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Could a wealth tax help reduce inequality?

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Could a wealth tax help reduce inequality?


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The idea of taxing personal fortunes is under increasing discussion amid the growing disparity in wealth distribution in society.

It’s not in your imagination—the gap between the wealthy and everyone else is growing.

Research by ACOSS and UNSW Sydney shows that the average wealth of Australia’s highest 10% is growing much faster than the lowest 60%. And now, nearly half of all wealth is held by the top 10% of households. So, as the rich get richer and the rest face a seemingly uphill battle to stay afloat, do we need to find ways to rebalance the economic scales?

Associate Professor Bruce Bradbury from the Social Policy Research Center at UNSW Arts, Design & Architecture says wealth inequality—that is, the unequal distribution of wealth in society—is coming under increasing public scrutiny.

“For a long time, interest in inequality has tended to focus on income and ability to consume, but now there’s an increasing focus on what role wealth plays in determining opportunities,” A/Prof. Bradbury says. “And as wealth has become more and more concentrated, that’s caught the eye of more people as a marker of disparity.”

Emeritus Professor Chris Evans, School of Accounting, Auditing & Taxation at UNSW Business School, says there will always be differences in wealth—and wealth inequality, up until a point, isn’t inherently problematic. It is when wealth is too unequally distributed that it can lead to the concentration of economic power and opportunities in the hands of just a few at the top, while those at the bottom are left out.

“It’s when there is gross inequality in wealth that it is a disaster for social cohesion because it unfairly limits opportunities for those less well-off to fulfill their potential,” Prof. Evans says. “So, there is certainly an argument for using some of the excess money at the top end to help some of the people at the bottom, and we might just find that we’ll have a much fairer and more efficient society.”

Taxing wealth at the top

The premise of a wealth tax is to take a small portion of the large amount of money tied up in the fortunes of wealthy individuals and redirect it towards those less well-off via taxation. Governments can then use the revenue raised from the tax to close the wealth inequality gap by improving essential services like education, building more social housing, or increasing supplements for low-income households.

One method of doing this is through an annual net worth tax—a small recurrent financial charge imposed on the value of a person’s wealth (the sum of assets minus their liabilities). It differs from income tax, which is the levy charged on the money received from work or through investments, and arguably provides a more complete picture of their financial power.

A variation of a net worth tax called a billionaire’s tax works similarly in principle but is levied on the highest-net-worth individuals. The idea for a global minimum tax on billionaires of 2% already has some support in principle from countries like Brazil, South Africa, and Germany.

Supporters of net wealth taxes argue it’s fair that the wealthiest have the means and should contribute more, Prof. Evans says. Critics say it unfairly punishes success, could discourage innovation, and lead the rich to move their investments to countries with more favorable tax laws.

“For Australia to introduce a net wealth tax, it would likely need to be either a progressive rate or very modest rate and have a very high threshold to hope to work,” Prof. Evans says. “So, it should probably be less than 1% tax and only for those in the 99th%ile of wealth.

“But even so, it would still need to overcome some complexities to be administered.”

Challenges to implementing a net-worth tax

Implementing a net worth tax in practice is easier said than done. While net worth taxes were once commonplace in the OECD, most have abandoned them due to disclosure, valuation, and mobility challenges.

“Net wealth taxes tend to be very easily evaded as lots of assets are hard to identify or value,” Prof. Evans says. “For example, hiding assets like cryptocurrency is easy; property must be valued yearly, which is a significant undertaking; and many shares are held in private firms with no disclosed market value.”

Some assets are also difficult to convert into money quickly to pay for a new tax.

“Some forms of wealth are just not very liquid,” A/Prof. Bradbury says. “Some people may have one main asset like a valuable property but don’t have much by way of income, so they wouldn’t have a way to pay a net wealth tax.”

All these challenges are manageable, but they require more robust solutions. For example, Prof. Evans says insurance companies could tackle disclosure and valuation by revealing what assets are insured and for what value.

“It sounds like an intrusion, but we already do this with banks who disclose to the ATO the interest they’re paying out to people,” Prof. Evans says. “You can also use good proxies for valuation, such as whatever it costs, and adjust for inflation each year.”

