, his tax cuts lifted the ultra-rich’s fortunes even further. 

A piece by The Guardian’s Stephanie Convery from 2023 tells us that the:

“Australian data showed that a wealth tax of just 2% on the country’s millionaires with wealth over $7m, 3% on those with wealth over $67m, and 5% on billionaires would raise $29.1bn annually, enough to increase income support payments to the Henderson poverty line of $88 a day for 1.44 million people.”

Tax reform is necessary to generate additional revenue for the government, which can then be used to reduce poverty and improve human services.

We need tax reform to help those struggling with poverty and improve access to essential human services. By generating additional government revenue, we can work towards creating a more compassionate society that supports and cares for all of its citizens.

My last Google search was surprising. I found it hard to believe that more than 250 ultra-wealthy individuals were urging politicians to increase their taxes. It happened at the World Economic Forum in Davos on January 15-19, 2024.

“Our request is simple: we ask you to tax us, the very richest in society,” the wealthy people said in an open letter to world leaders. “This will not fundamentally alter our standard of living, deprive our children, or harm our nation’s economic growth. But it will turn extreme and unproductive private wealth into an investment for our common democratic future.”

Like I said: I was surprised.