The wealth gap is widening, and it's not just a problem for the less fortunate. Australia's median wealth has taken a hit, dropping by nearly 7% since 2020, while the rich are getting richer. This is despite the fact that the number of millionaires in the country has skyrocketed, with over 25,000 new millionaires joining the ranks last year alone. What's going on here? And what does it mean for the future of our society? Personally, I think this is a wake-up call for us all. The fact that the average wealth is rising, but the median wealth is declining, highlights a growing divide between the wealthiest and the broader population. This is not just a problem for the middle class; it's a problem for everyone. What makes this particularly fascinating is the global context. While Australia's median wealth has taken a hit, other countries are experiencing even more dramatic shifts. For instance, median wealth in Japan has jumped by 50% in the 2020s, while in India it has increased by 20%. This raises a deeper question: is the wealth gap a universal problem, or is it specific to certain countries and regions? In my opinion, the answer is both. The wealth gap is a global issue, but its impact and causes vary from country to country. One thing that immediately stands out is the role of housing. Property wealth and compulsory superannuation have helped Australian adults have the third-highest median net wealth in the world, but this has come at a cost. The biggest driver of inequality by wealth is housing, and this is a problem that needs to be addressed. What many people don't realize is that the wealth gap is not just a numbers game. It's a reflection of the broader social and economic trends that are shaping our world. The fact that the rich are getting richer, while the median wealth is declining, suggests that the market forces driving increased inequality in the distribution of wealth are at play. This is where things get interesting. If you take a step back and think about it, you'll realize that the wealth gap is not just a problem for the less fortunate. It's a problem for everyone, because it's a symptom of a broader issue that affects us all. The question is, what can we do about it? One possible solution is an inheritance tax. This is one reason why I, along with a handful of other economists, am calling for an inheritance tax. The case for such a tax is particularly compelling given that about $5.5 trillion dollars of wealth will be passed from boomers to their kids over the next 25-30 years, and most of those 'kids' will be in their 50s and 60s when they get it. In my view, this is a missed opportunity to address the wealth gap and promote a more equitable society. If instead of stamp duty on property transactions, we had a broadly based land tax, that would do some of it as well. However, it's not just about the tax. We need to address the underlying market forces that are driving increased inequality in the distribution of wealth. This means rethinking our approach to housing, superannuation, and other factors that contribute to the wealth gap. In conclusion, the wealth gap is a complex and multifaceted issue that requires a comprehensive solution. It's not just a problem for the less fortunate; it's a problem for everyone. By addressing the underlying market forces and implementing policies like an inheritance tax, we can work towards a more equitable and just society for all.