Prof. Evans says wealthy individuals would still have access to the best accountants and asset managers to minimize their tax bills. Still, even if a net wealth tax wasn’t effective in raising revenue, it may send a message to wealthy individuals about the need to contribute a fair share.

The estimated effective tax rate on the wealth held by billionaires worldwide is currently just 0.3%.

“The more non-compliance, the less valuable a tax becomes for raising revenues,” Prof. Evans says. “The few countries that have them now, like Spain, are only raising a small fraction of what they should be in theory.

“Even Switzerland, which has had a reasonably successful annual wealth tax in place in its cantons for many years, raises a relatively insignificant amount of its total tax by taxing wealth.”

Reforming other taxes on wealth

Wealth taxes could bring sufficient revenue to address inequality in a perfect world. But if they don’t work that way in practice, there are some alternatives.

Prof. Evans argues that the next best idea could be reintroducing an inheritance tax—a levy placed on the value of a person’s estate that would be payable at death.

“There is an argument that inheritance tax is fairer in some ways than a net wealth tax because the deceased no longer need their assets,” Prof. Evans says. “The way to tax it would be at a certain threshold, such as the increase on the value of the assets.”

An inheritance tax would also overcome some challenges plaguing the administration of net worth taxes.

“Because the beneficiaries want to know the assets and their value, the valuation and disclosure problems are gone,” Prof. Evans says. “Any liquidity problems are also solved because the assets are sold off as part of the process, or there could be exemptions for spouses or direct relatives with the family home.”

A/Prof. Bradbury says another alternative could be to reshape property taxation by reforming stamp duty to make it work like a tax on land value. It would be particularly effective for raising revenue in Australia, where a significant amount of personal wealth is tied up in real estate.

“A one-off stamp duty transfer levy when a property is purchased is inefficient because it discourages people from moving,” A/Prof. Bradbury says. “Instead, proper land valuations and property taxes paid annually rather than in one lump sum would raise more revenue over time.”

Likelihood of introducing a wealth tax

A/Prof. Bradbury says back home, changes to any tax regime targeting wealth will likely receive significant pushback from some quarters.

“The losers in any tax change tend to make more noise than the winners benefiting,” A/Prof. Bradbury says. “And in this case, the losers likely have significant political influence.”

Prof. Evans agrees, saying it would be a daring move for any government to pull off a form of wealth tax, at least in the short term.

“The public is becoming more receptive to it, but introducing a wealth tax of any kind is still not likely to be popular politically,” Prof. Evans says. “It would take a courageous government with a big majority to attempt it, and there would be big scare campaigns to shut it down.”

While no perfect solution exists, Prof. Evans says more action to tackle wealth inequality should be welcomed.

“As the problem of wealth inequality gets worse, solutions that once seemed pie in the sky may become more palatable and even necessary,” Prof. Evans says. “Ultimately, if there are reforms, I hope we end up with a fairer and more efficient taxation system for all as a result.”

Citation:
Could a wealth tax help reduce inequality? (2024, September 23)
retrieved 23 September 2024
from https://phys.org/news/2024-09-wealth-tax-inequality.html

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High-pressure reactions can turn nonporous rocks into sponges

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High-pressure reactions can turn nonporous rocks into sponges


High-pressure reactions can turn nonporous rocks into sponges
Photographs of natural rocks showing (a) hydration and (b) dehydration features. (a) Eclogite shear zone with eclogitization associated to deformation from Holsnøy, western Norway (60°35’11”N, 5°07’34”E). (b) Metamorphic olivine veins in antigorite serpentinite from the Erro Tobbio ultramafic rocks, Ligurian Alps, Italy (44°33’38.9″N, 8°48’49.5″E). Credit: Geochemistry, Geophysics, Geosystems (2024). DOI: 10.1029/2023GC011422

In deep Earth, rocks take up and release water all the time, and the effects can be wide reaching. Dehydration can cause rocks to crack and trigger earthquakes, and over geologic timescales, this water cycling can influence plate tectonics and move continents.

