Why is ‘Taxing the Rich’ a chapter in the CRF?
The most recent addition to our common research framework is the thematic chapter of “Taxing the Rich,”. The chapter seeks to delve into the complexities and implications of wealth accumulation and income inequality for the very richest in society. By examining the specific tax policies and administrative dimensions of taxing the richest individuals, this framework aims to dissect the mechanisms through which a country’s tax system is influencing the extreme wealth accumulation and how it can change it. The thematic chapter endeavors to offer nuanced insights and actionable guidance for devising more equitable tax policies targeting the richest individuals and thus fostering a more balanced socio-economic landscape. The thematic chapter can be found as chapter 8 in the CRF, which you can find here.
TJNA and Oxfam’s vision for “taxing the rich”
In recent years, discussions on income inequality and the concentration of wealth in the hands of the few have become increasingly common. Governments around the world are grappling with ways to tackle inequality. In this context Oxfam and TJNA recommend increasing taxes on the richest individuals – it is time to break the cycle of never-ending wealth accumulation by the top1%.
In the current “polycrisis,” with simultaneous crises in many areas such as economics, health, and climate change, governments around the world are cutting spending, while the rich continue to amass fortunes. Extreme concentrations of wealth can undermine economic growth, corrode democracy, and contribute to climate breakdown. Oppositely, taxing the rich can help to not only reduce economic inequality but also reduce racial, gender, and colonial inequalities. Oxfam’s 2023 Survivel of the Richest report points out that over the past two years, the richest 1% of the global population has captured almost two-thirds of all new wealth, leaving the remaining 99% to divide the remaining one-third. Billionaire fortunes are growing by $2.7 billion per day, while at least 1.7 billion workers are struggling to keep up with inflation. Food and energy companies are doubling their profits, yet over 800 million people go to bed hungry every night.
Oxfam estimated in 2019 that about $2.3 trillion of individual wealth is held on the African continent, of which $920bn – or roughly 40% – is held by high net worth individuals (HNWIs) i.e. those who own $1m or more in net assets. In 2017, there were 148,000 HNWIs living in Africa, of whom 7,100 were multi-millionaires and 24 billionaires.
In order to increase the taxes on the richest 1% and higher rates for the extremely rich multi-millionaires and billionaires, Oxfam and TJNA recommends a number of tax policies including introducing and/or increase inheritance taxes, land taxes and property taxes, and increasing taxation of dividend payouts, stock buy-back and capital gains.
“The Rich” and political capture
To make these solutions feasible, we need to empower the civil society and tax administrations to track the wealth of the top1% richest people, and convince governments and international institutions to work together to build a more equal world. Reducing economic (wealth and income) inequality will in many cases also reduce political inequalities, as concentration of wealth at the top of society leads to political capture which further fuels inequality. In many cases the rich are rich because they are powerful and they are powerful because they are rich. For instance, we see political capture by the rich in the concentration of media ownership. This gives them the power to influence the terms of the political debate, pose a significant challenge to progressive reforms. For example, the French economist Julia Cagé recently documented how media outlets owned by French billionaire and pundit Vincent Bolloré have given increased airtime to guests who defend right-wing policies, including tax policies, championed by Bolloré himself. In Mexico, a sizeable share of media is owned by the country’s richest man, Carlos Slim. In Kenya, the former president Daniel Arap Moi, considered one of the richest men in the country, owned several newspapers with large reach, including the Standard, before he passed away in 2022 . And in India, one billionaire, Mukesh Ambani, own 72 TV channels reaching over 800 million people.
Who are we talking about when we talk about “the rich” – when are you rich/wealthy and super rich?
This is an essential question that can and should only be answered in each national context. This means it is up to the country context and national colleagues to decide whether it is best to talk about “rich”, “wealthy”, “millionaires”, “billionaires” etc.
Oxfam has a generalised calculation of what the US dollar $5m and $50m wealth-group thresholds would become if adjusted for each country’s wealth distribution and median income with the USA as the benchmark. See the full country list here.