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wealth inequality
Analysis Shows Trump Tax Plan Would Make Rich People Richer, Working People Poorer
Economists estimated that under the GOP nominee's proposal, the "share of national income going to the top 5% would increase by around 1.6%, while the share of the bottom 50% would fall by roughly 4.8%."
Oct 03, 2024
Republican presidential nominee Donald Trump's proposal to further reduce the U.S. corporate tax rate from 21% to 15% would make the bottom half of the nation's income distribution poorer while boosting the fortunes of those at the very top, according to an analysis published Thursday by economists at American University.
The analysis, released just over a month before the high-stakes November 5 election, projects the hypothetical macroeconomic and distributional impacts of corporate tax rate plans put forth by Trump and Vice President Kamala Harris, the Democratic nominee. Harris has called for increasing the corporate tax rate to 28%.
If implemented, the economists found, Trump's plan would "modestly reduce" the nation's gross domestic product (GDP), decrease government revenue, and "significantly increase inequality," given that wealthier households "are the primary owners of corporate stocks" that would benefit from the former president's tax cuts.
The "share of national income going to the top 5% would increase by around 1.6%, while the share of the bottom 50% would fall by roughly 4.8%," the analysis estimates.
Harris' plan, by contrast, would "mildly" raise U.S. GDP, increase federal revenue, and "decrease inequality, reducing the share of income earned by the top 5% of the distribution by about 1% and increasing the share of income earned by the bottom 50% of the distribution by about 4.7%, compared to current policy."
The analysis came a day after the Congressional Budget Office released a report showing that the richest 1% saw their share of the nation's wealth grow to 27% between 1989 and 2022 while families in the bottom half of the distribution held just 6% of the country's wealth in both 1989 and 2022—a wealth gap that further slashing corporate taxes would exacerbate.
Trump's call to reduce the corporate tax rate to 15% was the "centerpiece" of an address he delivered last month at the Economic Club of New York, as Bloombergreported at the time.
When Trump took office in 2017, the statutory corporate tax rate was 35%. Later that year, Trump and congressional Republicans rammed through an unpopular tax-cut package that slashed the corporate rate to 21% and led to a surge in tax avoidance. The law has been hugely regressive, delivering major benefits to the rich and very little to the working class.
Cutting the corporate tax rate to 15% would hand roughly $50 billion in annual tax cuts to the 100 largest and most profitable U.S. companies, according to a recent analysis by the Center for American Progress Action Fund.
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The Ultra-Rich Are Running Scared, for Good Reason
Budding entrepreneurs worldwide are devoting their time and talents to making our Earth as safe as possible for our planet’s top 1% that now holds more wealth than the entire bottom 95% combined.
Sep 29, 2024
Have our world’s super rich become absolutely paranoid about the future? Or do they, deep down, understand that our exceedingly unequal global distribution of income and wealth has placed them—and everyone else—in ever-present danger?
The Robb Report, a news service that offers our most awesomely affluent the ultimate in consumption advice, has no interest in psychoanalyzing what the wealthiest among us believe. But Robb Report analysts certainly do enjoy chronicling how these rich behave.
“Forget Butlers,” a Robb Report headline has just pronounced. “Private Security” has now become “the Ultimate Service for the Ultra-Wealthy.”
Real progress on the environmental and every other major problematic front, the new Oxfam report sums up, “will require all countries—both in the Global North and Global South—to realize that they have a common interest in tackling extreme concentrations of wealth.”
The Samphire Risk insurance firm, the Robb coverage goes on to relate, specializes in policies that insure the rich against the dangers that our world visits only upon them. Say, for instance, two monied motorcyclist pals get involved in a crash that leaves one of them badly injured and the other kidnapped amid the accident’s chaos. Samphire prides itself on providing “the connective tissue between the problem and the expertise needed” to solve whatever dilemma the rich may encounter.
