So, as I understand it, the value of one's money is in its purchasing power, and its purchasing power is related to its amount relative to others. That is to say: Earning 25k a year in a country where the mean income is 10k makes you very rich, whereas earning 25k in a country where the mean income is 50k means your 25k does not go nearly as far.
So my question is this: Does this mean that an across-the-board percentage income tax cut does not increase anyone's wealth? If everyone has x% more money, isn't their purchasing power still identical? Obviously, the second it happens, prices and wages are the same, so in that moment they have more, but don't prices and wages catch up? Or does the definition of purchasing power shift.. one could buy more of certain goods, but the prices of things like housing rise to reflect the increased amount of money people have to bid on them?
Confounding factors I can think of: Global prices, capital shift between public and private sector