Fiscal hypocrisy

Publish date 03-06-2023

by Sandro Calvani

Does it still make sense to talk about inhuman injustice between the North and South of the world in this time of global permacrisis? And is the growing injustice due to different market access opportunities or is it mainly intentionally imposed by governments? To understand the question, just observe that between 2014 and 2018 Elon Musk, one of the richest men in the world, paid a "real tax rate" of about 3%. Aber Christine, a flour seller in Uganda, earns $80 a month and pays a 40% tax rate.

In 2022, the fortunes of the world's wealthy billionaires increased by $2.7 billion a day. While at the beginning of 2023, at least 1.7 billion workers live in countries where inflation is growing faster than wages, thus making them increasingly poor. Over the past three years, the richest 1% have seized nearly two-thirds of all newly created wealth, worth $42 trillion, nearly double the amount held by the bottom 99% in the world. This is an extraordinary acceleration of inequality, given that in the previous decade the top 1% had “only” owned about half of all new wealth. In practice, extreme wealth and extreme poverty have increased rapidly for the first time in 25 years.

The solution to stop and reverse the direction of growing inequality exists and is known to all: it would be enough to demand a tax of up to 5% on the multimillionaires and billionaires of the world; a global justice tax imposed for a few years could raise $1.7 trillion a year, enough to lift two billion people out of poverty. That would not be new: in fact, from 1951 to 1963 in the United States and other rich countries, the top marginal rate of income tax was 91%. Until 1975, the top rates of inheritance tax were 77%. In the 1950s and 1960s the corporate tax rate was above 50%. These high levels of taxation have been supported across the political spectrum and have existed in the decades of greatest economic development we have seen. According to polls done by the World Economic Forum, more than 60% of the super-rich would agree to pay more taxes; 200 ultra-millionaires have signed a letter to governments calling for higher taxes. According to José Antonio Ocampo, Minister of Finance in Colombia: "Taxing the richest is no longer an option: it is rather an ethical and political obligation!"

*All data taken from Oxfam's Survival of the Richest report presented in Davos in early 2023


Sandro Calvani
NP March 2023

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