Oxfam International released its annual inequality report of 2023, titled Survival of the Richest in the opening day of the World Economic Forum 2023 in Davos, Switzerland. According to the report, the very richest became dramatically richer and corporate profits hit records high, driving an explosion of inequality. The report emphasises on how taxing the rich is vital to addressing the unprecedented polycrisis, i.e., global crises that are interconnected, entwining, and worsening one another leading to skyrocketing inequality. The report suggests how much tax the richest should pay, and how governments could raise such taxation in practical, tried, and tested ways. The report shows how taxing the rich could set a path to a more equal and sustainable world, free from poverty. The report appeared in January 2023.
Major Findings of the Report
Some of the major findings of the report are as follows:
An age of crisis In 2022, the World Bank had announced that the goal of ending extreme poverty by 2030 would be impossible because the global progress in reducing extreme poverty had come to a halt. As per the International Monetary Fund (IMF), one-third of the global economy would be in recession in 2023. The United Nations Development Programme (UNDP) has found for the first time that human development is falling in nine out of 10 countries of the world.
At least 1.7 billion workers worldwide would have seen inflation outpace their wages in 2022. Whole nations are facing bankruptcy, with debt payments reaching out of control. The poorest countries have been spending four times in repaying their debts than on health care besides planning brutal spending cuts. Over the next five years, three-quarters of the governments are planning to cut spending amounting to about US$ 7.8 trillion.
Huge fortunes for a few According to Oxfam analysis of Credit Suisse Data (Credit Suisse Group AG is a global investment bank and financial services firm in Switzerland), since 2020, the wealth grab by the super-rich accelerated and the richest 1 per cent captured almost two-thirds of all new wealth. This is six times more than 90 per cent bottom humanity. Over the last 10 years, more than half of all new global wealth was captured by the richest 1 per cent of humanity. Since 2020, for every dollar of new global wealth gained by someone in the bottom 90 per cent, US$ 1.7 million was gained by one of the world’s billionaires.
The billionaires saw huge gains during the COVID-19 pandemic. Lots of public money, pumped into the economy by rich countries in order to support their populations, drove up asset prices and wealth at the top. This led the super-rich to gain unprecedented fortunes in the absence of progressive taxation. Again, this corporate price profiteering drone at least 50 per cent of inflation in Australia, the US, and Europe, in what is as much a ‘cost-of-profit’ crisis as a cost-of-living one.
Billionaires and policy failures The report finds out that the richest are key contributors to climate change as a billionaire emits a million times more carbon than the average person. It means the very existence of booming billionaires has led to an economic system which has failed to deliver for humanity. Therefore, to break the discredited cycle of never-ending billionaire wealth accumulation, governments need to address all those ways in which the economy favours them, such as regulating labour laws, privatisation of public assets, CEO compensation, etc. The report also suggests that the world should aim to halve the wealth and number of billionaires by 2030 by increasing taxes on the top 1 per cent and adopting other billionaire-busting policies so that the number of billionaires and their wealth reach where they were in 2012. Thus, tax would be crucial in delivering that vision. However, to achieve this goal there must be a drastic break with decades of tax cuts for the rich.
The study further states that for every US$ 1 raised in tax, only four cents come from taxes on wealth. This failure to taxing wealth is higher in low- and middle-income countries. Two-thirds of the countries do not have any form of inheritance tax on wealth; yet assets passed to direct descendants. Half of the world’s billionaires now reside where there is no such tax. Top rates of tax on income became lower and less progressive. The average tax rate on the richest fell from 58 per cent in 1980 to 42 per cent more recently in OECD countries (Organization for Economic Co-operation and Development). Across 100 other countries, the average rate is even lower, at 31 per cent. Rates of tax on capital gains are on an average only 18 per cent across more than 100 countries. Capital gains is the most important source of income for the top 1 per cent in most countries.
The results also have exposed many of the richest people of the world getting away with paying hardly any tax. For instance, Elon Musk has been paying a true tax rate of 3.2 per cent, while another of the richest billionaires, like Jeff Bezos, pays less than one per cent. On the other hand, people with poor income pay a much higher tax such as Aber Christine, one of the market traders in Uganda, pays 40 per cent of her profits in tax.
Taxing the rich: a tool to fight inequality Taxing the rich and corporations with greater percentage can end the polycrisis, the world is undergoing. Greater taxation would enable strategic governments to invest in universal health care and education; happier societies; research and innovation development; transition to green economies, etc. So, together with the Institute for Policy Studies, the Patriotic Millionaires and the Fight Inequality Alliance, Oxfam used data from Wealth-X and Forbes to calculate that a wealth tax of 2 per cent on the world’s millionaires 3, per cent on those having wealth over US$ 50 m, and 5 per cent on the world’s billionaires would raise US$ 1.7 trillion annually, which would lift 2 billion people out of poverty. It could also fill the funding gap for emergency UN humanitarian appeals, and fund a global plan to end hunger. Moreover, the tax could help with financing the loss and damage caused to low- and lower-middle-income countries by climate breakdown. It could also provide universal health care and social protection for these countries.