Schmalholz and team asked how water can move through impermeable rocks, such as those found in mantle wedges, the deep lithosphere, and the lower crust. They hypothesize that certain reactions can cause temporary porosity in these rocks. By mathematically modeling the hydration and dehydration of rock at high pressure, they derived equations to estimate how the porosity of rock changes as water cycles through it.

The research is published in the journal Geochemistry, Geophysics, Geosystems.

Previous work suggested that at very high temperatures, minerals can react with each other to form denser minerals, squeezing water out of the minerals and generating less dense, more porous rocks in the process.

As the reaction progresses, a “dehydration front” moves through the rock. On the other hand, some reactions cause rocks to act like dry sponges, soaking up surrounding water and becoming denser. The progression of this reaction is known as a hydration front.

In the study, the researchers presented 1D simulations for three scenarios (one for a hydration front and two for dehydration fronts) in which a rock with no porosity becomes temporarily porous.

In a hydration reaction, water flows into the rock from an external source, so the hydration front always moves in the same direction as the fluid is flowing. Dehydration reactions have two possible scenarios. In simple dehydration, water flows out of the rock and into the surrounding environment, moving in the opposite direction of the dehydration front.

In the second scenario, called dehydration inflow, water is squeezed out of minerals, and additional water flows in to fill up the created porosity, so the fluid moves in the same direction as the dehydration front.

Whichever direction water is pushed, it has the potential to enter impermeable surrounding rocks if the reactions generate a porosity that allows for it. Describing how water moves through deep Earth is challenging, the researchers note, but their newly derived equations provide a framework for others researching how water drives geological processes beneath Earth’s surface.

More information:
Stefan M. Schmalholz et al, (De)hydration Front Propagation Into Zero‐Permeability Rock, Geochemistry, Geophysics, Geosystems (2024). DOI: 10.1029/2023GC011422

This story is republished courtesy of Eos, hosted by the American Geophysical Union. Read the original storyhere.

Citation:
High-pressure reactions can turn nonporous rocks into sponges (2024, September 23)
retrieved 23 September 2024
from https://phys.org/news/2024-09-high-pressure-reactions-nonporous-sponges.html

This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no
part may be reproduced without the written permission. The content is provided for information purposes only.





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Study shows artificial light at night changes the behavior of fish, even into the next generation

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Study shows artificial light at night changes the behavior of fish, even into the next generation


When darkness never falls
Shoreline habitats that are most affected by artificial light at night are vitally important to many aquatic species. Credit: MPI of Animal Behavior/ Alex Jordan

Scientists have shown that light pollution—especially light in the blue spectrum—can alter the behavior of fish after only a few nights, and have knock-on effects for their offspring. The team from China has studied how female zebrafish responded after being exposed to artificial light at night, which is considered to be the main source of the world’s light pollution.

Fish were exposed to varying wavelengths of artificial light at night over nine nights, which caused them to swim less, stick closer together, and spend more time near the wall of the aquarium. These anxiety-like behaviors were seen in fish under all wavelengths of light, but short wavelength light in the blue spectrum caused the fastest and strongest changes.

The results further reveal that light pollution can have long-lasting effects: offspring born from light-exposed mothers swam less despite never being exposed themselves. The study is published in the journal Science of The Total Environment.

Artificial light at night pollutes the environment by adding luminescence to places that would otherwise be dark at nighttime. It exists outdoors through the lights that brighten streets, buildings, and industrial areas all night; and it exists indoors through the devices that hold our attention into the evening.

Artificial light at night is known to impact most organisms by disrupting the natural rhythms of biological processes, which are coordinated by cycles of light and dark.

“Sleep is one of the main processes of animals that is disrupted by artificial light at night, so we were curious to know what that means for their ability to navigate their lives. In other words, what does it mean for their behavior?” says Wei Wei Li, the study’s first author who did the work as a doctoral student in the Max Planck Institute of Animal Behavior.

“The light levels that we used in our study matched what is already shining into the homes of animals at night through the many sources we place outdoors. And we found extremely strong and clear negative effects on the behavior of fish and their offspring after only a few bright nights.”

The dangers of blue light

Because the negative effects of artificial light at night are known to occur in humans from exposure to light in the blue spectrum, the team wanted to know if different wavelengths also affected the behavior of fish differently.

