8 Mar 2018
Middle Class Wealth: What went wrong?
- Posted by Dejan Pekic BCom DipFP CFP GAICD, Senior Financial Planner
This is an excellent visual story except that it is wrong.
The middle class is disappearing but it is not the fault of business.
It is also not the fault of high net worth individuals who derive their wealth from business.
The fault is squarely with Government.
It is the role of Government to legislate for the people and to ensure that the wealth derived from society by business ultimately finds its way back into our society.
For example, in the United States the Buffett Rule was proposed by President Barack Obama in 2011 which would have applied a minimum tax rate of 30% on all individuals earning more than US$1m a year but it was not legislated. Why?
In Australia and in the United States, business is allowed to make political donations and to lobby Government but business does not vote. Why?
The primary purpose of business is to create wealth for shareholders who are investors.
Business is a good thing, business is necessary for creating prosperity for our society but business is not Government.
Government makes the rules and business will play by the rules and yes business will push the boundaries but ultimately comply with the law.
The problem with the current rules is that without Government legislating change they will continue to lead to greater and greater wealth inequality.
That is a fact.
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