A Viable Billionaire Tax?

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Above Photo: Flickr/CafeCredit.com

New paper makes the case that a global billionaire tax is ethical, good for growth, and could solve a lot of the world’s problems. Oh and politically viable. 

At the end of Thomas Piketty’s 2013 blockbuster Capital in the Twenty-First Century, the French economist makes a compelling case for a global wealth tax. Levying a tax on wealth, Piketty explains, would be a preferable alternative to global war or economic calamity, the only other drivers for a significant redistribution of wealth he could find in the historical record.

A global tax on wealth back in 2013 sounded quaint to many seasoned wealth researchers, a nice idea but something destined to go nowhere. The election of Donald J. Trump seemed to only confirm this political assessment.

But Oxfam economist Didier Jacobs has a distinctly different perspective in his new discussion paper, The Case for Billionaire Tax. Jacobs sees a global tax on concentrated wealth as something that could fund universal access to basic education and health care and spur economic growth, an ethically justified and politically feasible catalyst for change.

Jacobs envisions a 1.5 percent tax on net wealth over $1 billion, a levy that could in theory generate $70 billion in annual revenue from the 1,800 or so billionaires around the world.

“Such revenues would be sufficient to secure an education for all the 124 million children not going to school in low- and lower-middle-income countries,” the Jacobs paper estimates, “and save 6 million lives a year.”

In simpler terms, a global billionaire tax could ultimately end “dollar a day” extreme poverty in every country in the world.

That stat alone should give serious policy makers and organizers reason enough to consider a global billionaire tax. In essence, we are today choosing to subjugate millions of families to dreadful poverty by not placing a small levy on a tiny group of people who have more money than they could ever spend in a dozen lifetimes.

Jacobs reminds us that billionaires currently account for 2.7 percent of the world’s wealth and 0.00002 percent of the world’s population. He also reminds us that many billionaires want to help.

About a hundred of our billionaires have signed the Bill Gates giving pledge and committed themselves to give away half their fortunes. But this pledge group makes up just 6 percent of the world’s billionaires, and philanthropy, while important to solving many global problems, remains wholly insufficient in the fight to really bring down global inequality.

Okay, so revenue from a billionaire’s tax could do a lot of good. But how exactly could such a tax be feasible, especially in the Trump era?

No international organization like the United Nations, Jacobs acknowledges, has the legal authority to levy taxes. But he sees the UN playing a key role in a billionaire tax over the course of a three-step implementation.

The first step, Jacobs argues, would be for the UN General Assembly to ask for individuals to annually contribute 1.5 percent of their net wealth above $1 billion to international development and to ask for member states to process such contributions.

This move would only require a simple majority of states to get the ball rolling. Some billionaires would likely heed such a call and bring the idea some much needed momentum and legitimacy.

The next step in the Jacobs plan would involve having major corporations incorporate the billionaires tax notion into their social responsibility agendas and ask their wealthy founders to commit to the idea. Again non-binding, but building momentum and pushing the idea of a billionaires tax into the mainstream.

A global billionaire tax could ultimately end “dollar a day’ extreme poverty

Finally, the last step would require real legislation, passing the UN resolution at the national level in the tax code of each country.

“By translating the international ‘soft law’ into ‘hard’ national law,” writes Jacobs, “the billionaire tax would become a true tax, legally enforceable.”

To be viable, a billionaire tax would require public mobilization and a shift away from the austerity politics dominating many countries worldwide. Jacobs sees the idea as “highly campaignable” and draws hope in the rising viability of the financial transactions tax, an idea that had been seen for years as an obscure longshot.

Ten of the 28 countries in the European Union are today in the process of adopting a financial transaction tax.

The longer we wait to act on global wealth inequality, the more wealth will concentrate into fewer and fewer hands. The process of implementing a global wealth tax will not be easy and certainly won’t be quick, but it will be necessary if we’re going to reverse our severe contemporary maldistribution of wealth.

The Jacobs plan offers us a valuable nudge towards that end.

  • AlanMacDonald

    We are entering a dangerous and deceptive time regarding the critical
    ‘symptom problem’ (for our country and our world) about massive wealth
    inequality — and there are, perhaps not surprisingly, two schools of
    thought (or two competing narratives) confronting each other on this
    seminal issue.

    While Thomas Piketty’s research and the recent
    shocking fact that only EIGHT white men control/own as much wealth as
    half the people in the whole word, would seem to point toward the need
    for peacefully unwinding this greatest inequality in the history of
    mankind, there is a subtle ‘fear-inducing’ second counter-narrative —
    as evidenced by Walter Scheidel’s new “The Great Leveler, Violence and
    the History of Inequality”, WSJ articles, the CIA’s country case-book
    note that GINI Income Inequality greater the 0.45 is an indicator of
    “civil unrest” and potential revolution, and the Disguised Global
    Capitalist EMPIRE now led by faux-Emperor/president Trump, which pits
    people against people, instead of people against EMPIRE.

