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Doing well – and good – at the same time

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Inequality has serious negative effects across the wider economy – so serious, the United Nations has identified reducing inequality as one of the 17 Sustainable Development Goals. 

Taxing citizens, particularly wealthier citizens, and redistributing income to the poor, is a popular governmental approach to redressing inequality.  However, taxes remain unpopular with many people, who don’t trust how their governments spend money. But there may be changes in taxation that achieve important social outcomes, with a degree of personal control, that overcomes the lack of trust in government.

Two Monash University sustainability experts, publishing in the journal Public Money and Management, have been giving this global problem some serious thought.  Prof David Griggs and A/Prof Liam Smith, have come up with a solution called ‘Giving for Good’.
Under this system, anyone on a high annual income, such as US $200,000 or more, would be required to donate an additional 2% to the charity, community or tax deductable organisation of their choice.  As the income rises, so does the donation amount (still 2%).
By choosing where donation goes, the wealthy have final say on which social outcome they regard as most important (not the government). Most compelling in this idea is that being altruistic (giving to charity) can make people happy, healthy, thankful and more socially connected. Thinking about different charitable options and then choosing one may also change how givers feel about themselves.  Self-perception theory suggests that our identity is shaped at least in part, by our actions. If we do good, maybe we are good.

‘Giving for Good’ may be a ‘win-win’; the more you have, the more you give, the more you do for society and the higher that society holds you in its esteem.  

To quote Liam Smith “It benefits those doing the giving and those receiving the donations and changes how we see the richest ‘one percenters’.”

Read the full paper here.
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