What is the Wealth Inequality?
I risk sounding ever so political and I am well aware that there are no easy answers. However, as I provide financial planning advice to people in Wimbledon (and wider afield) I imagine that bringing information to your attention about money and wealth is probably important and in particular the wealth inequality. On a global scale most of Britain is wealthy. My clients are all wealthy in terms of the UK, some very wealthy, however I don’t currently advise the mega wealthy (£10m+).
What is the market value of the US?
So have a look at this video, it takes US opinion and US data, but in practice the same phenomena is happening in most nations. To give a little more background, at the end of 2012 the US stockmarket was worth about 46% of the total world stockmarket at £10,540 billion (the UK worth 7% at £1,717 billion). This does not include the value of property or all assets, just the stockmarket capitalisation values. The video mentions 312 million Americans so 1% of this number is 3.12million Americans actually own 40% of the US wealth (and therefore 18.4% of all wealth). It is estimated that the world population is now 7 billion.
How does the wealth inequality impact tax policy?
The problem for politicians is that due to the disproportionate amount of wealth that is owned by the top 1%, there is a fear that changing tax policy would mean that this wealth would leave the country. Increasingly I am of the view that this is the basic fear now underlies most economic policy and why the middle classes in particular are paying far more tax (proportionally) than anyone else. The top 1% has greater access to offshore tax regimes and can afford to risk very large sums of money on tax avoidance schemes that may not work. All of my clients can make use of legitimate tax avoiding and tax reducing schemes, but not on the same scale or with the same degree of cavalier attitude.
You don’t see hearses with luggage racks
I risk offending the wealthy or even putting them off appointing me as their adviser which I don’t mean to do in the sense of a personal attack, but merely to raise the huge problem of inequality. Certainly our politicians misuse our taxes, we need wealth to create jobs and security, however unless I have missed something, when you die, you don’t get to take it with you. Great financial planning is about working out what it takes to support your chosen lifestyle and is not simply about amassing more.
Dominic Thomas: Solomons IFA