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Piketty split - why soaking the rich won't help anyone

By Graham Young - posted Monday, 7 July 2014


Piketty proposes a 5 to 10 per cent annual tax on capital, as well as inheritance taxes. He also proposes a once-off 15% tax on European private wealth to pay back government debt.

These measures would destroy the wealth not of the top 200, or 1% or whoever, but anyone with only modest means. It would make private business virtually impossible, and what business was possible would be unlikely to grow to any significance.

Wealth would then become the business of government, or grey-suited risk averse investment managers.

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Would they take the risks and reap the rewards that the BRW Rich 200 and their imitators take? And if not, what impact would that have on our collective wealth, especially the most marginalised?

There is something to be said for letting those who are good at business aggregate more of our national assets so that as they enrich themselves they enrich all of us. There is no ethical basis I can think of where we are justified in taking it away from them.

While superficially attractive, the idea that by enforcing equality of financial means, societies advance, has little empirical, and even less ethical, support.

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An edited version of this article was published in the Australian Financial Review.



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About the Author

Graham Young is chief editor and the publisher of On Line Opinion. He is executive director of the Australian Institute for Progress, an Australian think tank based in Brisbane, and the publisher of On Line Opinion.

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