Wealth inequality in Australia has dramatically worsened over the past 20 years, mainly being driven by investment properties (excluding the family home).
The richest 10% have seen their property assets grow by an average of $2.2 million per household over the last two decades.
Wealth is being taxed more generously than income, with $100 billion of tax concessions going to the three biggest assets: other property, superannuation, and the family home.
Key points:
- 'Other' property is the most concentrated with half of their increase over the last 20 years going to the richest 10%. This was worth $900,000 per household.
- The poorest half of Australian households got just 7% of the benefit ($24,000 over 20 years).
- Superannuation was the second fastest growing of the three major assets, with 37% of the last 20 years growth going to the richest 10%. The bottom half received 15%.
- Huge tax concessions worth $100 billion per year are going to the three major assets. These concessions reduce taxes on wealth and add to wealth inequality.
- Investment properties benefit from negative gearing and the CGT discount, with 73% of their benefit going to the top 10% of income earners.
- Cracking down on these tax concessions would reduce wealth inequality.
Research from The Australia Institute shows closing tax loopholes on wealth will make housing more affordable and reduce wealth inequality.
The current system is making housing more unaffordable for the average Australian, while further entrenching wealth inequality. For every dollar of tax concessions directed to the bottom 10% of Australian households, the richest 10% receive $40.
"The housing crisis is making wealth inequality worse and investment properties are concentrating housing into the hands of fewer and fewer people," said Matt Grudnoff, Senior Economist at The Australia Institute.
"The housing crisis and wealth inequality are two sides of the same coin.
"We know that wealth inequality is bad for social cohesion, democracy, and prosperity.
"We also know the pain that the housing crisis is causing. Both of these can be improved by cracking down on tax loopholes for the wealthy."
