Every billionaire is a policy failure

Max Lawson is Oxfam’s Head of Inequality Policy

Walter is the father of my son’s best friend at school. He works nights as a security guard at a bank in the City of London. He has three kids. They are really struggling, as the prices of everything - petrol, electricity and food - have all increased dramatically. Where £20 use to buy enough electricity for a week, it now lasts just a couple of days.

But Walter, whose family comes from Sierra Leone, and who returned there recently for his mum’s funeral, counts himself lucky: “I think of all those back home with literally nothing. No job, no money coming in, and prices just going up and up. It’s terrible.”

Walter’s story is typical of hundreds of millions of families worldwide. Hundreds of millions of small domestic tragedies playing themselves out, as brutal, impossible choices must be made. Between healthcare for your sick child and food for the family. Between heating your home and having a hot meal. 

In all the years I have worked for Oxfam, I have never seen such a combination of terrible crises impact so hard on ordinary people everywhere. First COVID-19, and now the cost of living crisis, coming on top of years of rising inequality and climate breakdown, have driven up the numbers of people living in poverty for the first time in 25 years. Global inequality is growing faster than at any time since WW2.

The 2020s meanwhile are roaring for the super-rich.

Over the last decade, the richest 1% captured about half of all new wealth. But since the beginning of this decade, this pace of accumulation has dramatically increased. Since 2020, the top 1% (to be in the top 1% you need to have more than $1 million in wealth), have captured almost two-thirds of the $42 trillion in newly-created wealth. The richest 1% have captured almost twice as much wealth as the rest of humanity - the 99% of us put together. They have grabbed an astonishing $26 trillion, with billionaires fortunes rising by $2.7 billion a day. 

Billionaires are directly profiting from inflation and price rises. Oxfam’s 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 percent) of that to rich shareholders. The Walton dynasty, which owns half of Walmart, received $8.5 billion over the last year. We found that at least 1.7 billion workers are living in countries where prices are outpacing wages.

A turning tide?

This year, the focus of our report is taxing the super-rich. We explain how the last 40 years have seen a collapse in taxation of the richest, accompanied by a big jump in the share of income going to the top 1%.

Half of the world’s billionaires live in countries where there is no inheritance tax on bequests to children, meaning that $5 trillion, a figure greater than the entire GDP of Africa, could be handed on without a penny of tax being paid, creating a whole new global aristocracy. When it comes to taxing the super-rich, so many governments don’t even have the basics in place. No inheritance tax. No property tax. No taxes on capital gains. Let alone taxes on wealth.

We think the top rate of tax on the super-rich 1% should be a lot higher. For example, 60%, and higher still for multi-millionaires and billionaires. Interestingly, Bill Gates agrees with us. For large parts of the 20th century, it was normal to tax the incomes of the richest at 60% or more. Jeff Bezos paid a true tax rate of less than 1% from 2014 to 2018. Just 4 cents in every tax dollar now comes from wealth taxes.

Yet, I have hope that this tide is turning. In Latin America, a group of countries led by Colombia and Chile have concrete plans to increase taxation on the richest. Other countries, from Norway to Spain, are doing the same. Protests are happening around the world. Millionaires are even joining the protests in Davos, demanding to be taxed in what must be the ultimate man bites dog moment.

The volumes of money that could be raised are truly spectacular.

Together with Patriotic Millionaires and the Fight Inequality Alliance, Oxfam has calculated that an annual wealth tax of up to 5% on the richest people could raise $1.7 trillion . This could lift 2 billion people out of poverty and deliver a 10-year plan to end hunger. 

Every billionaire is a policy failure. Every billionaire is a sign of an economy that is failing the majority. It is time to build a more equal world, where both poverty and extreme wealth are consigned to the history books once and for all.