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The world’s ten richest men own more wealth than 3 billion people
by Gabriela Bucher
Executive Director of Oxfam International
As the cost of essential goods rises faster than it has in decades, billionaires in the food and energy sectors are increasing their fortunes by $1 billion every two days.
For every new billionaire created during the pandemic — one every 30 hours — nearly a million people could be pushed into extreme poverty in 2022 at nearly the same rate, reveals a new Oxfam brief today. “Profiting from Pain” is published as the World Economic Forum — the exclusive get-together of the global elite in Davos — takes place for the first time face-to-face since COVID-19, a period during which billionaires have enjoyed a huge boost to their fortunes.
“Billionaires are arriving in Davos to celebrate an incredible surge in their fortunes. The pandemic and now the steep increases in food and energy prices have, simply put, been a bonanza for them. Meanwhile, decades of progress on extreme poverty are now in reverse and millions of people are facing impossible rises in the cost of simply staying alive,” said Gabriela Bucher, Executive Director of Oxfam International.
The brief shows that 573 people became new billionaires during the pandemic, at the rate of one every 30 hours. We expect this year that 263 million more people will crash into extreme poverty, at a rate of a million people every 33 hours.
Billionaires’ wealth has risen more in the first 24 months of COVID-19 than in 23 years combined. The total wealth of the world’s billionaires is now equivalent to 13.9 percent of global GDP. This is a three-fold increase (up from 4.4 percent) in 2000.
“Billionaires’ fortunes have not increased because they are now smarter or working harder. Workers are working harder, for less pay and in worse conditions. The super-rich have rigged the system with impunity for decades and they are now reaping the benefits. They have seized a shocking amount of the world’s wealth as a result of privatization and monopolies, gutting regulation and workers’ rights while stashing their cash in tax havens — all with the complicity of governments,” said Bucher.
“Meanwhile, millions of others are skipping meals, turning off the heating, falling behind on bills and wondering what they can possibly do next to survive. Across East Africa, one person is likely dying every minute from hunger. This grotesque inequality is breaking the bonds that hold us together as humanity. It is divisive, corrosive and dangerous. This is inequality that literally kills.”
Oxfam’s new research also reveals that corporations in the energy, food and pharmaceutical sectors — where monopolies are especially common — are posting record-high profits, even as wages have barely budged and workers struggle with decades-high prices amid COVID-19. The fortunes of food and energy billionaires have risen by $453 billion in the last two years, equivalent to $1 billion every two days. Five of the largest energy companies (BP, Shell, TotalEnergies, Exxon and Chevron) are together making $2,600 profit every second, and there are now 62 new food billionaires.
Together with just three other companies, the Cargill family controls 70 percent of the global agricultural market. Last year Cargill made the biggest profit in its history ($5 billion in net income) and the company is expected to beat its record profit again in 2022. The Cargill family alone now has 12 billionaires, up from eight before the pandemic.
From Sri Lanka to Sudan, record-high global food prices are sparking social and political upheaval. 60 percent of low-income countries are on the brink of debt distress. While inflation is rising everywhere, price hikes are particularly devastating for low-wage workers whose health and livelihoods were already most vulnerable to COVID-19, particularly women, racialized and marginalized people. People in poorer countries spend more than twice as much of their income on food than those in rich countries.
Today, 2,668 billionaires — 573 more than in 2020 — own $12.7 trillion, an increase of $3.78 trillion.
The world’s ten richest men own more wealth than the bottom 40 percent of humanity, 3.1 billion people. The richest 20 billionaires are worth more than the entire GDP of Sub-Saharan Africa.
A worker in the bottom 50 percent would have to work for 112 years to earn what a person in the top 1 percent gets in a single year. High informality and overload due to care tasks have kept 4 million women in Latin America and the Caribbean out of the workforce. Half of working women of color in the US earn less than $15 an hour.
The pandemic has created 40 new pharma billionaires. Pharmaceutical corporations like Moderna and Pfizer are making $1,000 profit every second just from their monopoly control of the COVID-19 vaccine, despite its development having been supported by billions of dollars in public investments. They are charging governments up to 24 times more than the potential cost of generic production. 87 percent of people in low-income countries have still not been fully vaccinated.
