“Collect more taxes from us” – DW – 01/18/2024

“We are surprised that they have not been able to answer the simple question we have been asking them for three years: When will they tax extreme wealth?” The question comes from participants of the online campaign “Proud to Pay More” and is addressed to heads of state and government gathered at the World Economic Forum (WEF) in Davos.

On Wednesday (17.1.2024), activists delivered an open letter there, demanding an increase in taxes on the super-rich around the world.

“return to normal”

The highlight of the campaign is that some of the world’s richest people participate in it: 260 millionaires and billionaires came together to protest against growing social inequality globally.

He says his demands are not radical, but rather represent a “return to normalcy”. He believes that “excessive and unproductive wealth” can become an “investment in our democratic future”.

Valerie Rockefeller, Abigail Disney and Austrian Marlene Engelhorn, whose family founded the German pharmaceutical company BASF, are some of the campaign’s signatories. They’ve all inherited most of their wealth without working hard, and none of them agree with it.

the rich are getting richer

The gap between the poor and the rich is increasing internationally. According to the World Inequality Report 2022, more than a third of the private wealth accumulated since the mid-1990s is held by the richest one percent on the planet.

In contrast, the poorest half of the world’s population, the four billion, collectively own only two percent of these accumulated assets.

There have been several attempts in the past to impose higher taxes on extreme wealth.

Barriers to raising taxes

However, political implementation is not so simple. “The signatories of the petition in Davos are, first of all, heirs who do not actively run the company and are therefore uncomfortable with the huge wealth that they did not create themselves,” explains Stefan Bach, a tax expert at the German Institute for Economics. Research (DIW, for its acronym in German), in Berlin. In his opinion, these are also “individual voices”.

The vast majority of the super-rich have no say on the matter, Bach says, and political resistance from business organizations against these types of schemes is very strong.

Furthermore, Bach believes that some of the assets are tied to companies. Lower taxes serve as incentives to invest and create jobs. Business organizations argue that increasing taxes may lead to loss of investment and jobs.

national initiative

Similarly, according to Bach, there is no point in having a national law to tax extreme wealth, as billionaires can easily change their domicile to foreign countries where lower taxes are imposed.

In an interview with DW, the tax expert says a balanced mix of tax increases, such as income and wealth taxes, could generate additional money for the state coffers. He says, “But this is possible only when there is an agreement at the international level.”

Already in 2021, the first successes in the fight against tax evasion by large companies were recorded. 130 countries, which account for 90 percent of global economic output, agreed to impose a minimum effective tax rate of 15 percent for corporations.

With this, they want to prevent multinational companies from moving to countries with more attractive taxes. Last year, several MEPs proposed a similar initiative for a global minimum tax on excessive personal wealth.

However, as a result of the general shift to the right in Europe, Bach doubts that such proposals will become reality in the immediate future.

“There is almost no majority on the left,” he says and explains, “When it comes to tax measures, it is always necessary to have the support of the liberal or conservative parties, which are more favorable to businessmen.

(vt/ms)