Tuesday, September 01, 2020

This is why we need a wealth tax

The Household Economic Survey shows that wealth inequality is out of control:

The extent of wealth inequality in supposedly egalitarian New Zealand has been laid bare by figures showing the wealthiest individuals have over NZ$140bn (US$93bn) stashed away in trusts – and overall have nearly 70 times more assets than the typical Kiwi.

The new data, drawn from the 2017-18 Household Economic Survey, are likely to underestimate true inequality, as the ultra-wealthy are generally reluctant to take part in such surveys.

The data show that New Zealand’s wealthiest 1% of adults – around 38,000 people – have $141bn in trusts. Another 150,000 or so people, rounding out the rest of the wealthiest 5%, have trusts worth a further $122bn.


Overall, the wealthiest 10% have 59% of all the country’s assets, and the middle classes around 39%. That leaves the poorest half of the country with just 2%.

This is simply not the sort of country we want to be. And its not just undesirable, but also dangerous, given how wealth is leveraged into political power, which is in turn leveraged to protect wealth. As for how to fix it, the answer is wealth taxes to prevent excessive accumulation of wealth, and inheritance taxes to prevent the wealthy from passing on too much (obviously with trust-busting and beneficial ownership provisions to prevent the wealthy from hiding their assets). And it seems easy enough to set the thresholds so it doesn't impact the middle class - basicly, people who own their own homes and not much else - at all.

We've done this before, in the 1890's, when we used a land tax to strangle New Zealand's incipient rural aristocracy and preserve us as a middle-class country without such parasites. We can - and should - do it again.