“The extremely rich and powerful are profiting from pain and suffering. This is unconscionable. Some have grown rich by denying billions of people access to vaccines, others by exploiting rising food and energy prices. They are paying out massive bonuses and dividends while paying as little tax as possible. This rising wealth and rising poverty are two sides of the same coin, proof that our economic system is functioning exactly how the rich and powerful designed it to do,” said Bucher.
“Over two years since the pandemic began, after more than 20 million estimated deaths from COVID-19 and widespread economic destruction, government leaders in Davos face a choice: act as proxies for the billionaire class who plunder their economies, or take bold steps to act in the interests of their great majorities. One common economic sense measure above all will put this to the test: whether governments will finally tax billionaire wealth”.
Oxfam recommends that governments urgently:
Introduce one-off solidarity taxes on billionaires’ pandemic windfalls to fund support for people facing rising food and energy costs and a fair and sustainable recovery from COVID-19. Argentina adopted a one-off special levy dubbed the ‘millionaire’s tax’ and is now considering introducing a windfall tax on energy profits as well as a tax on undeclared assets held overseas to repay IMF debt. The super-rich have stashed nearly $8 trillion in tax havens.
End crisis profiteering by introducing a temporary excess profit tax of 90 percent to capture the windfall profits of big corporations across all industries. Oxfam estimated that such a tax on just 32 super-profitable multinational companies could have generated $104 billion in revenue in 2020.
Introduce permanent wealth taxes to rein in extreme wealth and monopoly power, as well as the outsized carbon emissions of the super-rich. An annual wealth tax on millionaires starting at just 2 percent, and 5 percent on billionaires, could generate $2.52 trillion a year —enough to lift 2.3 billion people out of poverty, make enough vaccines for the world, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries.
http://www.oxfam.org/en/press-releases/pandemic-creates-new-billionaire-every-30-hours-now-million-people-could-fall http://www.oxfam.org/en/press-releases/g7-must-pursue-windfall-taxes-excess-corporate-pandemic-profits-and-cancel-poor http://www.oxfam.org/en/press-releases/g7-summit-media-brief http://www.actionagainsthunger.org/story/nearly-193-million-people-face-life-threatening-hunger http://static.hungermapdata.org/insight-reports/latest/global-summary.pdf
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Why tax justice is critical to the realisation of rights
by CESR, Tax Justice Network, ICIJ, ICRICT, agencies
Why tax justice is critical to the rights of persons with disabilities, by Polly Meeks and Mirjam Gasser for the Center for Economic and Social Rights
As the 2022 Financing for Development Forum gets underway, guest bloggers Polly Meeks and Mirjam Gasser use examples from Switzerland, the UK, and India to illustrate why the rights of persons with disabilities cannot be fully realized without reform of the international tax system:
This week’s UN Financing for Development Forum will see renewed calls to fix the flawed international tax rules that allow rich companies and individuals to dodge their taxes.
As the Center for Economic and Social Rights (CESR) and other experts have long argued, tax justice is a human rights issue. Tax dodging – estimated at some 483 billion USD per year – robs the public purse of resources urgently needed to fund public services and institutions essential to upholding rights.
Among those hit hardest by tax dodging are persons with disabilities as budgets are systematically trimmed. Persons with disabilities make up 15% of the global population and experience compounding social, economic and political injustices that are exacerbated when disability intersects with other forms of discrimination, for example on the basis of gender, race or indigenous status.
These injustices cannot be properly tackled without dedicated public resources. For example: resources are needed to ensure that persons with disabilities can access infrastructure, information, and services on an equal basis with others; that persons with disabilities can enjoy an adequate standard of living and can meet the extra costs of disability; and that representative organisations of persons with disabilities have the funds to hold governments to account. So, when tax dodging drains resources away from public budgets, persons with disabilities stand to lose disproportionately.
The importance of considering the impact of tax systems on persons with disabilities at home and abroad is increasingly being recognized, for example in a proposed draft tax convention from Eurodad and the Global Alliance for Tax Justice.
