Economy Jake Johnson

Tax on Global Mega-Rich Could Help Lift 2.3 Billion Out of Poverty

Golden piggy bank
A golden piggy bank. Original public domain image from Wikimedia Commons

By Jake Johnson / Common Dreams

A new analysis released Tuesday estimates that an annual wealth tax targeting the world’s millionaires and billionaires would raise enough revenue to lift 2.3 billion people out of poverty, provide universal healthcare to the people of low- and middle-income nations, and produce enough coronavirus vaccines to meet global demand.

The study was carried out by the Fight Inequality Alliance, the Institute for Policy Studies (IPS), Oxfam, and Patriotic Millionaires, advocacy groups that have long warned about and cataloged the corrosive impacts of wealth inequality—which has only gotten worse during the ongoing Covid-19 crisis.

“The insane reality is that whilst billions face a daily struggle to survive during this pandemic, billionaire wealth is spiraling out of control,” Jenny Ricks, global convenor of the Fight Inequality Alliance, said in a statement. “This cannot be right.”

Unveiled amid the corporate-dominated World Economic Forum, the analysis details how a wealth tax of 2% on global millionaires, 3% on those with fortunes above $50 million, and 5% on the world’s 2,660 billionaires would raise $2.52 trillion dollars a year. According to the groups’ calculations, a “more steeply progressive tax” of 2% on millionaires, 5% on ultra-millionaires, and 10% on billionaires would bring the revenue total up to $3.62 trillion annually.

Chuck Collins, co-author of the new report and director of the Program on Inequality and the Common Good at IPS, said Tuesday that “wealth inequality has been supercharged by the pandemic, creating an unprecedented global concentration of wealth and power.”

“Taxing the world’s wealthiest one-tenth of 1% would raise substantial revenue for public investments in health and social protection and for a greater global response to the most urgent crises of our time,” Collins added. “During 2021, we witnessed the epidemic of Covid-19 and wealth-hiding, and it’s time to reverse course.”

In the United States alone, the new report notes, there are over 1.43 million individuals with fortunes of $5 million or more and 740 billionaires with combined wealth totaling $5.1 trillion—up roughly $2 trillion since the start of the coronavirus pandemic.

Tesla and SpaceX CEO Elon Musk, whose estimated net worth currently sits at around $294.2 billion, owns more wealth than all the people in the bottom 40% of the U.S. income distribution combined, the analysis observes.

With a modest progressive wealth tax on millionaires and billionaires, the U.S. could raise around $928.39 billion a year, the new research estimates—more than enough to cover the annual price tag of the stalled Build Back Better Act, which would cost roughly $1.75 trillion over 10 years.

Revenue from the wealth tax could also “eliminate half of households’ out-of-pocket health costs,” the report finds.

According to the latest figures from the World Bank, the coronavirus pandemic has added significantly to the global poverty rate, forcing around 97 million more people to attempt to survive on less than $1.90 a day. The institution estimates that 163 million more people are currently living on less than $5.50 per day than before the pandemic.

Pointing to World Bank data, the Fight Inequality Alliance, IPS, Oxfam, and Patriotic Millionaires note that it “would cost on average $901 per person annually to lift up someone living below the $5.50 line; the total cost of doing this for all of the 3.297 billion people living on less than $5.50 a day would be $2.97 trillion dollars.”

That price tag would be covered—with some money to spare—by the more aggressive wealth-tax structure outlined in the new report.

“There is no defending a system that endlessly inflates the wealth of the world’s richest people while condemning billions to easily preventable poverty,” said Morris Pearl, chair of the Patriotic Millionaires. “We need deep, systemic change, and that starts with taxing rich people like me.”

10 comments

  1. Defending Capitalism. That’s the rub here. So, let’s make it Capitalism lite. Or, let’s “tax” the rich. And why are there “rich” folk? How much work have they done to get those riches? Well, work for humanity, for the good of the earth, for people in communities, that’s the questions. Work is not scamming, conniving, plotting, amassing, gouging, and setting up a system of penury and parasitic economics. Work is not driving stakes in hearts of humanity by any means necessary. Work is not deploying tricks, lawyers, economists, politicians, armies, technocrats, the works, to take every last red cent from the masses.

    Think about the system of the elite, the super rich, the rich, and their professional middle rung Eichmann’s. Think about the fines, levies, taxes, fees, penalties, tickets, tolls, service debts, evictions, foreclosures, repossessions, credit hikes, and then you see the work of the rich.

    So, a tax here and a tax there? Who the hell voted for Bezos to control retail? Who voted for Waltons and Krogers to monopolize and then pay slave wages? Who voted for satellites in space, all the rockets rumbling into space for the perverted billionaire jockeys? Who voted for 4, 5 and 6 G EMFs bombarding humanity? Who voted for mercury in water, forever chemicals, persistent organic compounds, dioins, drugs in meat, GMOs in food, plastics in all our feces?