The AHNA Group run by a Dubai-based former military operative from South Africa last year provided top corporate execs protective services for over 500 trips into more than four dozen countries. AHNA, says its mover and shaker Mac Segal, always goes the extra mile and even takes the time to prep its operatives on how to make conversation with their rich clients.
“You should speak in short sentences,” Segal advises, “so the client can stop the conversation whenever they want to.”
Still another new security service available for the fretful rich offers “a bodyguard in your pocket,” an artificial intelligence-powered mobile phone app that can tell if a deep pocket’s limo is following its normal daily route.
Budding entrepreneurs worldwide, in short, are devoting their time and talents to making our Earth as safe as possible for our planet’s most comfortable, that top 1% that now holds more wealth, relates a just-released report from the global humanitarian group Oxfam, than the entire bottom 95% combined.
This “immense concentration of wealth,” notes Oxfam’s new Multilateralism in an Era of Global Oligarchy analysis, has allowed large corporations and the ultra-rich “who exercise control over them to use their vast resources to shape global rules in their favor, often at the expense of everyone else.”
How dramatic has this wealth concentration become? Since 1987, as economist Gabriel Zucman has detailed, the combined wealth of the world’s 3,000 richest households—in effect, our richest 0.0001%—now stands at about $14 trillion. Their share of the world’s wealth has over that timespan more than quadrupled.
About 46% of the world’s population, meanwhile, lives on less than the local equivalent of $6.85 per day.
Our contemporary wealth inequality, Oxfam’s research details, connects up neatly with growing global corporate concentration. Seven of the world’s 10 largest corporations now have a billionaire either as CEO or top shareholder. Our wealthiest, Oxfam shows, don’t just benefit passively from all the corporate stock they hold. They’re increasingly shaping—in sectors ranging from pharmaceuticals to global digital advertising—exactly how corporations exercise their market and political power.
The ultra-wealthy and the corporations they dominate, as Oxfam puts it, are using “their vast resources to pressure governments”—through everything from lobbying and campaign contributions to influence over the media and threats to withhold investment—to lower the taxes rich people pay, weaken labor protections, and privatize public services.
In 2022, Oxfam points out, 182 of America’s largest corporations, spent $746 million on lobbying alone. For every lobbying dollar the nation’s 50 largest publicly traded corporations spent, they averaged back $130 in tax breaks and over $4,000 in federal loans, loan guarantees, and bailouts.
One consequence of this ultra-rich political influence: The Covid-19 pandemic, observes Oxfam, left in its wake at least 40 new billionaires.
The most dangerous long-term consequence of ultra-rich influence? That may well be environmental. The dollars of our global ultra-rich, notes Oxfam, continue to be “disproportionately invested in the companies driving climate breakdown.”
What can we do to break down this climate breakdown threat? Real progress on the environmental and every other major problematic front, the new Oxfam report sums up, “will require all countries—both in the Global North and Global South—to realize that they have a common interest in tackling extreme concentrations of wealth.”
“A more equitable international order,” as Oxfam’s latest research powerfully reminds us, “benefits everyone.”
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Blueprint Shows Why Only Real Barrier to Global Billionaire Tax Is 'Political Will'
"Thanks to recent progress in international tax cooperation, a common taxation standard for billionaires has become technically possible," says leading economist Gabriel Zucman.
Jun 25, 2024
Renowned economist Gabriel Zucman released a blueprint Tuesday showing the world's governments that a global minimum tax on billionaires would be both technically feasible and economically beneficial, leaving political will as the only major obstacle preventing transformative changes to an international tax structure long exploited by the ultra-rich.
Zucman, an economics professor at the University of California, Berkeley and a leading expert on tax evasion, estimated in the new analysis that a 2% minimum tax on the wealth of global billionaires would raise between $200 billion and $250 billion annually in revenue from roughly 3,000 individuals globally, resources that "could be invested to support sustained economic development through investments in education, health, public infrastructure, the energy transition, and climate change mitigation."
