Estimating the Distribution of Household Wealth in South Africa
Author: Aroop Chatterjee, Léo Czajka and Amory Gethin
This working paper is the result of a collaboration between the Southern Centre for Inequality Studies and the World Inequality Lab.
SCIS Working Paper | Number 3
This paper estimates the distribution of personal wealth in South Africa by combining tax microdata covering the universe of income tax returns, household surveys and macroeconomic balance sheets statistics. We systematically compare estimates of the wealth distribution obtained by direct measurement of net worth, rescaling of reported wealth to balance sheets totals, and capitalisation of income flows. We document major inconsistencies between available data sources, in particular regarding the measurement of dividends, corporate assets and wealth held through trusts. Both household surveys and tax data remain insufficient to properly capture capital incomes. Notwithstanding a significant degree of uncertainty, our findings reveal unparalleled levels of wealth concentration. The top 10 per cent own 86 per cent of aggregate wealth and the top 0.1 per cent close to one third. The top 0.01 per cent of the distribution (3,500 individuals) concentrate 15 per cent of household net worth, more than the bottom 90 per cent as a whole. Such high levels of inequality can be accounted for in all forms of assets at the top end, including housing, pension funds and other financial assets. Our series show no sign of decreasing wealth inequality since apartheid: if anything, we find that inequality has remained broadly stable and has even slightly increased within top wealth groups.
A Wealth Tax for South Africa
Authors: Aroop Chatterjee, Léo Czajka and Amory Gethin
SCIS Working Paper | Number 14
This working paper provides the details behind the op-ed that proposes a wealth tax to assist with fiscal sustainability, as well as reduce extreme wealth inequality.
It considers the feasibility of implementing a progressive wealth tax to collect additional government revenue and reduce inequality in South Africa in the wake of the COVID-19 crisis. Drawing on their companion paper on wealth inequality in South Africa, the authors estimate that under conservative assumptions, a progressive wealth tax on the richest 1% could raise between 1.5% and 3.5% of GDP. They discuss how sensitive their estimates are to assumptions on mismeasurement of wealth and tax evasion, and they examine technical issues related to the enforcement of the tax. They also explain how this new tax could interact with other capital related taxes already in place in South Africa, and discuss the potential impact on growth.
Based on this paper, there is also a wealth tax simulator available here. This tool allows the user to change tax rates, thresholds, and parameters (such as evasion rates and depreciation of wealth) to see how much revenue it generates, how much tax an individual would have to pay, and how it compares to other government expenditures and revenues.
Wealth Inequality and Elites in the global South
Authors: Surinder S. Jodhka and Vamsi Vakulabharanam | June 2023
The paper explores the processes that produce, expand/dissolve and reproduce the extreme concentration of wealth in the context of the institutional and social structures in India. The study engages with the historical and empirical processes of big wealth in India.
Authors: Sripad Motiram and Kiran Limaye | June 2023
This paper analyses wealth in Bombay/Mumbai by considering three historical phases: pre-colonial and colonial (sixteenth century-1947), independence to pre-liberalisation (1947-91) and post-liberalisation (1991-present).
Authors: Anjana Thampi and Ishan Anand | June 2023
In this paper, we study the evolution of wealth in this region using secondary data, primary data collection, and detailed interviews. Our interviews of key informants and case studies of wealthy elites revealed five key themes: real estate, land, and farmhouses; caste and community networks; start-ups; politics and wealth creation; and investment in educational institutions.
Authors: Saswata Guha Thakurata, Manas Ranjan Bhowmik and Riona Basu | June 2023
In this paper, focusing on the city of Kolkata, we present a narrative concerning, (a) The caste-class-ethnicity intersectionality with respect to wealth ownership; (b) The sectoral dimension of wealth creation; and (c) the spatial implications of the process of wealth accumulation.
Authors: Purendra Prasad and Raviteja Rambarki | June 2023
Taking into consideration the agrarian background of elites and subsequent emergence of professional classes on one hand, and diverse trajectories of business elites on the other, this paper tries to explain the current wealth-accumulation dynamics in Hyderabad City region through a political economy perspective.
Authors: Lena Lavinas, et al. | June 2023
This paper provides a very concise view of the trajectory of Brazil since it became a republic. It goes through the 20th century and into the 21st century to systematize how the different phases of economic development reproduced and reformatted the inequalities inherited from the country's colonial-slave period.
Authors: Lucas Bressan, Ana Carolina Cordilha, João Paulo Constantino and Pedro Rubin | June 2023
The goal of this article is to unpack the regressive and biased nature of the Brazilian tax system. It combines data from national and international institutions for the past two decades to provide a comprehensive understanding of the tax system's role in shaping income and wealth gaps.
Authors: Lena Lavinas, Ana Carolina Cordilha, Lucas Bressan and Pedro Rubin | June 2023
The paper describes the recent evolution of financial and non-financial personal wealth in Brazil, with an aim to indicate how the different forms of wealth - in particular the strong expansion of fictitious capital - reshape inequalities in Brazil.
Authors: Francisco Bedê, José Maurício Domingues, Mônica Herz, Guilherme Leite Gonçalves, and Maria Elena Rodríguez | June 2023
The article analyses the relation between the state and the political system, on the one side, and capital and capitalists, on the other, in Brazil, especially under the Bolsonaro government.
Authors: Mariana Fix, João Paulo Constantino and André Doca Prado | June 2023
This paper aims to identify and characterise changes and continuities in the real estate wealth, with a focus on the residential segment.
Our paper concludes that there is extreme wealth inequality in South Africa and there has been no decline since the end of Apartheid. The headline finding reveals that the top 10% own 85% of private wealth while the bottom 50% are net debtors.