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wealth tax
Economists, Advocates Call On G20 Ministers to 'Make History' and Tax Superrich
"There are 16 people in the world who—if 99% of their wealth vanished overnight—would still be billionaires," said one campaigner. "We must tax the rich."
Nov 12, 2024
Ahead of the G20 Leader's Summit, scheduled to take place over two days next week in Rio de Janeiro, international economists on Tuesday were calling on economic ministers to take an historic step toward reducing global inequality by approving a tax on extreme wealth.
"Tax the rich" has been a rallying cry among economic justice advocates for years, but with the richest 1% of people now owning more wealth than the bottom 95%, some of the world's top economists and finance ministers in recent months have joined the call for a fair taxation system that demands the wealthiest households pay their fair share.
Jenny Ricks, general secretary of the Fight Equality Alliance (FIA), pointed out that taxing the richest people in the world would barely dent their fortunes—but for millions of people across the Global South, it could mean the difference between whether healthcare and public services are provided to them or not.
"There are 16 people in the world who—if 99% of their wealth vanished overnight—would still be billionaires," said Ricks. "We must tax the rich, end austerity, and cancel debt to ensure healthcare, education, and other essential public services for billions in the Global South. A growing movement of millions across the world is tired of the G20 upholding a broken system. A first step forward would be supporting an ambitious global deal to tax the superrich."
The five richest men in the world have doubled their wealth since 2020, while 60% of people have become poorer. The richest 1.5% of people in the world now control nearly half the world's wealth.
FIA warned that with U.S. President-elect Donald Trump scheduled to take office in January, global finance ministers must take action to rein in the "era of the billionaire" before leaders like Trump lavish their billionaire donors with more tax breaks, decimating public services.
"Countries are on track to lose $4.8 trillion in tax to tax havens over the next 10 years," said Nathalie Beghin, co-director of the Instituto de Estudos Socioeconômicos in Brazil. "Such unchecked tax evasion perpetuates inequality and undermines the foundation of sustainable economic development. At this historic moment, G20 leaders must demand the changes needed to transform an outdated, unfair system that's no longer fit for purpose—if it ever was."
Beghin, an economist, called on G20 leaders to support the United Nations Framework Convention on International Tax Cooperation (UNFCITC), which would "tackle illicit financial flows, rediscuss inefficient tax expenditures, [and] tax transnationals and high net worth individuals."
"If Brazil could tax its superrich, as a consequence of a global commitment, the country could stop austerity measures and implement social, environmental and adaptation policies to fight hunger, poverty, and climate change," said Beghin. "Making big companies and very wealthy individuals pay their fair share is also fundamental to tackle inequality."
At a meeting in Rio de Janeiro in July, global finance ministers agreed on the need to develop a global tax system in which the richest people in the world pay a higher tax rate—despite the protests of the United States delegation.
Zinnia Quirós Chacón, a campaigner with Oxfam International, called the upcoming G20 meeting "a once-in-a-lifetime chance to make history."
"For the first time ever, world leaders are close to agreeing on a global plan to tax the superrich," she said.
Oxfam and other groups participating in the Say It With Me Now campaign—an initiative aimed at showing the widespread support for a global wealth tax—posted a video on social media showing supporters around the world asking the G20 ministers to take decisive action.
"Tax the superrich and make the world a better place for everyone," said the supporters in the video. "They won't even notice anyway."
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Global Wealth Tax Could Raise $2.1 Trillion Annually for Climate Action and More
"To make our economies secure and protect the earner way of life that has defined the modern era, we need wealth taxes that end the two-tier treatment of wealth," says a new report.
Aug 19, 2024
With countries set to focus heavily on climate finance for the Global South at the 2024 United Nations Climate Change Conference in November, the Tax Justice Network on Monday offered a proposal that could raise double the amount of money needed to help developing countries transition to clean energy and adapt to extreme weather—and there's already proof the idea is effective and politically feasible.
