International charity think tank, Oxfam, is recommending an annual wealth tax of up to 5% on the world’s richest one percent (1%) to reduce the poverty inequality gap in a new report released on Tuesday coinciding with the Davos summit underway in Switzerland.
Oxfam’s report highlights a widening poverty inequality gap, where it says the super-rich continued to amass a disproportionate amount of global wealth – making nearly twice as much as the rest of the world since 2020, while already vulnerable people faced many levels of economic recessions.
“Billionaires have seen extraordinary increases in their wealth. During the pandemic and cost-of-living crisis years since 2020, $26 trillion (63 percent) of all new wealth was captured by the richest 1 percent, while $16 trillion (37 percent) went to the rest of the world put together. While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams,” said Gabriela Bucher, Executive Director of Oxfam International.
The World’s richest five men – Tesla CEO Elon Musk, LVMH chief Bernard Arnault, Amazon’s Jeff Bezos, Oracle’s Larry Ellison, and investor Warren Buffet increased their wealth by 114% since 2020, at $14m per hour during the past four years, according to the report. Oxfam said this could potentially cause the emergence of the world’s first trillionaire, but poverty will not be eradicated for the next 229 years.
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Illustrating this tax disparity, Oxfam presented an example: Tesla boss, Elon Musk is said to have paid a true tax rate of just over 3% from 2014 to 2018, while a market trader selling rice and flour in Northern Uganda paid an income tax rate of 40%.
The solution for an annual 5% increase in taxes for the world’s richest could raise $1.7 trillion a year, enough to lift 2 billion people out of poverty, and fund a global plan to end hunger, the report said.
“Taxing the super-rich directly reduces the numbers and wealth of the richest, creating more equal societies, and preventing the emergence of powerful, unaccountable and semi-aristocratic elites. It also reduces corrosive social inequalities,” the report said further.
What are Oxfam’s other suggestions on taxing the rich to get out of the wealth inequality loop?
Oxfam is calling on governments to:
- Introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering.
- Permanently increase taxes on the richest 1 percent, for example to at least 60 percent of their income from labor and capital, with higher rates for multi-millionaires and billionaires. Governments must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income.
- Tax the wealth of the richest 1 percent at rates high enough to significantly reduce the numbers and wealth of the richest people, and redistribute these resources. This includes implementing inheritance, property and land taxes, as well as net wealth taxes.
The charity organisation hopes the release of its report will trigger discussions among business and political leaders gathered at the World Economic Forum summit.
