A New Generation of Wealth Shaped by Social Justice
Chloe B McKenzie defines wealth as one’s vision for peace.
It is important to understand how the idea of money started – it’s crazy. We made it all up really. We have put together rules and regulations that help us to determine the value of these pieces of papers and copper coins. Barter trade made it difficult to match needs and wants, we had to establish a standard – something everyone would want.
For many centuries, societal statuses, colonisation and slavery determined how
much money landed up in your pocket. To date, traces of these past systems of
injustice are still visible. According to the Institute for Policy Studies (2019), the
richest 1% own 44% of the world’s wealth, inequality and poverty certainly looms.
Yes, there is more money in our global economy, but it is merely the rich getting
Taxation is one of the methods that is aimed at collecting revenue that will be
absorbed back into the economy and distributed in a way that primarily benefits the least well off – this is of course in theory. Across the globe, the flaws that administer the legislations that drive these economic schemes are more prevalent than others.
There is always a question of fairness when it comes to this matter – should the rate of taxes increase as your salary increase and why should those relying the least on public services pay the most. Should tax rates be a fixed percentage of your income – the burden here will be felt by those earning the very least and that brings the debate of how society expects those living on minimum wage to then be able to meet their daily necessities.
According to Robert Kiyosaki, the understanding of three concepts allows the rich to avoid paying taxes. Namely: amortisation, appreciation and depreciation.
Amortisation is a method of expensing the cost of an asset periodically. Additionally, understanding how the cost basis on which this amortisation is calculated is important as this determines how much capital gains tax you will be liable for. Depreciation is an expense against assets that reduces the amount of taxable income. As the value of their assets go up (appreciation), the rich increase their debt to purchase more assets, essentially increasing that depreciation and amortisation – they always end up with as little taxable income as possible. Amazon plays this game quite well, by reinvesting their profits back into the company, they always owe the government a lot less that one would imagine.
Financial education is the missing link. Whilst the average man on the street relies
on the basic education system made available to him through his exposure to state
schools – financial education does not exist in the school curriculum. That is how the chain of flawed systems continuous. The basic education system allows him to live a life like many, a life spent paying off other people’s mortgage, buying liabilities thinking they are assets, working as an employee and retiring at 65 without sufficient savings to sustain them from then on forward.
When young people land up in the work place and get their first pay check, they
either use all this money up in paying off their student debt or purchasing all the
luxury items that the rich kid at their high school showed off to them every day –
trying to portray an image that they later find out is just too expensive to maintain.
They lack basic budgeting skills, cannot tell the difference between an asset and a
liability or how to reap the benefits of tax benefits offered by government. Lessons
that the wealthy expose to their children to from a tender age. That is how the rich
get richer and the poverty cycle repeats itself from one generation to the next.
Breaking this poverty cycle can be achieved through increased access to basic
finance and investment knowledge for all citizens. Financial literacy in state’s
mandate should just be as crucial as basic literacy. Basic education curriculums
should be made to be more agile and adapt to how the globe shifts at any given
time. The fast-paced nature of the innovations we are witnessing in our time calls for society that adopts a love to continuously learn and accept change.
It is time we make the opportunity to create one’s own vision for peace a basic