My old friend and fellow tax justice activist, Jim Henry has been busy in the US talking about an issue that is of great concern to me as well, which is wealth inequality.
He has a new podcast out where he is in discussion with others including Paul Krugman. The link is in this tweet. You don't have to agree with it. You can think the US different to the UK. But the reality is that this is a worldwide issue of concern that has to be addressed, and that's why keeping this message going is important:
#NowThis New podcast on “Inherited Wealth†and #taxjustice in the US. James S. Henry, Paul Krugman, + Katharina Pistor speak to Sean Morrow on why wealth inequality in the US is so grotesque — and how easy it would be to fix it. https://t.co/AMCH5TNVUN
— James S. Henry (@submergingmkt) May 25, 2021
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I presume you intend to pass on your property and wealth to your children? Why? I cannot passion anything to my children so why should yours inherit wealth and mine not?..what is the solution? for all wealth to pass to the state or charity?
I may be as generous as my father
He left my £5,000
Ahh so you are saying you will “volunteer” to either leave your wealth to the state or a charity.. I like that. Put your money where mouth is..let’s hope others follow suit
Again though a lot of it comes down to asset price inflation.
When the average house price was about 3x earnings it was possible for most people to buy a house from their own income and savings.
If your parents owned their home and there are a number of variables bit clearly you might expect to inherit something between a year and three years earnings – potentially double that for a couple of course.
A tidy sum of money no doubt BUT not really a game changer.
Now of course with house prices at about 9x earnings most of us cant afford to buy from our income or savings making money from ‘elsewhere’ more important. To say nothing of course of changes to the number of young people going to University & how that is funded.
Secondly as a multiple of earnings the potential inheritance those lucky enough to have parents who were owner occupiers is significantly greater. On top of that you then get the impact of smaller families and more women not having children.
I can think of some young adults potentially in line to inherit the proceeds of not only their parents homes but from other relatives as well, significantly multiplying what they may come into in later life.
If we can put the house price genie back in the bottle that will go some way towards easing the situation.