Inequality

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Revision as of 10:44, 5 April 2022 by WikiSysop (talk | contribs)
World inequality

The image above divides the world's ~9bn people into four quarters based on the wealth they own. The poorest are to the left and as you descend to the right people become richer.

Top-1-percent
Top-1-percent

The big blue man on the left represents the poorest, encompassing 68.7% of people[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 overall wealth (in red above). The next, blue person, represents the next quarter of 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:

  1. 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].
  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

  1. 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. 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.
  3. https://www.cbc.ca/news/offshore-tax-haven-leaks-panama-pandora-paradise-papers-1.6205447

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