Capital gains tax changes are already having an impact on wealth inequality

By Greg Jericho • June 24, 2026 • Business

Weekend house auction results and the official taxation data reveal the arguments from outraged conservatives are hollow

Has a policy ever worked as quickly as the changes to the capital gains tax (CGT) discount? It hasn’t even become law yet and already it is having an impact despite conservatives loudly telling everyone the discount was not the cause of the housing affordability crisis. Last week in my role as chief economist for the Australia Institute, I appeared before the Senate committee into the tax changes. I stated what regular readers of this column have long known – that my research showed the CGT 50% discount was ground zero of the housing affordability crisis. The opposition finance spokesperson, Claire Chandler, took issue with this assertion and regurgitated economist Richard Holden’s argument that the deregulation of the banking system by Paul Keating, the Reserve Bank of Australia targeting inflation and the Basel I and II banking accords all played a bigger role. Now perhaps there is a reason why dwelling prices remained at around the same level in relation to household income during this deregulation-inflation-targeting-Basel-that period, and why those things only began to have an impact after the CGT discount was introduced in 1999, but it’s not one I’d want to try to sell: If the graph does not display click here Chandler also wondered if “the CGT changes in 1999 are still what’s impacting the increases in the property market, 27 years down the track?” I suggested, “The problem is that the thing that happened 27 years ago is still happening; it’s still here.” Until now. Now, this tax discount, which apparently had no impact on house prices, is the cause of house prices falling $100,000, or falling 10% nationally, or falling 7% of 8% in Sydney and Melbourne over the year to November. Not bad for a little thing that only had an impact 27 years ago. Coupled with these attempts to suggest the CGT discount has no impact on housing is the suggestion by opposition parties, including Pauline Hanson’s One Nation, that capital gains are vital for young people and as such the changes are actually hurting, not helping, them. Last week in her National Press Club speech, Hanson said “the largest capital gains cohort is younger. There are now over 215,000 under 35-year-olds who will see less income from their investments.” Last week the Australian Taxation Office released its latest annual taxation statistics, so we can run our eye over that claim. In 2023–24 there were 1.6 million people who had capital gains; of those 369,000 were under 35. That doesn’t mean Hanson is wrong – after all, the changes only apply to investments held for more than year, which would be fewer than the total of all capital gains. But younger people are clearly not the “largest capital gains cohort”, given nearly 400,000 over-65s had capital gains. And if you want to meet someone with a capital gain, the best bet is to seek out those in their 50s, not their 20s or 30s: If the graph does not display click here The tax stats also reveal that younger people earn much less on average from capital gains than do older folk: If the graph does not display click here Capital gains are also much less important to those under 35 than they are to those over 65. They account for less than 1% of total income for those under 35, compared with 10% for those born before the 1960s: If the graph does not display click here We also know that capital gains are vey much the purview of the richest in Australia. There were 27,964 people in 2023-24 with an income above $1m. That was just 0.2% of all income earners, and yet they took in 38% of the net capital gains that year: If the graph does not display click here And unsurprisingly when we line this up with occupations, we find that the higher the average income of the job, the higher the percent of people in that job who earn capital gains: If the graph does not display click here Who knows, maybe there is a stack of financial advisors, financial dealers, anaesthetists and economists in their 20s who are going like mad making capital gains. But we know even if there are, they are a very, very small minority. It is odd to find One Nation worrying about minorities for a change. But like the vested interests who are loudly arguing against the capital gains tax changes, I suspect Hanson’s motives are not so much concern for young people but older, richer ones. For 30 years we’ve had governments seemingly care more about that cohort than others. Now that a government finally is trying to address the problem of intergenerational wealth inequality, it is no shock that the vested interests are upset. But the weekend house auctions, and the official taxation data shows their arguments are hollow. Greg Jericho is a Guardian columnist and chief economist at the Australia Institute

Source: The Guardian