Billionaires’ wealth increases by $2.7 billion a day, while 1 in 10 people go hungry

Billionaires’ wealth increases by $2.7 billion a day, while 1 in 10 people go hungry.

10 years after Oxfam Novib’s 1st inequality report, the world is even more unequal.

Since 2020, the collective wealth of billionaires has increased by $2.7 billion per day. The richest 1% in the world pocketed 63% of all newly acquired wealth. At the same time, 1.7 billion workers see inflation rise faster than their wages, and 820 million people go hungry. This is according to the new Oxfam report published today at the start of the annual World Economic Forum. Oxfam Novib is calling for a critical debate on the harms of extreme wealth and for significantly higher tax rates on the wealth of the super-rich.

‘It is exactly 10 years ago this year that we first raised the alarm in Davos about the increase in extreme inequality worldwide. The subject has since become firmly on the agenda, and many say they would like to bring it up, but the facts are unfortunately different. The number of billionaires has doubled in the same period, and poverty has risen again for the first time in decades. Billions of people are currently struggling with rising energy and food prices. Something needs to be done quickly to tackle this outrageous trend of global economic inequality that has disrupted our society for decades, starting with much tougher taxation of the super-rich,” said Michiel Servaes, general manager of Oxfam Novib.

The new Oxfam report “Survival of the Richest” shows:

  • That between December 2019 and December 2021, $26 trillion (63%) of all newly created wealth was pocketed by the richest 1%.
  • Only $4 trillion (10%) of new wealth reached the bottom 90 percent of the world’s population.
  • For every $1.7 million a billionaire earned, only $1 went to 90% of the world’s population.
  • In the past 10 years, the wealth and number of billionaires has doubled.
  • Meanwhile, governments fail to tax these assets more fairly. Worldwide, only four cents of every tax dollar now comes from wealth tax.

Crises increase inequality

In the crisis year 2022, 95 food and energy companies managed to more than double their profits. Of this, $257 billion, 84 percent, has been paid out to shareholders. Meanwhile, workers’ wages lag and consumers pay higher prices. Excessive corporate profits are responsible for at least half of inflation in Australia, the US and the UK. At the same time, 1.7 billion workers are seeing inflation rise faster than their wages, and more than 820 million people – about one in ten people on the planet – are going hungry.

The World Bank states that 2020, the year many countries imposed lockdowns against the pandemic, likely saw the largest increase in global inequality and poverty since World War II. Since then, the fight against poverty has been excruciatingly slow, partly because many developing countries are weighed down by large debt burdens. The least developed countries now spend four times more on debt repayment than they do on their health care. Three-quarters of the world’s governments plan to cut public spending – including health and education – to the tune of $7.8 trillion over the next five years.

Tax races to the bottom feed the super rich and hurt societies

Wealth comes with power and influence, which is how the biggest companies and the richest manage to bend the tax rules to their will. The report shows that over the past 40 years, governments in Africa, Asia, Europe and the Americas have reduced income tax rates for the wealthiest. The tax on profits was also lowered, and multinational corporations and wealthy individuals were given ample opportunity – partly due to tax havens such as the Netherlands – to avoid taxes and hide assets. At the same time, taxes on goods and services increased. This weighs disproportionately on the incomes of the poorest and further disadvantages women and other marginalized groups. The excessive consumption of the super-rich also fuels the climate crisis. For too long, governments, international institutions and multinational corporations have argued that low taxes and high profits ultimately benefit everyone. Oxfam Novib calls for a serious debate about the harms of extreme wealth.

Inequality in the Netherlands has been denied for too long

While tackling the Netherlands’ extremely poor role as a tax haven has finally gained traction – although it is too early to call it a success – tackling the lopsided distribution of wealth in the Netherlands has long been deafeningly silent. Less than a year ago, the Prime Minister stated in the House of Representatives that the debate on wealth inequality was not held during his time in politics. While numerous reports and experts have been exposing the problem for years. Last summer, an interdepartmental policy study (IBO) also reached firm conclusions about the unequal distribution of wealth in the Netherlands and how the tax system causes this imbalance.

“Also in the Netherlands it is finally coming through that we are no longer the egalitarian country where everyone contributes equally and according to their means to our society. The richest 1% own 26% of the total Dutch wealth at the same time. de richest pay relatively less tax than the rest of the Netherlands. Or through tricks not or hardly at all. Tackling that inequality and the heavier taxation of wealth must become a spearhead of Dutch politics. By fighting extreme wealth and distributing the wealth more fairly, not not only can many more people get out of poverty, but the many crises can be tackled more effectively,’ says Servaes.

Oxfam Novib calls on governments worldwide to:

  • Introduce one-off solidarity taxes and tax on disproportionate profits from companies that profit during crises.
  • Permanently increasing taxes on multi-millionaires and billionaires, for example with rates of at least 60% on the highest incomes from labor and capital. In particular, governments should collect more tax on income from capital, which now has lower tax rates than other forms of income. In the Netherlands, the richest 1% also pay less tax on average than the rest of the population.
  • Tax the wealth of the richest 1% at rates high enough to significantly reduce inequality and discourage concentration of power. This includes the introduction of property, real estate and land taxes as well as taxes on net worth.
  • Increase transparency, for example by requiring multinational corporations to be transparent about their presence, activities, profits and tax payments per country and worldwide and by introducing a public asset register.
  • Use the tax revenue to fight inequality, to invest in better access to health care, education, food security, strengthening the purchasing power of people who are currently struggling, and in a fair and sustainable economy that benefits everyone.

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