July 21, 2010

Income gap

I was reading something. The writer was not quite happy with growth. He said it only makes the rich richer.

It makes me think a bit about the income gap between the rich and the poor. This is not unique to Singapore. Many countries, including China, have this problem. Just share with you my simple view on a complicated issue.

I think it is inevitable that the gap increases because the rich have more money to invest. Money makes money. The professionals will get higher pay increases and bigger bonuses than the blue-collar workers. So it is very difficult to narrow the gap. We can't stop (and should not) the rich from getting richer; but we can help the others to earn more and give the very poor a safety net.. Whatever, I think the gap will widen.

On the positive side, it is not a bad thing for the rich to get richer because they will spend more too and pay more consumption tax or GST. They will also have to pay more income tax. In fact the more they earn, a higher percentage of their income goes to income tax. Much of these taxes will be go back to society for the benefit of the community and to help the poorer people.

If the rich do not make money or start to earn less, it means the economy is not doing well. There is little or no growth. The poor would be more badly affected.

One important thing is that the rich must not flaunt their wealth and the poor must not be resentful of the rich.

1 comment:

Icemoon said...

If we delve deeper, we find wages not keeping up with inflation and being pushed down. No wonder the income gap is increasing.