“Tax the Rich” – for a Wealth Tax: to Protect the Climate and for a Fairer World”

” To Change Direction towards Social Justice How unfairly wealth is distributed and what should be done about it ” was the title of an online event organised by Mouvement Ecologique with Action Solidarité Tiers Monde on 15 May 2024. The guest speaker was Manuel Schmitt, social inequality officer at Oxfam Germany (*).

In a vivid way, the presenter explained how unfairly wealth is currently distributed – in this case ‘assets’ and not ‘income’ – why this is so problematic and what can be done about it.

A few short facts ‘picked out’ from the lecture that are thought-provoking:

• The wealth of the 5 richest people (men) has more than doubled since 2020, from over 400 billion to well over 800 billion dollars. The poorer 60% of the world’s population, i.e. 5 billion people, have become poorer in the same period. Injustice is therefore increasing dramatically, as is poverty.
• In Germany, just under 50 % of people are among the richest 10 % in the world.
• A skilled labourer working at a Tesla factory in Germany would have to work 7.3 million years to reach Elon Musk’s estimated wealth (but would not be allowed to spend anything at the same time).
• Inequalities are driving the climate crisis, as people with higher incomes cause far more CO₂ emissions than the poorer ones.
• The richest 1% of the world’s population cause 16% of global CO₂ emissions (in the consumption sector) just as much as the poorer 2/3 of the world’s population, who make up 5 billion people. The 10 % richest people emit around 50 % of emissions.
• While there are a small number of private winners whose wealth is steadily and significantly increasing, the net wealth of governments is continuously decreasing. Recognising this fact is particularly important given the current debates on austerity measures.
• Broadly speaking, taxes have two main functions: State financing and the reduction of inequalities, i.e. redistribution to ensure social justice. Unfortunately, taxes currently have a negative connotation, but this has not always been the case. Oliver Wendell Holmes, a judge at the Supreme Federal Court, put it this way: ‘Taxes are the price of a civilised society’.
• Surprisingly, Switzerland has a wealth tax, which accounts for 7% of state revenue.
• It has been calculated that if a fairly modest wealth tax were to be introduced in Germany, as already exists in Switzerland today, it would generate around 73 billion in revenue for the state;
• There are efficient instruments to combat the feared tax evasion due to a wealth tax, such as an ‘exit tax’, where the emigration of tax evaders is associated with costs;
• The use of revenue from wealth taxes is essential. On the one hand, these should be used to tackle the climate and biodiversity crisis, but also to contribute to global justice between North and South.

Watch the video of this very interesting presentation in which these and other facts are presented in an easily understandable way: about corporate taxes, the general introduction of inheritance and wealth taxes, the different tax rates between income classes, the relationship between transfer taxes and net wealth taxes, the distribution of tax revenues by type of tax, … but also possible solutions.

The Mouvement Ecologique will be approaching you in the coming weeks with a request to support a European citizens’ initiative under the motto “Tax the rich”. The main demands are as follows:

• We call on the EU Commission to introduce a permanent and annual wealth tax for the super-rich in Europe.
• Revenues should be invested both in Europe and in the Global South:
• to finance social and ecological change,
• to reduce inequality and poverty and
• support countries affected by climate change.
• The money should flow into both the EU budget and the budgets of EU countries.’

(*) Oxfam is one of the world’s largest emergency aid and development organisations. It combats extreme poverty and social inequality with over 75 years of experience. Together with around 3,000 partner organisations, Oxfam is active in around 80 countries. The organisation also puts pressure on politicians and businesses – with creative campaigns, expert discussions and public campaigns.

17.05.2024