Humanity is living through an unprecedented moment of multiple crises: basic goods and energy prices are rising, extreme poverty is growing for the first time in 25 years, millions are still reeling from the impact of the pandemic and climate breakdown is ravaging communities.
Yet, this polycrisis does have a winner: the superrich. Indeed, during this escalating period of crisis, the 1 percent has captured almost two-thirds of new global wealth, which amounts to close to double as much as the entire 99 percent received.
This is the stark message delivered by Oxfam in its current annual report on global wealth distribution.
Launched this week, the Survival of the Richest report is perhaps the bleakest assessment the confederation of charities has thus far delivered.
But Oxfam hasn’t left us dangling. The organisation focused on the alleviation of global poverty does propose a solution to this “cost-of-profit” crisis, which is taxing the rich: an idea that’s “hugely popular” and would work to reduce multiple disparities, not just economic inequality.
Survival of the rich
The recent multiple crises have seen wealth accumulation that was already at record levels accelerate further for a tiny few, with the two-thirds of all new wealth that they’ve captured, amounting to six times what the bottom 90 percent garnered.
As Oxfam puts it, this means that for every dollar of new wealth gained by a member of the bottom 90 percent, one of the world’s billionaires received a tidy $1.7 million.
The huge amounts of public money that were “pumped into the economy by rich countries” to support communities during lockdowns, also served to drive up the wealth of those at the top, and without any progressive tax regime to deal with this, the superrich pocketed the entire fortunes.
And despite this surge in wealth having peaked in 2021, the majority of the trillions accumulated remains with these billionaires, while at least half of the global cost-of-living crisis is being spurred by corporate price profiteering.
The trickle-down fallacy
According to Oxfam, extreme wealth accumulation has some not so obvious outcomes. It undermines the growth of economies and corrupts democratic systems, while in terms of climate, billionaires emit a million times more carbon than the average person.
“The very existence of booming billionaires and record profits, while most people face austerity, rising poverty and a cost-of-living crisis, is evidence of an economic system that fails to deliver for humanity,” writes Oxfam, adding that the fallacy of “trickle-down economics” has reigned too long.
In order to break the cycle of billionaire wealth accumulation, the report posits that governments have to shift away from policies that are feeding it, such as the privatisation of public assets, executive compensation and labour laws.
But the key way to solve this growing disparity is to tax the rich. And Oxfam finds that the extreme rise in the wealth of a few has coincided with a breakdown in the taxing of the 1 percent.
The report outlines that for every dollar taxed these days, only 4 cents is attributed to taxes on wealth. However, back in 1950s America, the top marginal tax rate was 91 percent, inheritance tax stood at 77 percent until 1977 and corporate tax averaged at around 50 percent in the 50s and 60s.
Taxed out of crises
Oxfam asserts that the polycrisis is causing a global shift in the perception of billionaires and unlimited wealth accumulation, and it suggests that the backflip the UK government performed on proposed tax cuts for the wealthy last October marked a turning point.
Report researchers consulted polling from nations across the globe, finding that the overwhelming majority of people consider taxing the rich to be a common sense approach that could help alleviate the multiple crises the world is suffering through.
And they underscore that the trend towards cutting taxes for the superrich was not driven by popular demand but rather state capture is to blame.
Oxfam considers that the 1 percent should be paying at least 60 percent tax, while multimillionaires and billionaires should be looking at a 75 percent tax rate. And it further posits that taxes on capital gains for the superrich should involve higher rates than those on income.
“The revenues raised from this new wave of progressive taxes could then be used to build a fairer, more equal and sustainable future for us all”, via investment in “healthcare, education and food security” and a “just transition to a low-carbon world”, Oxfam ends.