A recent event organised by CBM Switzerland gave a taste of the insights that might emerge if countries were held accountable to their actions in these areas. Inspired by previous work on tax justice and gender justice by CESR and allies, the event invited experts to discuss the links between tax justice and the rights of persons with disabilities in a sample of three countries: Switzerland, the UK and India. In the case of Switzerland, the arguments are also elaborated in more detail in a new CBM Switzerland factsheet.
A closer look at tax and financial secrecy policies in Switzerland and the UK
Switzerland’s financial system has two key characteristics that facilitate cross-border tax dodging. First, Switzerland has very high levels of banking secrecy, as the recent SuisseSecrets scandal exposed once again. While some small progress has been made in automatic exchange of taxpayer information with other jurisdictions, this leaves out many countries at the bottom of the income spectrum – depriving them of vital information to act swiftly against cross-border tax dodging and money laundering. Second, Switzerland also has low effective corporation tax rates.
Although the Organisation for Economic Cooperation and Development (OECD) and the Group of 20 (G20) recently agreed on global minimum corporation tax rate, the agreed rate is too low and the agreement too full of loopholes to have much effect on multinational companies who report their profits from the Global South to Switzerland in order to avoid tax.
In many of the UK’s offshore Crown Dependencies and Overseas Territories, financial secrecy is the norm, facilitated by the City of London (despite some positive steps towards transparency in recent years). The Cayman Islands, for example, came top of the most recent Financial Secrecy Index from the Tax Justice Network.
In addition, the UK’s network of tax treaties can restrict Global South countries’ ability to tax multinational corporations. Research by ActionAid in 2016 found that since the 1970s, the UK had entered the equal-highest number of very restrictive treaties with countries in Africa and Asia.
As our expert panelists Dominik Gross (Alliance Sud) and Matti Kohonen (Financial Transparency Coalition) explained during the event, when tax policies in the Global North restrict tax revenues in the Global South, this in turn will take a toll on the rights of persons with disabilities. As Matti Kohonen reminded us during the event, “without revenue, there are no rights”.
A case study from the Global South: India
Of course, national governments are the primary duty bearers in budgeting for the rights of persons with disabilities.
Disability advocate Meenakshi Balasubramanian (Center for Inclusive Policy) has been researching budgets for the rights of persons with disabilities in India for more than a decade. Her most recent research, part of the Centre for Budget and Governance Accountability’s annual analysis of the Union (federal level) budget of 2022-23, shows that:
Specific reported budget allocations for persons with disabilities have declined from 0.0097% of Gross Domestic Product (GDP) in 2020-21, to just 0.0084% of GDP in 2022-23, or around 21.7 billion Indian Rupees / 290 million US dollars.
Only 0.0006 % of the Union Government’s Pradhan Mantri Garib Kalyan Yojana COVID-19 relief package was allocated to support the incomes of persons with disabilities.
According to government statistics from 2018, only between 19% and 32% of persons with ‘locomotor disabilities’, ‘visual disabilities’ and ‘hearing disabilities’ accessed assistive devices. And only a small minority of these people did so through government programs. Yet budget allocations for such devices have remained roughly static over the last four years, and no plans to improve distribution have been announced.
Ms Balasubramanian’s research both on the 2022-23 Union budget and on COVID-19 response (covering 2020-2022) highlights numerous areas needing urgent government attention from the Indian state.
But the starting point is so low that even after these priority areas are addressed, there will still be a very long way to go to mobilize maximum available resources for budgets that fully comply with the UN Convention on the Rights of Persons with Disabilities. Effectively stemming cross-border tax abuses can play a significant role in ensuring that maximum resources are indeed available: it is estimated that India currently loses more than 16 billion US dollars per year due to cross-border tax abuse.
These losses are attributable to the tax/financial secrecy policies of many countries and jurisdictions, not solely to our two examples of Switzerland and the UK. Still, research has pointed to some links during the past decade. For example, the Swiss Leaks scandal in 2015 revealed that numerous Indian nationals had Swiss bank accounts, allegedly for the purpose of dodging taxes in India.
Meanwhile, research in 2017 suggested that some Foreign Direct Investment in India might be being routed through the UK in order to take advantage of financial secrecy in British Crown Dependencies and Overseas Territories.
