NEW DELHI, Aug 6 (IPS) – Amitabh Behar is executive director of Oxfam InternationalWe live in a world full of crises of inequality, climate disruption and conflict. Billions of people worldwide are facing enormous hardship. Entire governments are on the brink of bankruptcy, with extremely high debt levels forcing them to implement brutal and deeply unpopular cuts and tax increases on ordinary people. 3.3 billion people live in countries who spend more money on interest payments on debt than on education or health care.
For the first time in 25 years, we see extreme wealth and extreme poverty increasing simultaneously. The world’s five richest men have doubled their fortunes since 2020, while five billion people have become poorer. In his SDG Progress Report 2023the United Nations Secretary-General announced that the Sustainable Development Goal (SDG), which maps inequality, is among the worst performing.
Taxation is one of the most important levers a government has to reduce economic inequality and generate revenue for governments to spend on policies that reduce inequality. Historically, taxing the ultra-rich has helped create more equal societies and prevented the extreme gap between the haves and have-nots.
However, in the decades leading up to the pandemic, progressive taxation collapsed, favoring the ultra-rich and corporations with low tax regimes while raising taxes for billions of ordinary people.
Billionaires pay tax rates of only 0.5% on their immense wealtha fraction of what teachers or nurses earn. Meanwhile, billionaire fortunes have grown an average of 7 percent annually over the past four decades — much faster than the wealth of ordinary people.
The call for higher taxes on the ultra-rich is gaining momentum. For the first time in history, G7 leaders pledged in June to work together to increase progressive taxes.
Under Brazil’s G20 presidency in July, G20 finance ministers committed for the first time ever to work together to more effectively tax individuals with extremely high net worth. Oxfam supports the Brazilian G20 presidency’s initiative to set a global standard for taxing the super-rich.
At the G20 summit in November this year, leaders should go beyond their finance ministers and support concrete coordination: agreeing on a new global deal to tax the ultra-rich at a rate high enough to close the gap between them and the rest of us. Political leaders are realizing that this is a very popular policy; even wealthy individuals are in favor of higher taxes on themselves.
Nearly three-quarters of millionaires in G20 countries support higher wealth taxes, and leading figures such as Abigail Disney have spoken out loud and clear in support of a global effort to tax the ultra-rich.
Higher taxes on the world’s wealthiest individuals are not the only answer to the inequality crisis, but they are a fundamental part of it. A one-off solidarity tax and windfall taxes would generate funds that could be used to provide public goods. These progressive changes are feasible.
Italy was one of the first countries to implement a windfall tax, and after WWII the French government taxed excessive war wealth at a rate of 100%. A similar level of ambition is needed today.
Furthermore, governments should permanently raise taxes on the richest 1%, for example to at least 60% of their labor and capital income, with higher rates for multimillionaires and billionaires. They should especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income.
A permanent wealth tax that balances taxes on capital and labor could significantly reduce inequality and address the disproportionate political power and excessive carbon emissions of the super-rich.
We need to ensure that the wealth of the richest 1% is taxed at rates high enough to significantly reduce the number and wealth of the richest people, and we need to redistribute these resources.
This includes the introduction of inheritance tax, real estate tax, land tax and wealth tax. Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will leave a tax-free $5 trillion treasury to their heirs – more than the GDP of Africa—the beginning of the next generation of aristocratic elites.
Above all, we want to see a shift in the imagination of governments. A reckoning that more of the same—more billionaire wealth and a deeper dive into a crisis of survival costs—is the definition of madness and more suffering for billions of people. We need to heed the evidence, but also look at history and what ordinary people around the world are demanding.
By closing tax loopholes and ensuring that the very richest pay their fair share, we can reduce inequality and raise the trillions of dollars urgently needed to stop climate change and invest in fairer societies for all.
It would put people and the planet above the needs of a wealthy minority. It is time for governments to shake off decades of failed ideology and influence of the wealthy elite and do the right thing: tax the ultra-rich.
© Inter Press Service (2024) — All rights reservedOriginal source: Inter Press Service
