, but little has been documented about wealth. Net wealth is the sum of all assets less any debts. Assets include cash, bank deposits, pensions, life insurance, property, bonds and stocks. Debt includes mortgages and other loans such as retail store credit accounts or loans from friends, family and money lenders.
Firstly, in 2017, the 10% richest South Africans owned 86% of wealth, with an average of R2.8 million per adult. In contrast, about 18 million were either in debt or had near-zero savings. With an average net worth of R486 million, the richest 3,500 owned 15% of wealth. This was more than the 32 million poorest altogether.
Before the lockdown, about half of the population was already in debt, or had near-zero net wealth. Therefore, this crisis will at best sink millions of people further into indebtedness or force them to beg, loot or starve. Conversely, our paper shows that a minority of individuals are in a much less vulnerable situation.
The first bracket – all wealth between R3.6 million and R27 million – would be taxed at a 3% rate, the second bracket at 5%, and all wealth above R119 million at 7%. Individuals with less than R3.6 million would be exempt. A billionaire would face a 6.7% tax rate: she would pay 3% on the fraction of her wealth higher than R3.6 million but lower than R27 million; 5% on wealth higher than R27 million but lower than R119 million; and 7% of the R821 million she owns above R119 million.
It would still leave rich individuals with very high levels of wealth: for each of the brackets, post-tax wealth would on average be R9.3 million, R50 million and R376 million respectively.Critics of a wealth tax argue that it would be too costly and complex to implement. But South Africa is well positioned to administer this tax cost-effectively.
The only equitable redistribution of wealth is: Less Government. All South Africans contribute to a People's Prosperity Fund. All South Africans, except the 15% richest people and Government officials gets R1m per household.
LOL Keep dreaming. The authors (a.k.a. socialist clowns) think that wealth is in cash and liquid. Good luck recovering that x% on a private residence, property, motor vehicle, painting, etc. Sincerely (not really), TaxationIsTheft
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