Whatever countries are responsible, those 16 billion US dollars of lost revenue equate to an enormous lost opportunity to resource rights – including the rights of persons with disabilities – throughout India.
The way forward
The case of persons with disabilities starkly illustrates the pressing need for action to reform the international tax system. The Stakeholder Group of Persons with Disabilities – the focal point for engagement by persons with disabilities in UN Sustainable Development policies – has highlighted this repeatedly in its inputs to the Financing for Development process.
Like so many other stakeholders across the Global South and Global North, the Stakeholder Group of Persons with Disabilities is calling for meaningful action to combat illicit financial flows (encompassing corporate tax abuses), including through:
A universal, intergovernmental tax commission under the auspices of the UN, where countries will be on an equal footing unlike in the OECD; and a UN convention on tax to address tax havens, tax abuse by multinational corporations and other illicit financial flows.
Reform of the international tax system is far from sufficient to ensure persons with disabilities, especially in the Global South, enjoy their rights to the full. But – as our three country case studies indicate – it is both necessary and urgent. Decisive progress through the UN Financing for Development process cannot come soon enough.
* Polly Meeksis an independent researcher with 14 years of experience, whose work focuses on economic justice, public finance and the rights of persons with disabilities. Mirjam Gasser is the Head of Advocacy at CBM Switzerland.
http://www.cesr.org/why-tax-justice-is-critical-to-the-rights-of-persons-with-disabilities/ http://www.cesr.org/cesr-and-partners-call-for-human-rights-aligned-global-tax-reforms/ http://www.cesr.org/fiscal-justice/ http://www.ituc-csi.org/ITUC-report-Fair-financing-of-social-protection http://www.socialprotectionfloorscoalition.org http://www.icrict.com/press-release/2022/4/19/icrict-open-letter-to-g20-leaders-its-time-for-a-global-asset-register-to-target-hidden-wealth http://taxjustice.net/press/us-tops-financial-secrecy-ranking-as-g7-countries-upend-global-progress-on-transparency/ http://www.theguardian.com/world/2022/apr/19/g20-ministers-urged-to-use-oligarch-crackdown-to-tackle-tax-havens
A new analysis, “Taxing Extreme Wealth,” by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires found a shocking rise in global wealth among the world’s richest people despite deepening inequality during the Covid-19 pandemic.
The analysis, “Taxing Extreme Wealth: An annual tax on the world’s multi-millionaires and billionaires: What it would raise and what it could pay for,” published on January 19 by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam, and Patriotic Millionaires found that globally:
3.6 million people have over $5 million in wealth, with a combined wealth of $75.3 trillion, according to data commissioned for this study from Wealth-X.
183,300 households own over $50 million, for a combined wealth of $36.4 trillion, according to Wealth-X data.
There are 2,660 billionaires with a total combined wealth of $13.76 trillion. (Drawn from Forbes on November 30, 2021).
An annual wealth tax applied to the world’s richest would raise U.S. $2.52 trillion a year (with a graduated rate structure: 2 percent tax on wealth over $5 million; 3 percent on wealth over $50 million; 5 percent on wealth over $1 billion.)
A more steeply progressive wealth tax would raise U.S. $3.62 trillion a year (with graduated rates of 2 percent on wealth starting at $5 million; 5 percent on wealth over $50 million; and 10 percent on wealth over $1 billion.)
An annual tax on the world’s richest would be enough to lift 2.3 billion people out of poverty, make enough vaccines for the whole world, and deliver universal health care and social protection for all the citizens of low and lower middle-income countries (3.6 billion people).
This new global billionaire wealth analysis comes on the heels of a new Oxfam International report based on World Bank data that shows that while 99 percent of the world’s workers earned less money in 2021, the world’s ten wealthiest men more than doubled their fortunes.
Meanwhile, global protests around the world are set to coincide with the World Economic Forum’s ‘State of the World’ online meetings.
In the US, roughly 750 U.S. billionaires have seen their wealth increase over $2 trillion since March 2020 for a combined wealth of over $5 trillion, according to previous research by the Americans for Tax Fairness and the Institute for Policy Studies.
