The “Skewed” Rich

Oxfam in its latest report found the world’s 26 richest people own the same wealth as 3.8 billion people at the bottom of the scale. The rich billionaires had their fortunes grow by USD2.5 billion each day in 2018. The world’s richest man, Amazon CEO Jeff Bezos saw his fortune increase to USD112 billion in 2018.

Oxfam warned that government were exacerbating inequality by underfunding public services. In addition, they under-tax the wealthy. In the U.S., congresswomen Alexandria Ocasio-Cortez has called for the ultra-rich to be taxed up to 70%. In Europe, the “yellow vest” movement is demanding repeal of cuts to wealth taxes on high income earners. The super rich and corporations are paying lower rates of tax over decades while humans suffer in terms of hospital care and educational opportunities.

Despite a reduction in official income inequality, the absolute earnings gap between Malaysia’s top 20 per cent and others have doubled. This is based on a study by Khazanah Research  Institute in October 2018.

Malaysia’s Gini coefficient has fallen from 0.513 in 1970 to 0.399 in 2016. But the T20 saw their household income rise to RM16,000 by 2016 (from RM9,000 in 1995) while the M40 saw income rise to RM6,000 (from RM3,000) and B40 from RM1,000 to RM2,000 for the same period. The gap between T20 and M40 is now RM10,000 and that between T20 and B40 at RM14,000. It is on the “shoulders” of the PH Government to redress the issue.

Perhaps, one way is to tax annual personal income in excess of RM10 million at 50%, with corporations paying a similar rate when pre-tax profit exceeds RM1 billion. That will fund some educational and health programmes or reduce current fiscal deficit.

References:

1. Oxfam: World’s 26 richest own same as poorest half on humanity (https://www.freemalaysiatoday.com)

2.    Study: Malaysia’s income gap doubled in two decades, The Star (Monday, 15 October 2018)