Inequality and taxation of the rich (Oxfam)

Our key takeaway: Money makes the world go round, as they say. In this case, money (and tax specifically) can also be an answer to the inequality crisis. Wealth has been created between 2020-2021 ($42tn of wealth to be exact). Of that wealth, 63% of it went to the richest 1%, and 37% of that wealth went to the bottom 99%. The richest are becoming richer, and the poorer are becoming poorer. Oxfam doesn’t mince its words: “Every billionaire is a policy failure.” Oxfam delves into how extreme concentrations of wealth undermine economic growth, corrupt politics and the media, corrode democracy and propel political polarization - let alone how those individuals holding the extreme wealth are contributing to the crises we are in (a billionaire emits a million times more carbon than the average person, and billionaires are twice as likely as the average investor to invest in polluting industries like fossil fuels, according to Oxfam). Oxfam’s recommendation: a call on governments to use the tax tools at their disposal to turn back this tide of inequality.

Oxfam International published ‘Survival of the Richest: How We Must Tax the Super-Rich Now to Fight Inequality’ (January 2023):

• “The inequality explosion”: The report highlights that: “We are living through an unprecedented moment of multiple crises. Tens of millions more people are facing hunger. Hundreds of millions more face impossible rises in the cost of basic goods or heating their homes. Poverty has increased for the first time in 25 years.” Chenai C. Mukumba,the Executive Director of Tax Justice Network Africa and Vice-President of ATAF Women In Tax Network (AWITN), notes as follows: “Inequality is one of the most important issues today and, left unabated, has the potential to exacerbate many of the social cleavages that exist within our society. Addressing it, therefore, should be at the forefront of our policy agendasThe report delves into data points, such as: “In 2022, the World Bank announced that we will fail to meet the goal of ending extreme poverty by 2030, and that ‘global progress in reducing extreme poverty has come to a halt,’ amid what it said was likely to be the largest increase in global inequality and the largest setback in addressing global poverty since World War II. The IMF is forecasting that a third of the global economy will be in recession in 2023. For the first time, the UNDP has found that human development is falling in nine out of 10 countries.”
  

• The winners of these multiple crises: The report highlights that “At the same time, these multiple crises all have winners. The very richest have become dramatically richer and corporate profits have hit record highs, driving an explosion of inequality.” Statistics include as follows: “Since 2020, the richest 1% have captured almost two-thirds of all new wealth – nearly twice as much money as the bottom 99% of the world’s population.” “Billionaire fortunes are increasing by $2.7bn a day, even as inflation outpaces the wages of at least 1.7 billion workers, more than the population of India.” “Food and energy companies more than doubled their profits in 2022, paying out $257bn to wealthy shareholders, while over 800 million people went to bed hungry.” The report finds that: “Every billionaire is a policy failure. Extreme concentrations of wealth undermine economic growth, corrupt politics and the media, corrode democracy and propel political polarization. New Oxfam research also shows that the richest are key contributors to climate breakdown: a billionaire emits a million times more carbon than the average person, and billionaires are twice as likely as the average investor to invest in polluting industries like fossil fuels.” 
  

• Fighting inequality by taxing the wealthiest: The report therefore makes the case for ensuring that those who”earn the most pay the most.” “Greater taxation of rich people and corporations is the exit door for today’s polycrisis. It can avert austerity, it can be used to fight inflation and higher prices, and it can avoid the unnecessary cruelty of mass destitution and hunger. Greater taxation is a precondition for successful, strategic governments, giving them the resources to invest in universal healthcare and education; happier, healthier societies; innovation, research and development; the transition to green economies; and stopping climate breakdown.” In short, the report calls for four steps governments should take to “use the tax tools at their disposal to turn back this tide of inequality”: (1) “Introduce one-off solidarity wealth taxes and corporate windfall taxes as well as much higher taxes on dividend payouts to stop crisis profiteering.” (2) “Permanently increase taxes on the richest 1%, for example to a minimum of 60% of their income from both labour and capital, with higher rates for multi-millionaires and billionaires.” (3) “Tax the wealth of the super-rich at rates high enough to systematically reduce extreme wealth and lower power concentration and inequality.” (4) “Use the revenues from these taxes to increase government spending on inequality-busting sectors, such as healthcare, education and food security, and to fund the just transition to a low-carbon world.”