Rich keep getting richer with billions in tax breaks amid calls to narrow Australian wealth divide

Ordinary Australians struggle to make ends meet while the richest enjoy billions in untaxed capital gains, a new report claims.

The wealth of Australia’s richest 200 people almost tripled as a proportion of the national gross domestic product over the past two decades, Australia Institute analysis of the Financial Review’s Rich 200 list has found.

“Australia is getting more unequal,” said David Richardson, a senior research fellow at the think tank.

The wealth of those on the list rose from the equivalent of 8.4 per cent of national GDP in 2004, to 23.7 per cent of GDP by 2024, the institute’s analysis indicates.

Excessive wealth inequality can worsen social cohesion, increase political polarisation and stifle economic growth, according to the International Monetary Fund.

“Wealth inequality is growing rapidly, and the tax system is making it worse,” Mr Richardson said.

The institute estimates the failure to fully tax realised capital gains in 2023/24 cost the government $19 billion in foregone revenue.

It is calling for more comprehensive capital gains tax, an annual wealth tax and the introduction of a wealth transfer tax on inheritance.

Australia currently has no inheritance or estate taxes, sometimes called “death duties”, but the institute’s report noted that 24 OECD countries including the UK, US, Switzerland, France and Germany were successfully operating such taxes.

Only France, Norway, Spain and Switzerland have wealth taxes in place.

“Growing economic inequality is making life worse for millions of Australians and holding our country back,” he said.

“It’s harder to realise our collective potential and grow the economic pie when millions of Australians are being forced to fight for crumbs that fall from the tables of the wealthy.”