The Wealth Gap
by Peter Naylor
More and more of our emerging companies have adopted the 10x principle. This means that the highest-paid employee gets no more than 10 x the financial benefit of the lowest-paid employee. This is a social contract and not legislated, however, these companies are outperforming some of the older companies that still have highly paid C-suites whose income is driven by Key Performance Indicators that aren’t always in the best interest of other employees. What this has resulted in is high performing individuals are attracted to the newer companies further boosting their growth. It also means that the lowest-paid employees in these high-performing companies are much better paid than their counterparts in the older companies.
All government agencies are or have moved to this principle as well.
Couples now can split their income for tax purposes, so that if there is a single income coming into the home then it can be split across two people. Or if there is one person part-time working then the combined income can be split between the couple.
In the early 2000’s a lot of New Zealand’s growth was predicated on a booming house market. People could buy multiple properties and leverage the booming market to buy more property. By 2023 the housing market had flattened, and interest rates had risen. Then with all the new changes in education, those at the bottom of the wealth scale started to move up. With the emphasis on NZ growth, investors started investing in businesses. As a result, everyone has become more prosperous. Rather than trying to limit the wealth at the top, there is an emphasis on helping people to maximise their earning potential.
Measures such as Guaranteed Minimum Income, and better access to education and health, help the disadvantaged. There are still segments of society that need additional support. Programmes are in place and while there is still some disparity each year that is getting less and less. The GMI also gives individuals the opportunity to create start-up businesses knowing that they have some backing. New Zealand continues to be a nation of small businesses, but more and more of them are exponential organisations, meaning that they grow rapidly.
Of course, wealth isn’t only a financial measure. A lot of people feel wealthy if they are living their dream lifestyle and this may be a simple uncomplicated lifestyle, full of rich relationships, enjoying the fruits of their labour, living in an ideal environment, that doesn’t necessarily need a lot of money. There are still plenty of people with a high net financial worth, who don’t have a wealth of good relationships with others or themselves or are able to appreciate the world they live in. Wealth and Success are no longer measured just in terms of financial assets.
A new success criterion has emerged and that is Happiness. Serotonin-based contentment is the new aspiration, rather than the dopamine addiction from Social Media and Consumerism in the early 2020s. Happiness and wealth are now measured in the depth of the relationships you have and the level of happiness you experience in your day-to-day life. AI has helped create a world of abundance where the basic needs of all are provided. Everyone has a roof over their heads, food on the table, opportunity to educate themselves or be educated if that is their preference. Everyone has access to healthcare and the world has moved away from success being measured by the size of your bank balance, the car in the driveway, or the size of your dwelling. Our purpose is not defined by our job or work role, but rather by our contribution to others and the world. Happiness and Contentment for all, has become our goal.
There has been a change in the way we treat international companies that try and avoid paying taxes for goods and services sold in New Zealand. Not only are they required to pay GST on services delivered in NZ, but there is also a computational company tax based on the published profitability of the company. As an example, if a streaming service generated 100 million in subscription fees and published a Nett Profit of 10% globally, then they would be required to pay company tax based on 10% of revenue generated in NZ. Assuming a company tax rate of 30%, in this example they would pay 30% of 10% of 100 million, being 3 million.
a) User Stories
By 2050, the 10x principle had become a prevailing social contract among emerging companies in New Zealand. This principle limited the highest-paid employee's earnings to no more than 10 times the lowest-paid employee's financial benefit. Sarah, a young professional, has chosen to work for one of these companies, where income inequality was significantly reduced. She is passionate about her work and feels that her contributions are valued and fairly compensated. She also finds that the company attracts a lot of top talent and this is a major contributor to the company’s success and her ongoing professional development.
The 10x principle isn't limited to the private sector. All government agencies have adopted this principle as well, further promoting income equality and fairness in society. Lisa, a dedicated civil servant, appreciates the principles governing her workplace, where everyone is rewarded fairly for their contributions. She feels proud to be part of a system that prioritizes fairness and equity.
Couples in New Zealand have the flexibility to split their income for tax purposes, making it easier to manage household finances. Mark and Emma, a married couple, Emma works full-time and Mark works part-time while raising their children. The ability to combine their incomes for tax purposes provides much-needed financial stability for their family and allows Mark to be at home when the kids get home from school. Under the 2023 tax regime, they both would have had to work full-time and get a nanny for after-school care.
New Zealand has adopted a holistic approach to wealth, recognizing that financial assets were just one aspect of wealth. Sandra, a community organizer, works tirelessly to support disadvantaged segments of society. She has seen the positive impact of measures like the Guaranteed Minimum Income and improved access to education and healthcare on the lives of vulnerable individuals and families.
In 2050, success and wealth were no longer merely measured in terms of financial assets. Happiness had become the new aspiration, and a sense of contentment was valued over the short-lived dopamine rushes from social media and consumerism seen in the early 2020s. Alex, a psychologist specializing in well-being, helps people find happiness through meaningful connections and personal fulfillment. He has noticed that there are many fewer people in deep levels of despair. There is much more support from others in the communities and even AI programmes have helped some people who historically suffered from loneliness.
David, an economist, has been a driving force behind the tax reforms, advocating for a more equitable system for international companies. International companies know that they will be taxed in New Zealand for profits earned here. This has meant that a few international companies choose not to offer services in New Zealand, but that has opened up the opportunity for other New Zealanders the opportunity to build comparable services. One of these start-ups has gone on to compete globally with the company that decided not to offer services in New Zealand.
In 2050, New Zealand has evolved into a society that prioritizes fairness, well-being, and happiness for its citizens. These characters represent a diverse range of individuals who play vital roles in shaping a more equitable and prosperous nation.