World's 1 percent rich swallows two-thirds of $42 trillion global wealth

Elon Musk, the maverick owner of Tesla and Twitter and one of the world’s wealthiest men, paid a ‘true tax rate’ of about three percent between 2014 and 2018. On the other hand, Aber Christine, a flour vendor in Uganda, made $80 a month and paid a tax rate of 40 percent.

These numbers have underscored the stark inequality between the global haves and have-nots, as the London-based charity Oxfam pointed out in its report titled ‘Survival of the Richest’ – released to coincide with the annual World Economic Forum meeting in Davos, Switzerland, between January 16-20.

The world’s richest one percent reaped over two-thirds of the $42 trillion in new wealth created since 2020, which is “nearly twice as much money as the bottom 99 percent of the world’s population”. It added that for the first time in 25 years, extreme wealth and extreme poverty have expanded together.

“Billionaires’ wealth is growing by $2.7 billion each day, while at least 1.7 billion people currently reside in nations where inflation is exceeding incomes,” said the report.

In addition, half of the world’s billionaires reside in nations that do not impose inheritance taxes on their direct descendants, putting them on track to leave $5 trillion to their heirs—more than Africa’s entire GDP.

According to the World Bank, the world is likely seeing the most significant increase in global inequality and poverty since WW2. Moreover, with debt obligations spiralling out of control, all nations are on the verge of bankruptcy. 

The poorest nations spend four times more on debt repayment than healthcare, frequently to wealthy, unscrupulous private lenders. Numerous others are preparing drastic spending cuts. 

According to the Oxfam report, 7 in 10 countries will decrease spending over the next five years, amounting to $7.8 trillion in total.

Many at the top are experiencing significant benefits due to the present cost-of-living crisis, which is characterised by rising food and energy costs. Energy and food companies are reporting record profits and paying out record dividends to their billionaire owners and wealthy shareholders. At least 50 percent of inflation in Australia, the US, and Europe is being caused by corporate pricing gouging, making this crisis both a “cost-of-profit” issue and a “cost-of-living” crisis.

“Top rates of tax on income have become lower and less progressive, with the average tax rate on the richest falling from 58 percent in 1980 to 42 percent more recently in OECD countries. Across 100 countries, the average rate is even lower, at 31 percent,” said the report.

Oxfam suggested that a 5 percent tax on the billionaires and multi-millionaires of the globe could generate $1.7 trillion annually, which would be sufficient to bring 2 billion people out of poverty.

“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.

“Taxing the super-rich and big corporations is the door out of today’s overlapping crises. It’s 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 superyachts.”

Oxfam also called on nations to:

• Introduce one-off solidarity wealth taxes and corporate windfall taxes, as well as much higher taxes on dividend payouts to stop crisis profiteering. 
• 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. 
• Tax the wealth of the super-rich at rates high enough to systematically reduce extreme wealth and lower power concentration and inequality. 
• 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.