And there are over 63,500 individuals with wealth over $50 million with combined assets of $12.8 trillion, according to the new report, Taxing Extreme Wealth. An annual wealth tax would raise $928 billion a year, enough to eliminate half of household out-of-pocket health expenses in the U.S.
It is time to levy a wealth tax on the world’s multi-millionaires and billionaires. This is not to simply raise revenue to vaccinate the world and invest in robust public health systems. But a wealth tax that is intended to save democracy from the extreme concentrations of wealth and power.
* Chuck Collins directs the Program on Inequality and the Common Good at the Institute for Policy Studies.
http://inequality.org/great-divide/tax-the-rich-global-wealth-report/ http://ips-dc.org/wp-content/uploads/2022/01/Report-Taxing-Extreme-Wealth-What-It-Would-Raise-What-It-Could-Pay-For.pdf http://www.americanprogress.org/article/these-19-fortune-100-companies-paid-next-to-nothing-or-nothing-at-all-in-taxes-in-2021/ http://www.propublica.org/series/the-secret-irs-files http://www.icij.org/investigations/pandora-papers/icij-publishes-final-batch-of-pandora-papers-data-on-more-than-9000-offshore-companies-trusts-and-foundations/ http://www.icij.org/ http://www.icij.org/investigations/russia-archive/why-western-governments-havent-gotten-serious-about-tackling-offshore-corruption-yet/ http://taxjustice.net/
The State of Tax Justice 2021
Countries are losing a total of $483 billion in tax a year to global tax abuse committed by multinational corporations and wealthy individuals – enough to fully vaccinate the global population against Covid-19 more than three times over.
The 2021 edition of the State of Tax Justice documents how a small club of rich countries with de facto control over global tax rules is responsible for the majority of tax losses suffered by the rest of the world, with lower income countries hit the hardest by global tax abuse. The findings are further galvanising calls to move rule-making on international tax from the OECD to the UN.
Countries are losing $483 billion in tax a year to global tax abuse – that’s enough to fully vaccinate the global population against Covid-19 more than three times over.
Of the $483 billion lost a year, $312 billion of this tax loss is due to cross-border corporate tax abuse by multinational corporations and $171 billion is due to offshore tax abuse by wealthy individuals.
Global tax abuse continues to hit lower income countries more severely than higher income countries. While higher income countries lose more tax in absolute number, their tax losses represent a smaller share of their revenues (9.7 per cent). Lower income countries in comparison collectively lose the equivalent of nearly half (48 per cent) of their public health budgets.
The taxes that lower income countries lose would be enough to vaccinate 60 per cent of their populations, bridging the gap in vaccination rates between lower income and higher income countries.
UN tax convention. Urgent calls to shift the responsibility of setting tax rules away from the OECD to the UN. The FACTI Panel’s key recommendations draw closely on the work of the tax justice movement, and include the establishment of a UN tax convention, intergovernmental UN forum for the urgent negotiation of further changes to the international tax rules; and a Centre for Monitoring Taxing Rights at the UN to raise national accountability for illicit financial flows and tax abuse suffered by others, and a globally inclusive.
Excess profit tax. Governments must introduce an excess profit tax on multinational corporations making excess profits during the pandemic, such as global digital companies, in order to cut through profit shifting abuses.
Multinational corporations’ excess profit would be identified at the global level, not the national level, to prevent corporations from underreporting their profits by shifting them into tax havens, and taxed using a unitary tax method.
Wealth tax. Governments must introduction of a wealth tax to fund the Covid-19 response and address the long term inequalities the pandemic has exacerbated, with punitive rates for opaquely owned offshore assets and a commitment between governments to eliminate this opacity. The pandemic has already seen an explosion in the asset values of the wealthy, even as unemployment has soared to record levels in many countries.
http://taxjustice.net/reports/the-state-of-tax-justice-2021/ http://www.icij.org/inside-icij/2021/11/nearly-500-billion-lost-yearly-to-global-tax-abuse-due-mostly-to-corporations-new-analysis-says/ http://gfintegrity.org/press-release/report-finds-trade-misinvoicing-continues-to-be-a-massive-and-persistent-problem/ http://www.cesr.org/moving-towards-a-new-generation-of-guiding-principles-on-business-and-human-rights/
Independent Commission for the Reform of International Corporate Taxation:
The agreement announced at the OECD Inclusive Framework on Base Erosion and Profit Shifting is a another lost opportunity to put an end to tax avoidance by multinationals and and generate revenues worldwide to support governments in their fight against the pandemic and the recovery post COVID.
