More than 100 millionaires say current tax systems are “not fair” and increasing wealth tax would help resolve inequalities made dramatically worse by the Covid health crisis
Millionaires from around the world have signed an open letter asking governments to tax them at higher rates.
The letter was published online Wednesday, mid-way through Davos, the World Economic Forum’s annual meeting being held virtually this year.
The signatories of the letter, which was the result of a joint initiative from inequality advocacy groups Patriotic Millionaires, Millionaires for Humanity and TaxMeNow, said current tax systems were “not fair”.
“Most of us can say that, while the world has gone through an immense amount of suffering in the last two years, we have actually seen our wealth rise during the pandemic – yet few if any of us can honestly say that we pay our fair share in taxes.”
“The world – every country in it – must demand the rich pay their fair share” wrote millionaire signatories from the US, UK, Germany, Canada, Denmark, Austria, the Netherlands, Norway and Iran.
This comes as Oxfam on Wednesday released a report detailing how the pandemic has exacerbated wealth inequality around the world. According to the report the unique circumstances of the pandemic have pushed an extra 160 million people into poverty, while the world’s 10 richest men have doubled their fortunes.
>>World’s 10 richest men doubled their wealth during pandemic, Oxfam reports
“Wealth is just continuing to concentrate now in the hands of the few, and then it's leading to deeper societal problems,” UK signatory Gemma McGough, an entrepreneur and member of Patriotic Millionaires UK, told FRANCE 24.
An annual wealth tax applied to the world's richest would raise US $2.52 trillion a year, analysis by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires found, with a graduated rate structure of 2% tax on wealth over $5 million; 3% on wealth over $50 million; 5% on wealth over $1 billion.
It estimated the funds would be sufficient to make enough vaccines for the whole world and deliver universal health care and social protection for all of the 3.6 billion citizens of low and lower middle-income countries, among other issues.
“If we don't tackle the huge inequalities, and the power and wealth that billionaires and millionaires have, we can't solve climate change [or make progress on] the feminist movement or the human rights movement. It's in the interest of all of us to push for quite a different future,” Jenny Ricks, Global Convenor at the Fight Inequality Alliance told FRANCE 24.
McGough added, “99% of people in the world saw their incomes fall during the pandemic and the cost of living is increasing. If you are in the 1%, then you look at your own situation and see it’s not the same – that’s not right. It's not fair. We know we are in a position to shoulder more of the burden.”
Drawing attention to the cause
Research from Credit Suisse found that the global number of millionaires rose to 56.1 million in 2020, an increase of 5.1 million in a year.
While only 100 millionaires signed the open letter, signatory Djaffar Shalchi, founder of Millionaires for Humanity, told FRANCE 24 it was a way to counter the narrative that taxing the wealthy hurts business development and damages the economy. “Millionaires have a unique role to play in advocating for wealth tax,” he said. “We want politicians to understand that not all millionaires agree with the policy of decreasing taxes for the rich.”
This is the third letter of its kind the group has sent, and high-profile signatories include Abigail Disney, grandniece of founder Walt Disney, and Nick Hanauer, who was an early investor in Amazon.
In a Twitter video, Disney was scathing about the Davos conference, where invitees typically include business leaders, senior politicians and billionaires. This year the theme of the conference is "working together to restore trust".
“I’ve been to Davos. It grossed me out. The idea that this many billionaires have to gather in a teeny, tiny place that regular folk can’t get into to discuss matters does not create trust,” Disney said.
Releasing the letter at the same time as the conference is an important way to raise awareness and stimulate discussion about wealth tax said Ricks. “It's not the 1% at Davos that have got the answers to the inequality crisis, it is the people who are facing those inequalities,” she told FRANCE 24.
A growing movement
The UK branch of Patriotic Millionaires started with just four members in 2020, including McGough and screenwriter Richard Curtis. Now membership is growing monthly and into diverse kinds of wealth, from those who have inherited money to those who have made their own.
Interest in the concept of wealth tax is also growing among the non-wealthy. The Fight Inequality Alliance, which campaigns against various forms of inequality, now has 50 member organisations worldwide. “We have a very diverse membership with young people, women's groups, trade unions, informal workers, environmentalists, human rights defenders. There is a growing constituency of people who understand that the situation is out of control and change is urgent," said Ricks.
However, for every tax activist, the question remains; “How interested are people in tax? The image of tax is something negative, complicated, and inaccessible” says Carla Hoppe, founder of Rethink Tax, a tax policy and education organisation in the UK. In this context, raising awareness and interest in how and why we are taxed is crucial. “We need better discussion around how we fix the tax system, because it isn't fit for purpose,” she told FRANCE 24.
Hoppe would ultimately like to see governments introduce methods to give voters more say in how they are taxed. She is sceptical as to whether wealth tax alone will provide a comprehensive solution to wealth inequality, even if it is implemented.
“What causes wealth inequality tends to be capital assets, like property and businesses, that effectively protect their owners from economic shocks. A wealth tax could go a long way to reducing inequality, but it very much depends on whether it captures those assets in its remit, and there are other reforms of current taxes which could be implemented more easily.”
Others have more hope. “Historically, when there's been big pandemics and big shocks to society, like after the Second World War, and after the financial crisis in 2008, that's when governments have brought in wealth tax,” said Ricks.
In 2021 the pandemic provided the catalyst for the Argentinian government to introduce a one-off wealth tax for citizens with assets worth more than 200 million pesos (€1.7million), which raised the equivalent of US $2.4 billion to be put towards Covid relief measures. “It's at these moments in history when governments can be pushed into introducing wealth taxes”, Ricks said.
For political leaders at Davos, the open letter delivered a more direct warning. “History paints a pretty bleak picture of what the endgame of extremely unequal societies looks like”, they wrote. “It’s taxes or pitchforks.”