- Interview by
- Luke Savage
Though it remains politically out of reach, it’s well worth thinking about a global wealth tax. Global tax agreements, after all, already have precedent in existing treaties. But, more importantly, there are critical insights to be gleaned in conceiving and designing such a tax.
Those insights are explored in a new report from coauthors Omar Ocampo and Chuck Collins of the Institute for Policy Studies in collaboration with Oxfam, Patriotic Millionaires, and the Fight Inequality Alliance. Among other things, Taxing Extreme Wealth offers a detailed analysis of the world’s billionaires and multimillionaires — revealing both the breathtaking extent of their wealth and what kinds of initiatives could be funded with a global wealth tax.
Jacobin’s Luke Savage sat down with Ocampo and Collins to discuss the report and its findings.
The report includes some staggering facts about the extent of wealth inequality — both globally and within individual countries. But before we get to its topline findings, I want to ask about the calculations themselves. Where did your data come from and what was the scope of your analysis?
This report is unique in that we dig into the tier of wealth that is below the billionaire level. We know a lot about billionaire wealth, in the United States and globally, thanks to Forbes and Bloomberg and their just-in-time wealth estimates. But we don’t know as much about the rest of the ultra-high net worth class, those with over $5 million or over $50 million in wealth.
For example, we estimate that there are more than 183,000 people in the world with wealth over $50 million that have a combined wealth of $36.4 trillion. We then apply a wealth tax similar to the one advocated by Elizabeth Warren, a progressive wealth tax with higher rates on the billionaires.
What is different about this report is we contracted data from Wealth-X, a private wealth research firm that has built a rather substantial global database on wealthy individuals. Their main clients are nonprofits, large charities doing major fundraising, and luxury companies selling luxury goods to multimillionaires and billionaires.
Coming to your findings, the report estimates that a global wealth tax levied on the world’s millionaires and billionaires could raise a little over $2.5 trillion every year. How exactly did you reach that figure, and what would your theoretical wealth tax look like in practice?
We looked at the global data and focused on the seventy countries that account for 98 percent of the global GDP. There are many countries that don’t have tax reporting or estimates of private wealth. But we think we include most of the world’s multimillionaires and billionaires.
We applied a number of different wealth tax formulas, but in the report, we only discuss two. The first applies an annual tax rate of 2 percent on wealth between $5 million and $50 million; 3 percent on wealth between $50 million and $1 billion; and 5 percent on wealth over $1 billion. This is the rate that would raise $2.5 trillion.
A second wealth tax rate is really aimed at more aggressively reducing billionaire wealth, with an annual tax rate of 10 percent. That rate would raise closer to $3.6 trillion a year. In the United States it would raise $1.34 trillion. But we also looked at higher rates and what they could raise.
A few other stats we found interesting:
- 3.6 million people globally have over $5 million in wealth, with a combined wealth of $75.3 trillion.
- There are 1,436,275 individuals with a net worth of $5 million or more, with wealth totaling $28 trillion.
- There are 63,505 individuals in the US with $50 million or more with a combined wealth of $12.8 trillion.
- Between 2016 and 2021, the number of US individuals with wealth over $50 million increased from 37,140 to 63,505 with combined wealth increasing from $8.4 trillion to $12.8 trillion, a gain of 51.84 percent, adjusted for inflation.
Perhaps the most important conclusion of Taxing Extreme Wealth has to do with what a global wealth tax could actually pay for. Can you give us a rundown of those findings? What sorts of things could an annual revenue of $2.5 trillion actually pay for?
We estimate that $2.5 trillion is enough to lift 2.3 billion people out of poverty, create 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 — an estimated 3.6 billion people.
According to the World Bank, there are roughly 3.3 billion people below their poverty line of less than $5.50 a day. It would cost, on average, $901 per person to lift them out of poverty. With regards to vaccines, COVID-19 vaccinations would cost $27.8 billion. Universal social protection and health care would cost an estimated $440.8 billion. In 2020, the finance gap for achieving universal social protection coverage and health care for low- and lower-middle-income countries was $440.8 billion.
Working with Oxfam International and the Fight Inequality Alliance, we worked with individual countries to identify how revenue could be deployed in their countries, primarily with an eye toward expanding public health systems. The fact sheet report includes country by country fact sheets for forty-four countries.
This report is obviously something of an exercise in utopian thinking. Which is to say: we currently lack the global institutional infrastructure that would be necessary to institute a worldwide tax on wealth, to say nothing of the balance of forces that would be required to bring something like one about.
Nonetheless, these are really political obstacles more than they are technical problems. So, putting aside the question of how we’d actually get there, do the two of you have thoughts on how a global wealth tax could theoretically work in practice? What kind of future institution (or institutions) do you envision would be needed to administer it?
While there is no central global tax authority, there are ways that nation states can agree on parallel policies. For example, we’ve just witnessed 136 countries come together and pass a treaty creating a 15 percent global corporate minimum income tax. Once implemented, this will discourage multinational corporations from pitting countries against one another in a race to the bottom to lower taxes.
It is hard to envision individual countries yielding to global tax authority (try and get that one through the United States Senate!), but with the mounting global pressure to address extreme inequality and billionaire tax avoidance, you could envision a process similar to what led to the global corporate minimum tax. A similar treaty agreement could unify countries to tax, in tandem, extreme concentrations of wealth and diminish billionaire wealth and power. The same international tax agreement should shut down the hidden wealth system, making it hard for the billionaire class to hide sequester wealth in trusts, offshore tax havens, and anonymous shell companies.