The "featherlight" wealth tax introduced in Spain less than two years ago raised hundreds of millions of euros last year by taxing the net worth of the 0.5% richest households, and the group's report argued that the law should serve as a model for a global wealth tax like the one increasingly supported by finance ministers in wealthy countries.
Spain's wealth tax, also called the "solidarity surcharge" by Prime Minister Pedro Sánchez, applied a tax of 1.7% to 3.5% to the richest 0.5% of the country's households—turning away from the "two-tier treatment of collected wealth and earned wealth" that TJN said is "the root of the problem" of growing inequality.
"Collected wealth—i.e. dividends, capital gains, and rent gained from owning things—is typically taxed at far lower rates than earned wealth—i.e. salaries gained by working," said TJN. "At the same time, collected wealth typically grows faster than earned wealth. Today, only half of the wealth created around the world each year goes to people who earn for a living—the rest is collected as rent, interest, dividends, and capital gains."
The two-tier tax system allows billionaires to pay tax rates that are half the rates paid by the rest of society, which has allowed the wealth of the richest 0.0001% people in the world to quadruple since 1987 "to the detriment of economies, societies, and planet," said TJN.
Because the richest 0.5% of households control, on average, more than 25% of any given society's wealth, the report states, if countries around the world replicated Spain's solidarity surcharge, governments could raise $2.1 trillion annually—enough to pay for climate finance as well as other pressing needs.
"By definition, a billionaire owns more wealth than an average U.S. household could spend in 10,000 years. Wealth contributes a lot less to the economy than it can when it's pharaoh-tombed like this, making economies poorer than the sum of their parts."
"To guarantee a good life for all citizens and preserve social cohesion despite these challenges, governments around the world need the fiscal space to transform economies in a socio-ecological manner, ensure high-quality education for all, guarantee access to modern health services, and fulfill basic needs like affordable housing, food, and transportation at the same time," reads the report. "Such measures are only feasible with sufficiently endowed and stable public budgets. A moderate, progressive wealth tax could help countries to raise these urgently needed funds."
The report shows, said Oxfam International, that "E.U. governments can no longer excuse their 'lack of funds' for failing to fight the climate crisis and end poverty. The money they need is in the pockets of the super-rich!"
In each country, half the population holds only about 3% of the wealth—a persistent inequality that is "making economies insecure and is directly linked to people having to spend more than they bring in."
The current global tax system treats billionaires as though they "earn wealth like everybody else, they're just better at it," said Mark Bou Mansour, head of communications for TJN. "This is bogus."
"It's impossible to earn a billion dollars," Bou Mansour said. "The average U.S. worker would have to work for a stretch of time 13 times longer than humans have existed to earn as much as wealth as the world's richest man has today. Salaries don't make billionaires, dividends and rent money do. But we tax dividends and rent money much less than we tax salaries, and this is destabilizing the earner model our economies are based on."
"By definition, a billionaire owns more wealth than an average U.S. household could spend in 10,000 years," he added. "Wealth contributes a lot less to the economy than it can when it's pharaoh-tombed like this, making economies poorer than the sum of their parts. To make our economies secure and protect the earner way of life that has defined the modern era, we need wealth taxes that end the two-tier treatment of wealth."
On the BBC, which featured TJN's report in a segment on Monday, Bou Mansour debunked the common claim that taxing the richest households would harm countries' economies by pushing rich people to move away.
"This is an area where public perception has been lagging behind the evidence," said Bou Mansour. "Recent wealth taxes in Norway, Sweden, and Denmark all resulted in a migration rate of 0.01% among the super-rich who were taxed. So what the data shows is that the super-rich do not leave en masse, and what's more striking is that the data shows if countries do not implement wealth taxes, that is far more harmful to the economies."
The report notes that concerns about the super-rich simply hiding their wealth in tax havens are valid, and called on countries to ensure that the U.N. tax convention currently being negotiated "delivers robust tax transparency standards."
"Countries should collaborate to combat tax abuse by the ultra-rich, a challenge addressed in another strand of literature," reads the report. "A straightforward starting point for combating this form of tax abuse in the context of a wealth tax is the implementation of full beneficial ownership transparency, at least within the country itself."
