The richest one per cent grabbed nearly two-thirds of all new wealth created since 2020, worth $42 trillion, almost twice as much money as the bottom 99 per cent of the world’s population, according to a new Oxfam report.
“Survival of the Richest” is being released as political and business elites gather at the World Economic Forum in Davos, Switzerland this week. These elites are gathering in the Swiss ski resort as extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.
In Canada, billionaires have seen their wealth grow by a staggering 51 per cent since the pandemic began. This accelerated a trend that was already driving wealth inequality in Canada over the past decade. For every $100 of wealth created in the last 10 years, $34 has gone to the richest 1 per cent and only $5 to the bottom 50 per cent. This means that the richest 1 per cent have gained nearly seven times more wealth than the bottom 50 per cent in the last 10 years.
“Canadians are making daily sacrifices on essentials like food and utility bills, while 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,” said Lauren Ravon, Executive Director of Oxfam Canada.
“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.”
Billionaires have seen extraordinary increases in their wealth. During the pandemic and cost-of-living crisis years since 2020, $26 trillion (63 per cent) of all new wealth was captured by the richest one per cent, while $16 trillion (37 per cent) went to the rest of the world put together. A billionaire gained roughly $1.7 million for every $1 of new global wealth earned by a person in the bottom 90 per cent. Billionaire fortunes have increased by $2.7 billion a day. This comes on top of a decade of historic gains — the number and wealth of billionaires having doubled over the last ten years.
Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The Oxfam report shows that 95 food and energy corporations have more than doubled their profits in 2022. They made $306 billion in windfall profits, and paid out $257 billion (84 per cent) of that to rich shareholders.
At the same time, at least 1.7 billion workers now live in countries where inflation is outpacing wages, including Canada, and over 820 million people — roughly one in 10 people on Earth — are going hungry. Women and girls often eat least and last, and make up nearly 60 per cent of the world’s hungry population. The World Bank says we are likely seeing the biggest increase in global inequality and poverty since the Second World War. Entire countries are facing bankruptcy, with the poorest countries now spending four times more repaying debts to rich creditors than on healthcare. Three-quarters of the world’s governments are planning austerity-driven public sector spending cuts — including on healthcare and education — by $7.8 trillion over the next five years.
Oxfam is calling for a systemic and wide-ranging increase in taxation of the super-rich to claw back crisis gains. Decades of tax cuts for the richest and corporations have fueled inequality, with the poorest people in many countries paying higher tax rates than billionaires.
Worldwide, only four cents of every tax dollar now comes from taxes on wealth. Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will pass on a $5 trillion tax-free treasure chest to their heirs, more than the GDP of Africa, which will drive a future generation of aristocratic elites. Rich people’s income is mostly unearned, derived from returns on their assets, yet it is taxed on average at 18 per cent, just over half as much as the average top tax rate on wages and salaries.
The report shows that taxes on the wealthiest used to be much higher. Over the last 40 years, governments across Africa, Asia, Europe, and the Americas have slashed the income tax rates on the richest. At the same time, they have upped taxes on goods and services, which fall disproportionately on the poorest people and exacerbate gender inequality.
“Taxing the super-rich is the missing ingredient for reducing inequality and strengthening our democracy. We need to do this to create equal opportunities for all. For stronger public services. For happier and healthier societies. And to tackle the climate crisis, by investing in the solutions that counter the insane emissions of the very richest,” said Ravon.
According to new analysis by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam and the Patriotic Millionaires, an annual wealth tax of up to five per cent on the world’s multi-millionaires and billionaires could raise $1.7 trillion a year, enough to lift two billion people out of poverty, fully fund the shortfalls on existing humanitarian appeals, deliver a 10-year plan to end hunger, support poorer countries being ravaged by climate impacts, and deliver universal healthcare and social protection for everyone living in low- and lower middle-income countries.
Oxfam is calling on governments to:
- Introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering.
- Permanently increase taxes on the richest one per cent, for example to at least 60 per cent of their income from labour and capital, with higher rates for multi-millionaires and billionaires. Governments must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income.
- Tax the wealth of the richest one per cent at rates high enough to significantly reduce the numbers and wealth of the richest people, and redistribute these resources. This includes implementing inheritance, property and land taxes, as well as net wealth taxes.