    Do they, the rich who do not work for the good of humanity, just call that the price of doing business, externalities WE the people pay?

    Exactly what is that tax? Are we going to be accounting for the cradle to grave energy wasted on each product?

    Tax the rich? We should have no “rich,” and that’s the problem with Scheer and Commondreams, et al.

    Michael Parenti, follows —

    The world’s 85 richest individuals possess as much wealth as the 3.5 billion souls who compose the poorer half of the world’s population, or so it was announced in a report by Oxfam International. The assertion sounds implausible to me. I think the 85 richest individuals, who together are worth many hundreds of billions of dollars, must have far more wealth than the poorest half of our global population.

    How could these two cohorts, the 85 richest and 3.5 billion poorest, have the same amount of wealth? The great majority of the 3.5 billion have no net wealth at all. Hundreds of millions of them have jobs that hardly pay enough to feed their families. Millions of them rely on supplements from private charity and public assistance when they can. Hundreds of millions are undernourished, suffer food insecurity, or go hungry each month, including many among the very poorest in the United States.

    Most of the 3.5 billion earn an average of $2.50 a day. The poorest 40 percent of the world population accounts for just 5 percent of all global income. About 80 percent of all humanity live on less than $10 a day. And the poorest 50 percent maintain only 7.2 percent of the world’s private consumption. How exactly could they have accumulated an amount of surplus wealth comparable to the 85 filthy richest?

    Hundreds of millions live in debt even in “affluent” countries like the United States. They face health care debts, credit card debts, college tuition debts, and so on. Many, probably most who own homes—and don’t live in shacks or under bridges or in old vans—are still straddled with mortgages. This means their net family wealth is negative, minus-zero. They have no propertied wealth; they live in debt.

    Millions among the poorest 50 percent in the world may have cars but most of them also have car payments. They are driving in debt. In countries like Indonesia, for the millions without private vehicles, there are the overloaded, battered buses, poorly maintained vehicles that specialize in breakdowns and ravine plunges. Among the lowest rungs of the 50 percent are the many who pick through garbage dumps and send their kids off to work in grim, soul-destroying sweatshops.

    The 85 richest in the world probably include the four members of the Walton family (owners of Wal-Mart, among the top ten superrich in the USA) who together are worth over $100 billion. Rich families like the DuPonts have controlling interests in giant corporations like General Motors, Coca-Cola, and United Brands. They own about forty manorial estates and private museums in Delaware alone and have set up 31 tax-exempt foundations. The superrich in America and in many other countries find ways, legal and illegal, to shelter much of their wealth in secret accounts. We don’t really know how very rich the very rich really are.

    Regarding the poorest portion of the world population—whom I would call the valiant, struggling “better half”—what mass configuration of wealth could we possibly be talking about? The aggregate wealth possessed by the 85 super-richest individuals, and the aggregate wealth owned by the world’s 3.5 billion poorest, are of different dimensions and different natures. Can we really compare private jets, mansions, landed estates, super luxury vacation retreats, luxury apartments, luxury condos, and luxury cars, not to mention hundreds of billions of dollars in equities, bonds, commercial properties, art works, antiques, etc.—can we really compare all that enormous wealth against some millions of used cars, used furniture, and used television sets, many of which are ready to break down? Of what resale value if any, are such minor durable-use commodities? especially in communities of high unemployment, dismal health and housing conditions, no running water, no decent sanitation facilities, etc. We don’t really know how poor the very poor really are.

    Millions of children who number in the lower 50 percent never see the inside of a school. Instead they labor in mills, mines and on farms, under conditions of peonage. Nearly a billion people are unable to read or write. The number of people living in poverty is growing at a faster rate than the world’s population. So poverty is spreading even as wealth accumulates. It is not enough to bemoan this enormous inequality, we must also explain why it is happening.

    But for now, let me repeat: the world’s richest 85 individuals do not have the same amount of accumulated wealth as the world’s poorest 50 percent. They have vastly more. The multitude on the lower rungs—even taken as a totality—have next to nothing.

    1. “So poverty is spreading even as wealth accumulates.”

      There is no contradiction here, these produce each other.

    2. “Who the hell voted for Bezos to control retail? Who voted for Waltons and Krogers to monopolize and then pay slave wages? ”
      Everyone that ever ordered stuff on Amazon, streamed on Prime, shopped at Walmart or one of the Kroger shops ( by the way, the Krogers are irrelevant, Kroger as a company is 84% owned by institutions)
      “Who voted for 4, 5 and 6 G EMFs bombarding humanity?”
      Everybody that owns a smartphone (for 4 and 5G; I am not even sure what 6G is and what is an EMF anyway??)