How much the richest should pay Governments must use the tax tools at their disposal to end inequality in the following ways:
- Establish one-off solidarity wealth taxes and corporate windfall taxes as well as much higher taxes on dividend pay-outs to stop crisis profiteering.
- Increase taxes on the richest 1 per cent for ever, for example, to a minimum of 60 per cent of their income from both labour and capital, with higher rates for multi-millionaires and billionaires.
- Impose tax on the wealth of the super-rich at rates high enough to systematically reduce extreme wealth and lower power concentration and inequality.
- Increase government spending on inequality-busting sectors, such as health care, education and food security, through revenues from these taxes and to fund the just transition to a low-carbon world.
Oxfam 2023 Report on India
According to Oxfam India, just 5 per cent of Indians own more than 60 per cent of the country’s wealth, whereas the bottom 50 per cent of the population possess only 3 per cent of the wealth. It also stated that between 2012 and 2021, 40 per cent of the wealth created in India went to just 1 per cent of the population. The total number of billionaires in India increased from 102 (in 2020) to 166 billionaires (in 2022). The combined wealth of India’s 100 richest persons has reached at Rs 54.12 lakh crore mark, i.e., about US$ 660 billion, which could fund the entire Union Budget for more than 18 months. The wealth of the top 10 richest Indians amounts to Rs 27.52 lakh crore, i.e., about US$ 335.7 billion.
India has been suffering from multiple crises like hunger, unemployment, inflation, and health calamities but India’s billionaires are not affected. Unfortunately, number of hungry Indians has increased from 190 million (in 2018) to 350 million (in 2022).
Trickle-down economics entered the Indian economic landscape in the form of tax cuts to the wealthy, in 2019. (Trickle-down economics is a term used to say that economic policies disproportionately favour the wealthy investors and large corporations.) An increase in indirect taxes is particularly regressive when taking into account the percentage of household income the poor spend on necessities, such as food. As per the report, the bottom 50 per cent of the population eventually pays six times more on indirect taxation as a percentage of income as compared to the top 10 per cent. Taxation in India has made a small group of billionaires who have been growing richer and richer off the sacrifices made by millions of starving taxpayers.
Some of the causes of a more intense burden on marginalised communities in India include women’s exclusion from inheritances, despite law enshrined in the Hindu Marriage Act; Dalit and other lower caste women are being forced into inhumane and undignified labour conditions; increased participation in an informal economy over a regularly-salaried job, etc.
Solutions to Wealth Inequality
This report has suggested some solutions to India’s rapidly increasing income inequality. First, the tax burden between the rich and the poor should be balanced ensure that those with means pay more than those who are struggling to make both ends meet. The balancing would include instituting a wealth tax for the top 1 per cent of the richest persons of society, such as millionaires, multi-millionaires, and billionaires with higher rates of tax; lowering indirect taxes, such as goods and services tax (GST) on essential commodities such as food and increasing taxes on luxury goods. Thus, there would be simultaneous increase in revenue and decrease in the tax burden on the poor.
Besides, the Oxfam India has also recommended stronger welfare policies for the millions of people who are without basic needs. By improving access to health care and education, India would be able to spend on welfare lines at par with the rest of the world. There should also be a strong social safety net, especially in the informal sector, allowing them to support in times of crisis. This way, India would be able to treat its people with dignity and respect, and also allow social mobility to make their way in the world.
About Oxfam
Oxfam International was established in 1995 by a group of independent non-governmental organisations (NGOs). These NGOs joined together as a confederation to maximise efficiency and to reduce global poverty and injustice with greater impact. There are 21 member-organisations of the Oxfam International confederation which are based in Australia, Belgium, Brazil, Canada, Colombia, Denmark, France, Germany, Great Britain, Hong Kong, Ireland, India, Italy, Mexico, The Netherlands, New Zealand, Quebec, South Africa, Spain, Turkey, and the United States. Its secretariat is based in Nairobi, Kenya. The organisation also has three engagement offices in South Korea, Sweden, and Argentina which raise funds and focus on awareness about the work.
Oxfam is a global movement of people who are fighting inequality to end poverty and injustice. Across regions, from the local to the global, Oxfam members work with people to bring the lasting change. The organisation is committed to the universality of human rights. The name ‘Oxfam’ comes from the Oxford Committee for Famine Relief, founded in Britain, in 1942.
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