They exposed female zebrafish to all-night light at 10 light regimes: nine separate wavelengths across the visible spectrum as well as white light. Lights were set at 20 lux, approximately the intensity of streetlights seen at a distance, and what animals would be exposed to in outdoor environments.

They found that after eight nights of exposure, all wavelengths caused fish to swim less, stick closer together, and spend more time near the wall of the aquarium, a behavior known as “thigmotaxis” or wall-hugging, which is an indicator of animal anxiety. However, the effect of blue light could be seen sooner, after only five days of exposure, with light at 470 nm having the strongest effect of all.

“This is consistent with what is known in humans, that exposure to the blue light of our electronic displays has the biggest effect on our sleep and possibly other physiological cycles,” says co-author Aneesh Bose, who did the work while at the Max Planck Institute of Animal Behavior.

The study did not set out to uncover a mechanism, but the authors speculate that sleep deprivation could be what underlies the patterns in their data. Their finding that behavioral changes revealed themselves after five or eight nights of exposure, rather than immediately, could be explained by lack of sleep.

“The fish could pull a few all-nighters, but after too many nights of disrupted sleep it eventually caught up to them,” explains Bose, who is now a researcher at Swedish University of Agricultural Sciences.

Long-lasting changes

The study also revealed that the impacts of light pollution did not end in the individual, but were passed down to offspring. After exposure to artificial light at night, the study’s female zebrafish were allowed to breed and the team raised their offspring under natural light conditions.

After 15 days, the researchers tested the swimming behaviors of larvae using specialized automated tracking software designed to quantify activity levels of the tiny fish. Offspring of exposed mothers showed decreased daytime movement despite themselves never being exposed to lights at night.

“We found that light pollution disrupted the natural behavior of fish, and this disruption may have fitness and performance consequences,” says Ming Duan, the study’s final author from the Institute of Hydrobiology Chinese Academy of Sciences.

To mitigate these consequences of artificial light at night on wild animals, the authors say that special attention needs to be paid to what light is emitted by human sources. Adds Duan, “Many of the places we light up at night are close to animal habitats. The best thing we can do is to minimize the use of blue wavelength light sources where animals are trying to sleep.”

More information:
Weiwei Li et al, Behavioural and transgenerational effects of artificial light at night (ALAN) of varying spectral compositions in zebrafish (Danio rerio), Science of The Total Environment (2024). DOI: 10.1016/j.scitotenv.2024.176336

Provided by
Max Planck Society


Citation:
Study shows artificial light at night changes the behavior of fish, even into the next generation (2024, September 23)
retrieved 23 September 2024
from https://phys.org/news/2024-09-artificial-night-behavior-fish-generation.html

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Murdoch’s REA ups offer for property website Rightmove

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Murdoch’s REA ups offer for property website Rightmove


Rupert Murdoch's REA Group said has now made three offers to buy UK property platform Rightmove
Rupert Murdoch’s REA Group said has now made three offers to buy UK property platform Rightmove.

REA Group, the Australian online property website majority-owned by Rupert Murdoch’s News Corp empire, said Monday it has made a third multi-billion-pound offer to buy British peer Rightmove.

The latest proposal, worth £6.1 billion (US$8.1 billion), comes after Rightmove rejected REA’s previous two bids made this month.

“We are genuinely disappointed at the lack of engagement by Rightmove’s Board,” REA CEO Owen Wilson said in a statement published on the London Stock Exchange.

Rightmove confirmed in a statement that it had received a third proposal that was “unsolicited, non-binding and highly conditional”.

Rightmove chairman Andrew Fisher said the board rejected the first two proposals as they “were uncertain, highly opportunistic and unattractive”.

He added, “The Board will continue to act on behalf of our shareholders and respond to the most recent proposal in due course.”

Shares in Rightmove were up 2.8 percent in early deals on London’s FTSE 100 index.

REA made public its interest on September 2, noting “clear similarities” between the pair “in terms of their leading market positions in the core residential business”.

The first offer was worth £5.6 billion. Rightmove rejected a second proposal on September 18.

REA reiterated that should it succeed in buying Rightmove, it would apply for a secondary stock market listing in London, in addition to its current trading on the Australian Securities Exchange.

