Why the wealthy should pay a charity levy

Monash sustainability experts believe the country's high-income earners should pay a charity levy based on a small percentage of their earnings.

Monash experts have proposed a new system for distributing wealth more evenly and help to balance social inequalities. The concept builds on the 2017 Oxfam International report which showed that the ‘one percenters’ grabbed 82 per cent of all the wealth created in 2017.

In the journal, Public Money and Managementthe authors write that inequality has serious negative effects across the economy in areas such as physical and mental health, drug abuse, education, imprisonment, obesity, social mobility, trust, violence, teenage pregnancies and child well-being. 

They say better wealth distribution can not only improve social outcomes aligned to the Sustainable Development Goals but would also help to address rising levels of mistrust around how governments raise and use taxes to provide services.

The paper also notes evidence to support the positive benefits of altruism; the act of giving makes people happy, healthy, thankful and more connected. So the system could also boost personal wellbeing.

Under the ‘Giving for Good’ system, anyone reaching a comfortable income starting at, say US $200,000 a year, would be required to donate an additional small percentage, on a rising scale, as income continued to increase, to a charity, community group or tax-deductible organisation of their choice.

Importantly, the donor chooses where the donation goes, with governments deciding which entities have charitable status. The system does not alter relative wealth; the richest remain that way (how we compare ourselves to others has been shown to be more important than absolute wealth).

The idea was developed by Monash Sustainable Development Institute researchers Professor Dave Griggs, who was heavily involved in the development of the Sustainable Development Goals (SDGs), and Associate Professor Liam Smith, who is the Director of BehaviourWorks Australia.

“Giving for Good may be a ‘win-win’ for all,” Associate Professor Smith said.

“It benefits those doing the giving and those receiving the donations and changes how we see the richest ‘one percenters’. Perhaps more importantly, how they see themselves. The more you have, the more you give, the more you do for society and the higher that society holds you in its esteem.”