Billionaires in countries around the world—including France and
the United States—pay lower effective income tax rates than those in the working class, often making use of holding companies and other complex maneuvers to dodge their obligations and stockpile massive fortunes. The world's billionaires collectively own $14.2 trillion in wealth, according toForbes data.
Zucman argued in his blueprint—
commissioned by the government of Brazilian President Luiz Inácio Lula da Silva—that structuring a new tax based on a specific percentage of billionaires' wealth would prevent ultra-rich individuals who report little to no taxable income from completely avoiding taxation. He also notes that the wealth of billionaires is easier to calculate than income flows, given that "at the top of the wealth distribution, the bulk of wealth consists of shares in companies."
"Fundamentally, this minimum tax should be seen not as a wealth tax, but as a tool to strengthen the income tax," Zucman wrote. "A billionaire who already pays the equivalent of 2% of their wealth in income tax (e.g., because that person realizes a significant amount of capital gains or earns a significant amount of dividend income directly) would have no extra tax to pay. Only billionaires who currently pay less than 2% of their wealth in tax would have to pay more."
The best way to address this failure would be with a common minimum standard
Billionaires should pay in tax the equivalent of at least 2% of their wealth each year (instead of the ~0.3% they pay today)
This would erase regressivity at the very top pic.twitter.com/2NutewKQYP
— Gabriel Zucman (@gabriel_zucman) June 25, 2024
Numerous potential challenges could arise should nations attempt to move forward with a minimum tax on billionaires, Zucman noted, including difficulties obtaining accurate estimates of rich individuals' fortunes—which are often hidden away in tax havens—and insufficient coordination between countries, as well as likely efforts by billionaires to evade the tax by shifting assets abroad.
But Zucman argues such obstacles can be overcome in the process of designing the minimum tax, which he described as the "most powerful tool to improve the effectiveness of the taxation of ultra-high-net-worth individuals because it ensures that no matter the avoidance strategies these taxpayers may use, the amount of tax effectively paid cannot fall below a certain amount."
"How to ensure an effective taxation of ultra-high-net-worth individuals if some jurisdictions decline to implement this standard? Two main policies could be implemented: first, measures to strengthen mechanisms to limit tax-driven international mobility; second, mechanisms to incentivize broad participation in the agreement," Zucman wrote. "Many countries have rules in place to limit tax-driven changes in residency of high-net-worth individuals, including exit taxes. Countries implementing the minimum tax standard could build on these rules and strengthen them."
The primary barrier to establishing a global tax on billionaires is not technical, Zucman argued, but political, particularly given the sway the ultra-rich have over economic policy.
"The goal of this blueprint is to offer a basis for political discussions—to start a conversation, not to end it," Zucman wrote. "It is for citizens to decide, through democratic deliberation and the vote, how taxation should be carried out. I hope this report will contribute to this democratic discussion."
"Thanks to recent progress in international tax cooperation, a common taxation standard for billionaires has become technically possible," he added. "Implementing it is a question of political will."
Recent statements by world leaders and survey data indicate that a global tax on billionaires is increasingly popular—even among millionaires. A YouGov poll released earlier this week found that 59% of U.S. millionaires would support a global tax on billionaires equal to 2% of their wealth, a proposal that U.S. Treasury Secretary Janet Yellen has thus far opposed.
In April, the finance ministers of Brazil, Germany, South Africa, and Spain argued in a Guardianop-ed that a minimum tax on billionaires would "boost social justice and increase trust in the effectiveness of fiscal redistribution" while also generating "much-needed revenues for governments to invest in public goods such as health, education, the environment, and infrastructure—from which everybody benefits, including those at the top of the income pyramid."
"Fighting inequality requires political commitment—a commitment to the objectives of inclusive, fair, and effective international tax cooperation," the ministers wrote. "Surely, it needs to go hand-in-hand with much broader approaches that reduce not only wealth inequality but also social and carbon inequalities. The challenges that lie ahead are huge, but we stand ready to engage in concerted multilateral action to tackle them."
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