Tax the rich for the benefit of all
My recent columns on the need to reduce inequality and social injustice by, among other things, increasing taxes on the rich and introducing or expanding wealth taxes, have elicited responses from some people along the lines of “you advocate stealing from the rich.”
But the reality is that the rich have increasingly been taking – stealing, if you like – from the poor in recent decades. This is one of the many damaging consequences of the neoliberal ideology that has dominated political and economic thought and practice since the 1980s.
The rich take from the poor in many ways. Among those ways: keeping wages low, keeping work temporary and parttime, and avoiding paying benefits to people, while pushing up prices, especially on necessities.
Another way is avoiding taxes, or minimizing taxes for the wealthy, which shifts more of the tax burden to middleand low-income people, while reducing government revenue and weakening the capacity to assist those in need.
They also move industries to countries that have lower wages, fewer social protections and less effective occupational and environmental protection, all of which reduces costs and boosts profits.
In addition, rich countries extract resources from low-income countries, while taking advantage of the same deficiencies, resulting in a transfer of benefits to the rich and environmental and social costs to the poor.
The consequences are documented in the latest Oxfam report on inequality, released this month. Titled “Survival of the Richest,” the report spells out what has been happening in painful detail.
The rich are getting richer, while the poor are getting poorer, says Oxfam. In fact “extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.” Since
2020, the top one per cent got even more – almost two-thirds of the $63 trillion in new wealth created. The rest of us – the remaining 99 per cent – shared the remaining one-third, and you can be sure it was not going to the people at the bottom.
In fact, the report says, over 70 million additional people were pushed into extreme poverty in 2020, an 11 per cent rise, while almost one-tenth of the global population was affected by hunger in 2021.
The effects of the pandemic, the war in Ukraine, climate change and corporate behaviour, notes Oxfam, have led to soaring food and energy prices that “deals another blow to the world’s poorest people.”
Yet many food and energy companies in particular are making unacceptable windfall profits. For 95 food and energy corporations that made windfall profits in 2022, Oxfam notes, 84 per cent of the $306 billion in windfall profits they made went to shareholders.
And yet, reports Oxfam, “worldwide, only four cents in every tax dollar now comes from taxes on wealth,” while rich people’s (mostly unearned) income “is taxed on average at 18 per cent, just over half as much as the average top tax rate on wages and salaries.” Yet taxes used to be much higher, playing “a key role in expanding access to public services like education and healthcare,” until “governments across Africa, Asia, Europe, and the Americas … slashed the income tax rates on the richest.”
The way things are, as Oxfam CEO Danny Sriskandarajah states, “is an affront to basic human values.” Moreover, states Oxfam, “extreme concentrations of wealth undermine economic growth, corrupt politics and the media, corrode democracy and propel political polarization.”
So, unsurprisingly, Oxfam calls for higher income taxes on the rich, higher capital-gains taxes, inheritance, property, land and net wealth taxes, and taxes on windfall profits.
The benefits of just an annual wealth tax of up to five per cent on the world’s multimillionaires and billionaires would be massive. Among other things, the $1.7 trillion a year it would raise would be “enough to lift two billion people out of poverty, fully fund the shortfalls on existing humanitarian appeals, deliver a 10-year plan to end hunger, support poorer countries being ravaged by climate impacts, and deliver universal healthcare and social protection for everyone living in low- and lower-middle-income countries.”
Imagine what raising taxes in all those other areas could do. What’s not to like – unless you are a billionaire or millionaire lacking any form of social conscience?