The richest in the world, who only form one percent, grabbed nearly two-thirds of all new wealth worth $42 trillion created since 2020, almost twice as much money as the bottom 99 percent of the world’s population, according to a new Oxfam report.
In the report“Survival of the Richest”, Oxfam said that billionaire fortunes are increasing by $2.7bn a day, even as inflation out paces the wages of at least.
The report is published on the opening day of the World Economic Forum in Davos, Switzerland. Elites are gathering in the Swiss ski resort as extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.
“While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams. Just two years in, this decade is shaping up to be the best yet for billionaires —a roaring ‘20s boom for the world’s richest,” said Gabriela Bucher, Executive Director of Oxfam International.
He also said, “taxing the super-rich and big corporations is the door out of today’s overlapping crises. It is time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else. Forty years of tax cuts for the super-rich have shown that a rising tide doesn’t lift all ships —just the super yachts.”
The Oxfam report mentioned that billionaires saw 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 one percent, while $16 trillion (37 percent) went to the rest of the world put together. A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 percent. Billionaire fortunes have increased by $2.7 billion a day. This comes on top of a decade of historic gains —the number and wealth of billionaires having doubled over the last ten years, the report said.
Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The report shows that 95 food and energy corporations have more than doubled their profits in 2022. They made $306 billion in windfall profits, and paid out $257 billion (84 percent) of that to rich shareholders. The Walton dynasty, which owns half of Walmart, received $8.5 billion over the last year. Indian billionaire Gautam Adani, owner of major energy corporations, has seen this wealth soar by $42 billion (46 percent) in 2022 alone. Excess corporate profits have driven at least half of inflation in Australia, the US and the UK.
TAXING THE RCH
• For every $1 raised in tax, only four cents comes from taxes on wealth. The failure to tax wealth is most pronounced in low- and middle-income countries, where inequality is highest.
• Two-thirds of countries do not have any form of inheritance tax on wealth and assets passed to direct descendants. Half of the world’s billionaires now live in countries with no such tax, meaning $5 trillion will be passed on tax-free to the next generation, a sum greater than the GDP of Africa. A new, powerful, and unaccountable aristocracy is being created in front of our eyes.
• Top rates of tax on income have become lower and less progressive, with the average tax rate on the richest falling from 58% in 1980 to 42% more recently in OECD countries. Across 100 countries, the average rate is even lower, at 31%.
• Rates of tax on capital gains – in most countries the most important source of income for the top 1% – are only 18% on average across more than 100 countries. Only three countries tax income from capital more than income from work. Greater taxation of rich people is not the only answer to the inequality crisis, but it is a fundamental part of it.
Oxfam said that it is time for governments to shake off decades of failed ideology and rich elite influence, and to do the right thing: tax the rich.
The revenues raised from this new wave of progressive taxes could then be used to build a fairer, more equal and sustainable future for everyone. Governments must use the tax tools at their disposal to turn back this tide of inequality, following these four steps to a more equal world:
1. Introduce one-off solidarity wealth taxes and corporate windfall taxes as well as much higher taxes on dividend payouts to stop crisis profiteering.
2. Permanently increase taxes on the richest 1%, for example to a minimum of 60% of their income from both labour and capital, with higher rates for multi-millionaires and billionaires.
3. Tax the wealth of the super-rich at rates high enough to systematically reduce extreme wealth and lower power concentration and inequality.
4. Use the revenues from these taxes to increase government spending on inequality-busting sectors, such as healthcare, education and food security, and to fund the just transition to a low-carbon world.