“This would provide the opportunity for a wider pool of investors to gain exposure to a global and diversified digital property company on the London Stock Exchange,” it said.

© 2024 AFP

Citation:
Murdoch’s REA ups offer for property website Rightmove (2024, September 23)
retrieved 23 September 2024
from https://techxplore.com/news/2024-09-murdoch-rea-ups-property-website.html

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New physics needed? Experts suggest possibility of updating fundamental physics concepts

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New physics needed? Experts suggest possibility of updating fundamental physics concepts


New physics needed? Maybe
An unexpected finding about how our universe formed is again raising the question: do we need new physics? The answer could fundamentally change what physics students are taught in classes around the world. Credit: NASA/JPL-Caltech/SSC

An unexpected finding about how our universe formed is again raising the question: do we need new physics? The answer could fundamentally change what physics students are taught in classes around the world.

A study from SMU and three other universities, available on the arXiv preprint server, delved into the possibility of updating fundamental physics concepts.

SMU played a significant part in the analysis, using the university’s high-performance computing capabilities to explore different scenarios that could explain the findings.

“The data from what’s known as DESI, or Dark Energy Spectroscopic Instrument, combined with what we already had, is the most precise data we’ve seen so far, and it is hinting at something unlike what we would have expected,” explained one of the study’s co-authors Joel Meyers, an associate professor of physics at SMU. “Now, we need to get to the bottom of why that is.”

Working with Meyers on this analysis were theoretical physicists Nathaniel Craig at UC Santa Barbara and the Kavli Institute for Theoretical Physics, Daniel Green at UC San Diego and Surjeet Rajendran at Johns Hopkins University.

What DESI found…and why it was surprising

DESI is creating the largest, most accurate 3D map of our universe, providing a key measurement that enables cosmologists to calculate what they call the absolute mass scale of neutrinos.

This absolute mass scale was determined based on new measurements from the so-called baryonic acoustic oscillations from DESI, plus information physicists already had from the “afterglow” of the Big Bang—when the universe was created—known as the cosmic microwave background.

Throughout the evolution of the universe, the behavior of neutrinos impacted the growth of large-scale structures, such as clusters of galaxies across vast reaches of space that we see today. Neutrinos are one of the most abundant subatomic particles in the universe, but they’re as mysterious as they are ubiquitous. One reason physicists want to know the mass scale of neutrinos is that it can help them get a better understanding of how matter clustered as the universe evolved.

Cosmologists—those who study the origin and development of the universe—have long thought that massive neutrinos kept matter in the universe from clustering as much as it otherwise might have over 13.8 billion years of cosmic evolution.

“But rather than the expected suppression of matter clustering, the data instead favors enhanced matter clustering, meaning matter in the cosmos is more clumped than one would expect,” said Meyers, who specializes in theoretical cosmology, including the cosmic microwave background, the early universe and connections to high energy and particle physics.

“Explaining this enhancement may point toward some problem with the measurements, or it could require some new physics not included in the Standard Model of particle physics and cosmology.”

The Standard Model of particle physics—the one that students likely learned in physics class—has long been scientists’ best theory to explain how the basic building blocks of matter interact. This finding of neutrinos is the latest measurement, similar to what’s referred to as “the Hubble tension,” to hint that we might not know our universe as well as we think we do, Meyers said.

In their study, Meyers and his colleagues looked into scenarios where physicists might need to tweak the Standard Model, but not throw it out entirely. They also examined introducing new concepts of physics. And they also explored whether systematic errors of key measures could account for the surprising DESI finding.

It will likely take years to know which of the researchers’ theories is correct. But the study gives a blueprint for future research.

More information:
Nathaniel Craig et al, No νs is Good News, arXiv (2024). DOI: 10.48550/arxiv.2405.00836

Journal information:
arXiv


Citation:
New physics needed? Experts suggest possibility of updating fundamental physics concepts (2024, September 23)
retrieved 23 September 2024
from https://phys.org/news/2024-09-physics-experts-possibility-fundamental-concepts.html

This document is subject to copyright. Apart from any fair dealing for the purpose of private study or research, no
part may be reproduced without the written permission. The content is provided for information purposes only.





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