Inequality
The image below divides the world's population up into four quarters based on wealth the wealth people own. The poorest are to the left and as you move right they become richer, leading to the richest on the far right....
The big blue human on the left represents 68.7% of people on earth which encompasses nearly 6 billion of the 8 billion people on earth[1] and shows that they have less than $10,000. Let that sink in for a moment, the majority of the people on this planet live on less than 3% of its wealth (in red above). The next, blue person, represent the next quarter if people on the earth. This section owns $10,000-$100,000 in wealth which is around 23% of the population on earth. If you combine the largest and second largest blue people together you can see that 7.5 billion people i.e. 91.6% of people earn less than $100,000. What's very revealing is that around 8.4% of the world's wealth, 41% belongs to the rest of the lucky 0.5 billion or 500 million people on earth.
Tax rates
The majority of government taxes are based on income[2] not existing wealth. So someone like Jeff Bezos or Elon Musk might have a gajillion dollars in shares but as they havent been sold, there is no income and therefore no tax. Putting this aside for a moment, let's have a look at income taxes around the world.
Most income tax rates are progressive meaning someone earning <$10,000 should, quite rightly only pay a small percentage of their income to the government whereas someone in the next bracket say $40,000 should pay a slightly higher tax and someone above this would pay even higher. There are two major issues here:
- Around the world the tax bracket levels of too early. The Laffer curve is often quoted here as higher tax can be a disincentive to work, there is some merit in this however modern analysis has found that the top of the curve should be 70% not 40% which is seen around the world[2].
- Tax havens[3]. As a wide range of leaks have revealed, even with a lower tax rate many individual entities move abroad to tax havens.
References
- ↑ United Nations Department of Department of Economic and Social Affairs:World Population Prospects published in 2019, accessed via this link on 10th February 2022..
- ↑ 2.0 2.1 https://treasury.gov.au/review/tax-white-paper/at-a-glance#:~:text=The%20major%20sources%20of%20state,of%20local%20government%20tax%20revenue.
- ↑ https://www.cbc.ca/news/offshore-tax-haven-leaks-panama-pandora-paradise-papers-1.6205447