Nobel Prize winner Joseph Stiglitz is concerned about increasing social inequality in the world. The gap between rich and poor is widening. To reverse the trend, he calls for the super-rich to pay a higher income tax and a wealth levy. He says introducing a special global tax rate of 70 percent for top earners “would clearly make sense.”
“People at the top might then work a little less if you tax them more. But on the other hand, our society benefits from a more egalitarian society with greater cohesion,” the former World Bank chief economist explained in Oxfam’s “Equals” podcast, summarized by the British newspaper The Guardian.\
Current top tax rates are much lower than what Stiglitz has in mind. A few examples
- In the U.S., the top tax rate is 37 percent for incomes above $539,901.
- The top tax rate in the U.K. is 45 percent on annual incomes above 150,000 pounds.
- In Austria, the rate is 55 percent, but only for annual incomes above one million euros.
- In Germany, the top tax rate is paid from an annual income of around 278,000 euros—it is 45 percent.
Only four European Countries have a wealth tax: Spain, Norway, Switzerland, and Belgium.
Joseph Stiglitz: Getting rich is a question of chance—not performance
Stiglitz explained in the podcast that such a new, higher top tax would lead to more redistribution—but at the same time one must also tax wealth fairly. Because that way, the richest people in the world would make a fair contribution, whose wealth has been accumulated over generations. According to Stiglitz, a global wealth tax would have an even greater impact in combating social inequality.
“We should tax wealth more heavily, because a lot of the wealth is now inherited. For example, the young Walmart’s inherited their wealth“, Stiglitz cited as an example.
“One of my friends describes it as winning the sperm lottery. You got the ‘right’ parents. I think we have to realize that most billionaires got a lot of their wealth just by luck.“
The Nobel Prize winner considers U.S. Senator Elizabeth Warren’s proposals for a 2 percent tax on wealth of more than $50 million and a 3 percent tax on wealth of more than $1 billion “very reasonable.” He believes that would “really do a lot to raise revenue that could be used to alleviate some problems our country faces.“
The crisis has made rich even richer
According to Stiglitz, the Corona pandemic has exacerbated social inequality around the world to an “astonishing” degree and “both exposed and exacerbated global inequalities.“
“AT A TIME WHEN SO MANY PEOPLE’S LIVES HAVE BEEN SO DIFFICULT, WHEN THEY HAVE LOST THEIR JOBS, WHEN FOOD PRICES HAVE RISEN AND OIL PRICES HAVE RISEN, IT IS SHOCKING HOW MANY PEOPLE AND RICH COMPANIES HAVE MADE OFF LIKE BANDITS,” STIGLITZ CRITICIZED.
Oxfam study: For the first time in 25 years, extreme wealth and extreme poverty are growing simultaneously
A recent Oxfam study showed that nearly two-thirds of the wealth accumulated since the pandemic began has gone to the richest 1 percent. The charity found that the best-off will have amassed $26 billion in new assets by the end of 2021. That’s 63 percent of all new wealth, with the rest going to the remaining 99 percent of people.
As a result, for the first time in 25 years, the rise in extreme wealth has been accompanied by an increase in extreme poverty.
The charity said that a tax of up to 5 percent on multimillionaires and billionaires could raise $1.7 trillion a year for the world. That, in turn, would be enough to lift 2 billion people out of poverty and end world hunger.
“WHILE MILLIONS OF PEOPLE DON’T KNOW HOW TO PAY FOR FOOD AND ENERGY, THE CRISES OF OUR TIME ARE BRINGING GIGANTIC INCREASES IN WEALTH FOR BILLIONAIRES AND BILLIONAIRES’ WIVES,” SAID OXFAM SPOKESMAN MANUEL SCHMITT.
200 super-rich call for global wealth taxes
More than 200 members of the super-rich elite have written to governments around the world in the run-up to the World Economic Forum in Davos calling on them to “tax us, the super-rich, now” to tackle the crisis of inequality. “Patriotic Millionaires”, “Tax me Now” and “Millionaires for Humanity” were behind the campaign.
Among the signatories are Disney heirs Abigail and Tim Disney and “Hulk” actor Mark Ruffalo. Marlene Engelhorn from Austria also participated in the protest—she delivered the letter on-site.
Members Phil White and Marlene Engelhorn protest the World Economic Forum in Davos.
It’s time to #TaxTheRich. pic.twitter.com/QwV7aWMPEP
— Patriotic Millionaires (@PatrioticMills) January 17, 2023