As the World Economic Forum, the annual gathering of the world’s rich and powerful, met virtually in mid-January — depriving the elite of their lavish in-person parties in Davos, Switzerland — a network of nonprofits released a report, titled, “Taxing Extreme Wealth.”
The report, published by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires, found that global wealth inequality is at least as extreme as during the robber baron era in the late 1800s. The five richest people in the world today o– all white male U.S. citizens – have combined wealth of $882.7 billion.
Analysis in the report projected the ways in which this enormous wealth could be fairly taxed, how much could be raised and what it could pay for. Between The Line’s Melinda Tuhus spoke with Chuck Collins, Director of the Program on Inequality and the Common Good at the Institute for Policy Studies, who contributed to the report. Here, he describes the “insane reality” that the report documents, what might be done to reverse decades of extreme inequality, and how we can move toward greater equity.
CHUCK COLLINS: You know, we at the Institute for Policy Studies have been tracking what we call the concentration of wealth and power for more than 15 years and looking at these trends. People talk about inequality, and I think it’s stagnant wages and declining wealth and security for people in the bottom half, or even 60 percent of society, and then this growing upsurge of wealth at the top. We primarily look at the U.S., although in this report we partnered with Oxfam International and the Fight Inequality Alliance and the Patriotic Billionaires to look at the global trends in wealth consolidation and what would a wealth tax, both at the national level and applied across many countries, how much money could be raised? At the global level, there’s about 2,700 billionaires with total wealth approaching $14 trillion, and we know that probably $5 trillion of that has emerged during the pandemic has increased in the last two years.
So, we know a lot about billionaires. What’s new in our report is that we actually looked at the number of households with wealth over $50 million and wealth over $5 million. And what we found is there are 183,000 households with over $50 million in wealth for a total of $36 trillion; and there are 3.6 million with more than $5 million in wealth for a total of $75 trillion. So, it sort of confirms what we know, which is there’s been a huge updraft of wealth to the very rich – we call it the top 1/10 of 1 percent globally, and that it’s accelerated during the pandemic.
MELINDA TUHUS: Chuck Collins, social services, rent relief and college debt relief are being starved in the federal budget. And forget about providing paid family leave or free community college. So how could this huge inequity be addressed?
CHUCK COLLINS: There’s a lot of wealth in the hands of a few and our current tax system really doesn’t touch it. We have an income tax. We have an inheritance tax, which is almost irrelevant. It’s so porous and so many billionaires evade it through loopholes and trusts.
But we don’t have an annual wealth tax that would tap and tax these huge fortunes. And just to put it in the U.S. data points, there are 63,500 individuals with $50 million or more, with a combined $13 trillion. Theoretically, let’s apply an annual wealth tax to these great fortunes – not just the billionaires, but say, look at the $50 million and in one scenario looking at the $5 million and up. And if we apply a wealth tax – very similar to what Sen. Elizabeth Warren proposed – a 2 percent tax on the lower end and a higher rate going up. One of our scenarios is – and again, we’re talking about wealth, not income – the wealth over $5 million up to $50 million at a 2 percent rate, which isn’t going to change anybody’s true economic circumstances; and a 3 percent rate on wealth over $50 million up to a billion; and a kicker rate of 5 percent on wealth over a billion. If we applied that to the current level of concentrated wealth in the U.S., that would raise about $930 billion.
So going to your point, Melinda, there is a lot of wealth out there, with that phony austerity story, “We don’t have enough, we can’t afford these things.” We’ve been debating a $2 billion Build Back Better legislation package; well, half of it could be paid by the richest 1/10 of 1 percent if we applied a wealth tax.
Again putting it in the context of the pandemic, Oxfam, using World Bank data, showed that 99 percent of the world’s incomes were lower in 2021 due to pandemic-related forces. Huge amounts of wealth have surged to the wealthy and so it’s time for both a national and global conversation about taxing these huge concentrations of wealth.
And investing it – and that’s one of the things we talk about in the report. A global wealth tax along the lines that I described would raise $2.5 trillion. What would that do? It would raise 2.3 billion people out of poverty. It would cover the cost of vaccinating the whole world. You could create universal health care and social protection for all of the citizens of the world who live in low- and middle-income countries, so 3.6 billion people could have universal health care; we could expand health opportunity.
Well, that’s on an annual tax, that’s a big payload and that’s exactly what we’re trying to raise up. Imagine what this world would be like if we tax this wealth and invest it in ways that lifted up humanity.
For more information, visit the Institute for Policy Studies at IPS-DC.org.
