Young Australians are not imagining it

Over the past decade, Australians have experienced the sharpest fall in living standards of any developed country. Real income per person here grew 6.6% between early 2015 and late 2025. Across the OECD it grew 20.7%. In the United States it grew 22.6%1. This is not a global condition that everyone is suffering equally. Australia is an outlier, and something specific is happening here.

What is happening is that the wealth is still growing, but it is no longer reaching most people. Young Australians face a lower quality of life than their parents and grandparents did, and for older Australians that is often a hard thing to accept. So let me make it concrete.

The evidence

Two-thirds of Australia's $19.21 trillion in household wealth, some $12.77 trillion of it, is land and dwellings2. When Australians talk about "the economy", what they are mostly talking about is housing.

Home ownership among 25 to 39 year olds has fallen with every generation. It was 66% for Baby Boomers, 62% for Generation X, and 55% for Millennials at the same age3. In the early 1980s, 70% of Australians in their early thirties owned their home. Four decades later it is 50%4.

The usual response is that young people today do not want to work, or do not work as hard. Let us consider what has changed.

In 1984, the average home cost 3.3 times the average annual income, and a 20% deposit came to two-thirds of a year's earnings. Today the same home costs 9.4 times income, and the deposit alone takes nearly two full years of gross pay5.

That is not a difference in effort but a difference of roughly three times in the price of entry.

The collapse is also accelerating. In March 2022, 40% of Australian homes were affordable to a household on the median income, meaning a mortgage would take less than 30% of their income. By September 2024 that had fallen to 10%. For households in the bottom quarter of incomes, on roughly $50,500, the figure is zero. They can't afford any of the houses6.

According to Cotality's modelling, a household on the median income of $104,390 can afford a home worth about $574,000. The median Australian dwelling in September 2025 was worth $857,000. Roughly a third of the purchase price7.

Meanwhile the wealth of households headed by someone under 35 has barely moved since 2004, while households aged 65 to 74 went from an average of around $900,000 to $1.3 million8.

Growth stopped being shared, and we can date it

According to KPMG, between 2014-15 and 2019-20 wealth growth in Australia was broadly shared. Median household wealth rose 11% and average wealth rose just over 10%. Ordinary households and wealthy ones moved together.

In the five years since, average household wealth surged 23.6% in real terms to $1.56 million, while median household wealth did not move at all. It sits where it was, at $700,0009.

In contrast, at the top end of the distribution, the combined wealth of Australia's 200 richest people has more than tripled, from $197.3 billion in 201610 to $707.25 billion in 202611.

The tax system was built for a different kind of wealth

Most Australians assume our tax system is progressive, because the income tax scale is. Earn more, pay a higher rate. That is true, and it works, right up until the point where someone's wealth stops arriving as income.

Australian income tax captures wages, dividends, rent and interest. Capital gains tax captures the profit when an asset is sold. Neither touches an asset that simply rises in value and stays where it is.

This is not a loophole, and nobody must do anything clever to benefit from it. It is what a transaction-based tax system does when confronted with wealth that grows without transacting. An asset that appreciates by ten million dollars generates no tax liability at all until it changes hands.

As a consequence, above a certain level of wealth, the effective tax rate stops rising with the income tax scale and starts falling, because a shrinking share of what someone actually gains each year passes through anything the tax system can see.

French inequality economist Gabriel Zucman and colleagues have measured this in the United States, where the data allows it. Their finding is that the total effective tax rate of the wealthiest 400 households averaged 24% between 2018 and 2020, compared with 30% for the population as a whole and 45% for people earning the highest labour incomes12. Measured against wealth rather than income, Zucman's estimate for the G20 was that billionaires pay effective rates of between 0.2% and 0.3% of their wealth annually20.

However, those numbers are contested. David Splinter, an economist at the US Joint Committee on Taxation, has published a technical rebuttal arguing that once you correct for family wealth spread across multiple tax returns and apply standard income definitions, the top 400 pay rates well above the average rather than below it13.

But read what he concedes. Splinter accepts there is still a decline in effective rates at the very top, and attributes it to the fact that the tax system "targets income, not wealth".

The disagreement between Zucman and Splinter is simply about how large the gap is, not whether it exists or not. Our system is aimed at taxing income, and the wealth compounding at the top is not recognised as income.

Australia has no comparable study, which is itself worth noting. We do not publish the data that would let anyone measure this properly here.

What the 2026 Budget did, and what it left alone

The 2026-27 Federal Budget delivered the largest change to capital gains tax since 1999. From 1 July 2027 the 50% CGT discount is abolished for individuals, trusts and partnerships, replaced by CPI-based cost base indexation and a new 30% minimum tax rate on capital gains. Negative gearing was also restricted, with losses on established residential properties acquired after 12 May 2026 deductible only against rental income or residential property gains. These measures are now law14.

However, both operate on gains at the point of sale. This means the whole system still rests on the same assumption: that wealth eventually gets sold.

Reforming capital gains tax raises the price of getting out. It does nothing about staying in. That gap is the case for a different instrument.

