Some weeks back I saw it mentioned that something like the top 1% of the world’s wealthy had increased their net worth by $42 trillion.
I was staggered. It wasn’t just a big amount or a great amount, it was an unbelievable amount. Trillions and trillions.
The comparison was even more telling, namely that the increase in wealth was found to be 34 times more than the bottom 50% of the world’s population: 34 times is an increase of 3400%.
How can this happen? Here we all are struggling along. Working one or two jobs and with our partner providing a second income and we are still struggling. If we were to deduct petrol, electricity, rent and food from our income, then in many cases there is nothing left.
If we are better off than that, then if we deduct petrol, electricity, food and a mortgage from our incomes, then there is still nothing left. How then is it that the top 1% is getting so much richer, so much quicker?
As the top 1% of the world’s wealthy obtain more and more wealth, they generate more and more wealth.
At the same time, as this is happening to the top 1%, obviously the opposite is happening to the bottom 50%. They are becoming poorer and poorer.
It is simply a matter of maths. If you transfer more and more wealth to one group and that wealth is the only means of producing more wealth, then obviously the wealthy get wealthier. And just as obviously the poor get poorer.
One could argue that this is not necessarily bad, as the rich are paying taxes on their trillions and trillions and these taxes are then being distributed across the rest of society and the rest of the world.
But here of course we are met with harsh reality. The super rich do not pay taxes. They will do anything to avoid taxes. They are basically living in a tax-free world of their own making.
This is a serious matter and perhaps one day I will write about it, but not today.
Today I want to ask a simple question. If the top 1% of the world, who owns 50% of all the wealth in the world, basically pay no taxes then who pays the taxes?
Clearly the impoverished don’t because they have no money. The great bulk of taxes is, therefore, paid by a group in the middle.
In New Zealand this once consisted of the working class and the middle class. The working class paid taxes on their wages via PAYE and the middle class paid tax either on their greater wages or on their income.
But today this simple division no longer works mainly because the working class is now a very truncated class. The working class has, to a large extent, been replaced by the underclass — beneficiaries, unemployed, dispossessed, the homeless. So taxes are paid by a small working class and an enlarged middle class.
The brilliance of the non-tax-paying super rich can be seen in the fact that very, very few middle-class taxpayers complain about the super rich or even just the very rich; they are all far too busy complaining about the poor, the unemployed, beneficiaries and the homeless.
Nero, Caligula and Commodus would all be so proud of them. Divide and conquer has never worked so brilliantly within a society before. The middle class are kept in place by a vague semi-religious belief that "I could be super rich", "that could be me" or "that will be me if only I stop these poor people holding me back".
The simple truth is, however, that unless the wealthy are taxed at a fair and reasonable rate, then the middle and the poor will never substantially improve their lot. So long as the super rich are able to spin their ideology about entrepreneurs, hard work, cutting cost, keeping the poor in their place, less tax and more freedom, then there will never be enough money in the system.
The only solution is that the very rich must be taxed at a rate far higher than that at which they are currently taxed. Then finally the small working class and the middle class may both prosper in a system that values both groups and also the needs of the underclass.
We just need to remove the blinkers that currently stop us from seeing the systemic failings of our current system.
We need to stop blaming the poor for being poor and we need to shift the burden of taxation upwards.
— Bill Verrall is a Fiordland writer.