The world is at a crossroads and the time to act to ensure all countries have sufficient resources to pay for public goods and to create a more resilient economy post-COVID is now.
ICRICT considers that a comprehensive reform would see ALL multinationals’ worldwide profits taxed in line with their real activities in each country - that is, by allocating global corporate profits of multinationals to different countries on a formulaic basis, according to the key factors that generate profit: employment, sales, and assets AND a 25% global effective minimum tax on multinationals, putting an end to harmful tax competition between countries and reducing the incentive for multinationals to shift profits to tax havens.
The Inclusive Framework agreement falls well short of the comprehensive reform the world needs and does not reflect the demands that developing countries have made in the past for a bigger and fairer reallocation of taxing rights for the largest and most profitable businesses and for a high global minimum tax to ensure that meaningful revenues are generated and shared fairly.
This agreement only serves the interests of a handful of countries, the richest. It is now time for the G20 countries to show real leadership and raise the ambitious of the current deal.
This requires a commitment to both introduce a much higher minimum tax, and to advocate within the Inclusive Framework for a higher share of global profits of multinationals to be reallocated using a formula, as both the Intergovernmental Group of 24 and the African Tax Administration Forum , which coordinate the positions of their members that are active in the negotiations, have been calling for.
A global minimum tax is one of the main recommendations of the Report on Financial Integrity for Sustainable Development - presented last February by a United Nations high-level panel, the FACTI.
A global minimum tax rate close of 21% could generate $640 billion, according to a recent study on the potential revenue-raising effects of the widespread adoption of this measure.
The European Tax Observatory, run by ICRICT commissioner Gabriel Zucman, just considered several scenarios, depending on a range of rates. An international agreement on a minimum rate of 25% - as supported by ICRICT- would allow the European Union (EU) to raise its tax revenues by €170 billion in 2021, an increase of 50% of the corporate tax revenue collected today and equivalent to 12% of total EU health spending.
With a 21% minimum rate (Biden’s early proposal), the EU would collect about €100 billion more. Moving from 21% to 15% would halve these revenues (to €50 billion).
A 25% global minimum corporate tax rate would raise nearly $17 billion more for the world’s 38 poorest countries (for which data is available) than a 15%. These countries are home to 38.6 % of the world’s population.
Multinationals, supported by some economists, claim that a 21% rate would be excessive and would harm developing countries, depriving them of a valuable tool to attract investment. This is a specious argument.
Studies show that when a multinational company considers where to locate a production unit, tax advantage does not take pride of place at all on the list of criteria to be considered. In fact, it appears well behind other issues such as the quality of infrastructure, the education of workers, or legal security.
Additional revenue generated by a global minimum tax must be shared equitably between the home countries of multinational companies and the developing countries where the activities – workforce and raw materials – are sourced.
The Intergovernmental Group of 24 (G24), a body representing emerging economies, is requesting that, in some circumstances, these economies should have priority in taxing profits shifted to tax havens.
Globally, tax avoidance diverts 40% of foreign profits to tax havens, according to ICRICT commissioner Gabriel Zucman.
http://www.factipanel.org/report http://www.icrict.com/press-release/2021/7/1/g20oecd-inclusive-framework-tax-deal-a-missed-opportunity-e6b2g http://www.oxfam.org/en/press-releases/oecd-tax-deal-mockery-fairness-oxfam http://taxjustice.net/press/oecd-tax-deal-fails-to-deliver/ http://www.icrict.com/press-release/2020/6/14/icrict-report-the-global-pandemic-sustainable-economic-recovery-and-international-taxation http://www.icrict.com/icrict-in-thenews http://bit.ly/3ollcTH http://taxjustice.net/press/tax-abuse-by-oecd-countries-denies-fundamental-human-rights-to-millions/
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