Survival of the Richest: How we must tax the super-rich to fight inequality

The report states that for the first time in 25 years, the world has experienced a simultaneous and sharp rise in extreme wealth and extreme poverty. As per the State of Food Security and Nutrition in the World 2022 report, almost one-tenth of the global population suffered from hunger in 2021. On the other hand, billionaires saw an increase in wealth. For instance, Gautam Adani’s wealth increased by 46 per cent in 2022.

While around 800 million people suffered from hunger, companies manufacturing food and energy more than doubled their profits in 2022, the report notes. Shareholders of such companies received about 257 billion dollars.

As per the report’s calculations, the wealth of billionaires is rising by 2.7 billion dollars each day while the wages of around 1.7 billion people struggle to keep up with the increasing inflation.

The average tax rates for the rich have lowered over the past few decades. In countries that are members of the Organisation for Economic Co-operation and Development (OECD), tax rates for the richest have fallen from around 58 per cent in 1980 to 42 per cent. The average personal income tax rate is even lower – 31 per cent – in the world’s 100 largest economies.

Using data from Forbes, Wealth-X, Patriotic Millionaires and the Institute for Policy Studies, Washington D.C., and the Fight Inequality Alliance, the report calculates possible tax rates for the rich. It states that it is possible to raise around 1.7 trillion dollars annually by enforcing a wealth tax of two per cent on millionaires, three per cent on those with wealth above 50 million dollars, and five per cent on billionaires.

Citing a 2020 article from the journal Studies in Comparative International Development, the report notes that consumption taxes (like value-added tax) which result in increasing inequality have been promoted by the International Monetary Fund as the primary means of raising revenue, especially in poorer countries. This has resulted in ordinary citizens bringing in more than 80 per cent of total tax revenue whereas taxes on corporations provide only about 14 per cent, and taxes on wealth account for four per cent.

A January 2022 survey by Fight Inequality Alliance India found that about 80 per cent of respondents favoured increased taxation of the rich, the report notes.

The report states that women and other marginalised groups are often excluded from government processes that determine tax-related policies. Citing an article from the Quint which quotes a report from the Hindustan Times, the report adds that the Central Board of Direct Taxes in India has not had a Dalit or tribal member for the last 30 years.

According to the report, due to the absence of taxes on ‘unrealized gains’ (increased value of assets that have not been sold) the wealthy can accumulate value from their investments without having to pay tax on them. The report says that a one-time tax on the unrealized gains (from 2017–2021) of Gautam Adani could have raised around 21.95 billion dollars or enough money to pay over five million primary school teachers in India for a year.

According to the report, the chairman and managing director of Reliance Industries Limited, Mukesh Ambani, owns 72 television channels watched by over 800 million people. The report goes on to say that such concentrated media ownership by the wealthy threatens reforms due to their influence on political discussions.

The report recommends that the first step in reducing inequality should be reducing the wealth and number of billionaires by half before 2030. This, it suggests, can be achieved by increased taxes for the richest 1 per cent and embracing similar “billionaire-busting” policies. The eventual aim, the report suggests, should be to abolish billionaires altogether.

Advocating for one time solidarity taxes as well as corporate windfall taxes, the report also suggests governments to introduce higher taxation rates on dividends. It also suggests a minimum 60 per cent tax on the income of multi-millionaires and billionaires. It advocates for revenue so collected to be spent on public healthcare, education and food-security.

Focus and Factoids by Naomi Fargose.