Where this is heading

Britain taxes inheritance at 40%, the sixth highest rate in the OECD15. Australia taxes it at nothing.

Australia is not entirely silent on wealth passing between generations. Capital gains are not wiped at death here as they are in some countries; the beneficiary generally inherits the original cost base and pays the tax whenever they eventually sell16. But that is a deferral, potentially across an entire lifetime, and it is a long way from taxing the transfer itself.

As wealth concentrates and passes down largely untouched, we should expect a return to dynastic wealth, where what you inherit matters more than what you do. Britain shows what that looks like in practice. There, just 9% of young people whose parents do not own property ever buy a home themselves. For those whose parents do own, it is 25%17.

That is the destination. Not a country with more billionaires, but one where your parents' housing situation determines yours. There is nothing meritocratic about that country, nothing which resembles the nation of a 'fair go'.

The scale of concentration is already substantial in both countries. In 2022 the ONS calculated that the richest 10% of British households hold 40.1% of all wealth, while the poorest 50% hold 9.8%18. In 2021, 131 Australian billionaires held close to as much wealth as the 2.8 million households in the poorest 30% combined. The absolute gap between the top and bottom 10% of households widened from $1.33 million to $2.19 million between 2002 and 201819.

The solution

A wealth tax on assets above $100 million20.

The purpose is not to raise revenue, though it would. The purpose is to put a brake on accumulation that has no functional limit. Above a certain point, wealth stops being savings and starts being a machine that converts existing ownership into more ownership. A fortune of that size compounds faster than any wage can, a tumour sucking the life out of the economy.

A tax at that threshold would touch a few hundred people. It would not touch a family home, a small business, or anyone's superannuation balance. That should be stated plainly at the outset.

Call it what it is: an anti-hoarding mechanism. We accept limits on accumulation in other areas without controversy. We cap political donations, we break up monopolies, we restrict how much of a broadcaster one person can own. The principle that concentration itself can be harmful, regardless of how it was acquired, is already embedded in Australian law.

The objections

"Won't the wealthy just leave?"

Australia already taxes departure, and most people arguing about capital flight do not know it. Under CGT event I1, in section 104-160 of the Income Tax Assessment Act 1997, ceasing to be an Australian tax resident triggers a deemed disposal of your assets at market value, and the resulting gain is taxed in your final return21. Australia is one of only a handful of countries with a broad exit tax of this kind.

More importantly, some assets never leave the net at all. Australian real estate, Australian business assets, and substantial interests in companies whose value derives principally from Australian land remain subject to Australian capital gains tax permanently, regardless of where the owner lives.

This matters because of what Australian wealth actually consists of. The largest sources of Rich List wealth are mining at $141.3 billion and property at $125.8 billion22. Iron ore in the Pilbara and apartment blocks in Sydney cannot be relocated to Singapore. The owner can leave but the asset stays, remains taxable here, and gets sold to someone else.

The honest limit of this argument is that an exit tax settles accrued gains once. It does not compel anyone to remain resident and keep paying an annual wealth tax.

"You can't value assets you haven't sold."

We already do. Local councils value every property in the country every year for rates. State governments value land for land tax. The ATO values assets for capital gains purposes constantly. Valuation of private companies and art is genuinely harder, and any workable design needs an answer for it, but the claim that valuation is impossible is not credible from a country that already values $12.77 trillion of housing annually.

"Why not just tax land? It's simpler."

This comes mostly from economists rather than from the wealthy. Their argument is that land cannot be hidden, moved offshore, or restructured into a trust, which makes it the one tax base that is impossible to avoid.

My answer is that land tax solves the problem we have now, but not the problem we will have next. Two thirds of Australian household wealth is currently land and housing, which is exactly why land tax is so attractive today. But if owning property becomes less profitable, capital moves. It goes into equities, private companies, infrastructure, offshore holdings. A tax that only reaches land is a tax that stops working the moment it succeeds.

The honest position is that these are not alternatives. Land tax is the better instrument for the housing crisis specifically and should be pursued on its own merits. A broad wealth tax is what stops concentration reappearing somewhere else.

"Isn't this just envy?"

The case does not depend on anyone deserving or not deserving what they have. It depends on what concentration does to everyone else. When only 10% of the housing market is affordable to a median income household, down from 40% in less than three years, the country has an allocation problem, not a motivation problem.

What is at stake

Australia has never been a country of extreme wealth concentration. Pre-pandemic our top 10% held 45% of wealth, against an OECD average of 52% or 80% in the US23. Today we rank third in the world for median wealth per adult24. That is not an accident, but the product of an unusually broad base of home ownership, built deliberately over decades, and a compulsory superannuation system covering around 78% of Australians25 that gave ordinary people a real stake in the productive economy.

We mustn't take this for granted going forward, because the evidence is showing this is all being dismantled right in front of our eyes.

The argument for acting now is that the alternative is not a dramatic collapse. It is a slow creep into an arrangement where the question of what your parents owned quietly becomes the most important economic fact about your life, just like we see in the UK today.

If you are convinced, please spread the word by sharing this article with friends and family.

If you are not, please leave your critiques in the comments below.

References

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