Income Inequality

: The economic case for maintaining a progressive income tax structure and targeting welfare payments to those most in need is overwhelming, according to The Guardian. The issue can be illustrated through a simple stylised example which outlines how a higher cash flow to the poorest is growth enhancing while a higher cash flow to the rich boosts savings, but keeps economic growth lower. Conversely, as income inequality increases, the potential for economic growth is constrained. Take a situation where there is a $1bn addition to the economy via growth. According to the BRW Rich list, the tenth richest person in Australia has wealth of $2.65bn while the richest, Gina Rinehart, has more than $14bn. That $1bn can be distributed in many different ways but let initially assume the 10 richest people in Australia each receive all of that gain, with $100m going to each person. (news.financializer.com). As reported in the news.