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Should the wealthy pay a charity levy?

Wealthy pay, magnifying glass

A world where the wealthiest pay a percentage of income to charity would be a better world, sustainability experts at Monash University have argued.

Researchers at the Monash Sustainable Development Institute, Professor Dave Griggs and Associate Professor Liam Smith have this week argued that altruism may be a “win-win” situation for everyone.

Proposing a “giving for good” system in which those earning an income of around US$200,000 are required to contribute a small percentage of income on a rising scale to charities of their choice, the researchers said that charitable giving benefits both the givers and the receivers.

“It benefits those doing the giving and those receiving the donations and changes how we see the richest ‘one per centers’. Perhaps more importantly, how they see themselves. The more you have, the more you give, the more you do for society and the higher that society holds you in its esteem,” Mr Smith said.

The researchers aren’t the first to suggest additional levies on the wealthy, and the idea bears a resemblance to the Abbott government’s Budget Repair Levy imposed on Australians earning annual incomes greater than $180,000 between 1 July 2014 and 1 July 2017.

Speaking on the system in the Public Money & Management journal, the researchers noted that the richest one per cent of the world’s population owns as much as the rest of the world combined, according to an Oxfam 2017 report.

“While some question these particular figures, whatever figures you use show a remarkable concentration of the world’s wealth in the hands of very few people.”

Inequality fuels drug abuse, poor social mobility, poor mental and physical health, violence, imprisonment, teenage pregnancies and poor child wellbeing, while better distribution of wealth has the power to boost trust in governments and the use of taxes, the researchers said.

“Clearly some mechanism is required to close the gap between the poorest and the richest in society,” they said, arguing that there are two ways to do this. The economic “pie” can be increased or the size of the “slices” can be reviewed.

In theory, growing the pie should make it possible for the poorest to boost their wealth at a faster rate than the richest. However, the researchers pointed to ACOSS 2015 research finding that that is “exactly the opposite of what is actually happening”.

The other option isn’t perfect either, given the sheer unpopularity of taxes thanks to mistrust in government spending and poor efficiency.

The researchers said that a “charity levy” is a different way of looking at the pie.

“It begins to address the issue of wealth inequality, but there are other aspects that are also potentially attractive,” they said.

“You get to decide where your donation goes, so this system retains an element of individual sovereignty and hence overcomes the lack of trust in [the] government to spend your money wisely.”

A recent Nest Egg poll found that most readers (53 per cent) consider a wealthy Australian to be one earning an annual taxable income of at least $200,000, while 22 per cent think you’re wealthy if you’re earning between $150,000 and $200,000. Only 15.6 per cent think you’re a wealthy Australian if you’re earning between $80,000 and $150,000, while 9 per cent think you’re wealthy if you’re earning between $60,000 and $80,000.

Should the wealthy pay a charity levy?
Wealthy pay, magnifying glass
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