  2. As usual, the devil is in the details. Assume that the funds are “in the bank”, how does it get distributed? Is it delivered in cash, such as a UBI, universal basic income? What if money isn’t the answer, such as in areas of political or religious conflict, or areas being exploited economically and environmentally or similar by the same people who are being taxed to fund the effort, or the same people whose wealth is rentier generated and not visible to be taxed?

    There are fledgeling UBI experiments, but they are selective and tuned so that the amounts and management are in alignment whether a pilot in East Africa or in the United States and most aren’t aimed at or below the amount mentioned in the article. Given the wealth available from those who have signed on to the idea, it would seem that a substantive pilot program is easily funded and would provide significant insight into both the amounts provided and the overhead costs for delivery so that a tax into a “wealth fund” could be effectively and successfully implemented

  3. It’s a dishonest claim. We all know that if a serious tax was imposed on the rich, not a penny of that money would trickle down to the US poor. When Democrats ended actual welfare aid, they admitted that it wasn’t an economic necessity., Our former primary welfare program, AFDC, had used a mere 6% of the budget at its highest (1970s). It was ended “for the principle of it.” Their claim is that if the jobless suffer enough, it will “provide the incentive” for them to “find jobs.” When they can’t, they are supposed to turn to private charities (?) for help. Middle classers are on shaky ground, increasingly calling for establishing a new welfare system (that excludes the poor). But the same ideology that ended poverty relief applies to them as well.

  4. The BIG problem with articles like this is that the BIG question is left unanswered: How?

    HOW can such a tax be levied, collected and enforced and by what national or international bodies?

    When this BIG question is left unanswered, this and thousands of others articles are just hot air or virtue signaling.

  5. Let’s try a “Thought Experiment”
    Assume that tomorrow due to a quirk of fate, a black swan event or a cosmic quirk , the Tesla share price is 0.000US$. The wealth of Elon Musk will decrease by no less than 200 billion US$. Is there one person on Earth that will be better off and increase his/hers wealth by even 10 cents? I don’t think so (except for short sellers but they don’t count) but I am sure that millions which own Tesla shares directly or indirectly ( including Tesla employees) will be poorer!
    As for wealth taxes, even assuming all political and legal hurdles are solved there are 2 major ,inherent problems:
    1. how and by whom is taxable wealth assessed? I may have 1,000,000,001 $ in my shares account at 10 am (and owe 50 million $ in tax ) and 999,999,999 $ at 10:10 am (and owe 30 mil in tax). I may be owner of gas station employing 5 people and “somebody” may decide that it is worth 10 mil $ (including land value) and ask me for 100000 $ tax , which may be half my annual profit (income) !
    2. “Mission creep” Tax receipts are never enough so there is a very powerful incentive to extend the net of the tax , either by not indexing brackets to inflation or by gradually lowering the minimum wealth taxable ( say from 5 M to 4.5 M, to 4M and so on according to the frog in boiling water principle).
    In any case, if ever such a tax is applied, the happiest people will be the tax lawyers and accountants!

  6. The daunting questions of HOW it will be distributed or WHETHER the monies will accomplish anything is exactly the kinds of roadblocks that the super wealthy are hoping will stall the process.

    Impose a tax, get the money, then work out the details.

    1. These people are felons, mysanthropes, and you know that. Penury, debt, tolls, fines, imprisonment, levies, code violations, non-disclosure agreements, forced arbitration clauses, tickets, taxes, fees, late charges, surcharges, early payout charges, evictions, credit checks, foreclosrues, reposssessions, and on and on and on.

      So, tax what? Us? These billionaires and millionaires get direct tax payer funding for their schemes. Monopolizing, hostile takeovers, parasitic and shock doctrines.

      Heads? Hmm, off with them?

      Taxation? What a revolutionary thought.

    2. And, then, what?

      https://www.opensecrets.org/trump/trump-properties

      No modern president has jumped so directly from the world of business to the presidency as Donald Trump. And in so doing, Trump has refused to do as his predecessors have done: sever ties to the companies or financial interests that may pose, or present the appearance of, a conflict of interest. By keeping his assets in a family-managed trust, which he can revoke at any time, Trump and his family are in the unique position to profit directly from his public service. Special interests in Washington have caught on. Those seeking to curry favor with Trump are not only donating to his reelection campaign but holding fundraisers and galas at his resorts, private clubs and hotels – the proceeds of which benefit him and his family.

      To track this new influence-buying and presidential profiteering, OpenSecrets has created this page to track payments to Trump properties from Trump-related entities and beyond. [See more of our expenditures data.]

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