In the context of current federal election campaigns and projections about wealth transfer across generations, it's time to reintroduce death duties. Director of the Australian Institute for Business and Economics, Professor John Mangan writes for The Conversation.
Without them, our rich will get richer
Since death duties went, Australian income inequality has climbed, with the standard measure (known as the Gini coefficient) climbing from 0.27 to 0.32 between 1982 and 2016 on a scale where a result of zero would mean income was equally shared and a result of 1 would mean one person earned all the income.
It’s harder to tell what’s happening to the distribution of wealth. The figures don’t go back as far, and the global financial crisis disrupted what appears to have been a long term trend for the distribution to become less equal. The Gini coefficient for the distribution of wealth is 0.52, much worse than in it is for the distribution of income.
The removal of death duties is far from the only potential reason.
Others include:
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Demographics. More Australians are older and they are more likely than younger people to own homes whose values have shot up in two waves around the turn of this century and the middle of the 2010s. Almost 90% of the gain in wealth in the past 20 years has been in households headed by someone over 45 years.
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Income growth. Wage growth has slumped during the past decade, leaving higher housing, sharemarket and other asset prices as the chief form of wealth growth.
Untaxed inheritance is likely to matter more. Over the next 20 years about 13% of Australia’s current population is expected to reach its life expectancy, meaning 3.18 million people are likely to die. Their net worth accounts for 27% to 37% of Australia’s total wealth ..