While a number of G20 finance ministers have come out in support of a global wealth tax this year, leaders in some wealthy countries including U.S. Treasury Secretary Janet Yellen have refused to back the proposal.
"The vast majority of countries are currently working on what can be the biggest shakeup in history to global tax rules, to end the scourge of global tax abuse by multinational corporations and the superrich. But a minority of rich countries still seem to be holding back from support for a robust framework convention on tax," said Alison Schultz, research fellow at TJN and co-author of the report. "This needs to change now—the climate can't wait, and nor can the people of the world."
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'Disgusting': Global 1% Captured $42 Trillion in New Wealth Over Past Decade
"The richest 1% of humanity continues to fill their pockets while the rest are left to scrap for crumbs."
Jul 25, 2024
The richest sliver of the global population hauled in more than $40 trillion in new wealth over the past decade as countries around the world cut taxes for those at the very top, supercharging inequality that poses a dire threat to democracy and the planet.
An Oxfam analysis released Thursday ahead of a meeting of G20 finance ministers estimated that over the past 10 years, the global 1% has accumulated $42 trillion in new wealth. That's "nearly 34 times more than the entire bottom 50% of the world's population," the group observed.
"That is disgusting," Michael Taylor, founder of the Australian Independent Media Network, wrote in response to the new figures.
The analysis comes amid a growing push by current and former world leaders for rich countries to enact a global tax on billionaire wealth that would begin to reverse the damage done by decades of regressive policy. Oxfam found in a separate analysis released earlier this year that economic and political elites' global "war on fair taxation" has slashed taxes for the rich by 32% since 1980.
Oxfam said Thursday that global billionaires "have been paying a tax rate equivalent to less than 0.5% of their wealth."
"Inequality has reached obscene levels, and until now governments have failed to protect people and planet from its catastrophic effects," Max Lawson, Oxfam's head of inequality policy, said in a statement Thursday. "The richest 1% of humanity continues to fill their pockets while the rest are left to scrap for crumbs."
"Momentum to increase taxes on the super-rich is undeniable, and this week is the first real litmus test for G20 governments," Lawson added. "Do they have the political will to strike a global standard that puts the needs of the many before the greed of an elite few?"
A recent report by renowned economist Gabriel Zucman of the University of California, Berkeley outlined how nations could go about implementing a 2% minimum tax on the wealth of global billionaires—a policy change that he shows would raise up to $250 billion in annual revenue that could be used to support a range of priorities, from climate investments to education and healthcare programs.
"Thanks to recent progress in international tax cooperation, a common taxation standard for billionaires has become technically possible," said Zucman. "Implementing it is a question of political will."
The economist's report was commissioned by the government of Brazilian President Luiz Inácio Lula da Silva, who has championed a global billionaire tax in the face of resistance from powerful nations, including the United States—which has more billionaires than any other country. In 2018, U.S. billionaires paid a lower effective tax rate than working-class Americans.
But reporting indicates that the leaders of G20 nations—which are home to roughly 80% of the world's billionaires—are likely to rebuff Lula's push for billionaire wealth tax, opting instead to pursue what Bloombergdescribed as "research on taxation and inequality that could take years to deliver results."
Reuters similarly reported Wednesday that G20 finance ministers meeting in Brazil "are preparing a joint statement for Thursday in support of progressive taxation that will stop short of endorsing the hosts' proposal for a global 'billionaire tax.'"
The global billionaire wealth surge comes in the context of growing misery for large swaths of the world's population. A report released Wednesday by the United Nations' Food and Agriculture Organization (FAO) estimated that one out of 11 people around the world—or up to 757 million people—"may have faced hunger" last year.
"The world's poorest people are paying the highest price of hunger," Eric Munoz, Oxfam's food policy expert, said in response to the FAO report. "We need deeper, structural policy and social change to address all of the drivers of hunger, including economic injustice, climate change, and conflict."
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