    “For thousands of years, civilization did not lend itself to peaceful
    equalization. Across a wide range of societies and different levels of
    development, stability favored economic inequality. This was as true of
    Pharaonic Egypt as it was of Victorian England, as true of the Roman
    Empire as of the United States. Violent shocks were of paramount
    importance in disrupting the established order, in compressing the
    distribution of income and wealth, in narrowing the gap between rich and
    poor. Throughout recorded history, the most powerful leveling
    invariably resulted from the most powerful shocks. Four different kinds
    of violent ruptures have flattened inequality: mass mobilization
    warfare, transformative revolution, state failure, and lethal
    pandemics.”

    Scheidel, Walter. The Great Leveler: Violence and the
    History of Inequality from the Stone Age to the Twenty-First Century
    (The Princeton Economic History of the Western World) (Kindle Locations
    413-418). Princeton University Press. Kindle Edition.

    This sort of ‘scare-tactic’ in addressing the issue of the GINI Coefficient of
    Wealth Inequality is clearly an argument that is being forwarded by both
    the UHNWIs of the world, their scribes & paid academics, and
    Think-Tanks (like Laurence Shoup’s “Wall Street’s Think Tank CFR and
    the Neoliberal Geopolitical EMPIRE”), and by the massively unequal and
    unfair structure of the EMPIRE itself, independent and separate from the
    tiny minority of our fellow human beings who vastly benefit because of
    the structure of EMPIRE throughout all of human history.

    It is predictable that very soon, and very importantly, “we the people” of
    America will have to recognize, understand, carefully diagnose, and take
    non-violent action — possibly in the form of a peaceful Second
    American “Political Revolution against EMPIRE”, or suffer the
    consequences of the Disguised Global Capitalist EMPIRE, which has
    ‘captured’, controls, and now almost fully “Occupies” our former country
    taking awful action against us, our children, our grand-children, our
    country, our environment, and our entire fragile little world.

  • DHFabian

    Wouldn’t it be more efficient to ignore the low-income and poor around the world, like we ignore them here in the US?

  • DHFabian

    A legitimate “inequality” discussion is impossible in the US because there is no acknowledgement of our poverty crisis. When liberals discuss “inequality,” they are referring to the gap between the working class and rich. Reality doesn’t always conform to popular ideology. In reality, not everyone can work, and there aren’t jobs for all. And we have no mercy on those who are left behind.

    Many understood that the years of the Obama administration represented America’s last chance to get back on track. It just didn’t happen. This takes us to the inevitable idea of “revolution.” Well, who would fight whom, and for what? We’re more split apart by class and race than we were eight years ago. It angers some people to hear this, but this is reality, and we’re stuck with it.

  • DHFabian

    Why the right wing isn’t afraid: How many people can risk losing their jobs by “rising up?”

  • mmckinley

    I have enjoyed the commentary of DHFabian for months, now. Maybe even years. You are spot on that the central problem is one of class, of the massive deep poverty so well-hidden by the plutocracy and their corporate media and their lackeys and guardians and managers in the upper middle class of neoliberal professionals that serve them so devotedly. I believe the world view that has captured us, that renders the 99% unable to escape the clutches of the plutocracy and the austerity they force upon us, is the Calvinist so-called work ethic that, behind the sanctification of work, claims: 1) work is sacrifice, and must be painful and soul-killing in order to deserve pay; and 2) those who do not work hard enough to suffer deserve to die. It is the ethical basis of slavery. When you have to work at any job available in order to live, and pay the debts you accrued in order to merely survive, you are a slave. When a system ensures that the supply of available jobs is always less than the demand for those jobs, that is a system of slavery. In such a system, workers are effectively owned, and subject to any manner of abuse. And such a system is always based on violence and force. In our capitalist system that force manifests in, among other things, government privilege purchased by monopoly and concentrated capital (such as tax breaks and subsidies, privatization of the commons, competitive protections, government contracts, even actual direct looting of the treasury) at the expense of the 99% and enforced by the power of government. The primary power of monopoly is the power to control and restrict supply—in this case, the supply of quality, meaningful jobs available. It is a system that guarantees a permanent, massive poverty class and a dependent, tremulous, utterly insecure middle class. I believe that the only possible way out of this damnable system is a guaranteed basic living income for all. I stress the “living” part of that. Based on the idea that currently a living minimum wage is considered to be $15/hr, that translates to about $2600/month for every adult in America (the amount proposed in the recent Swiss referendum, which also would have included $650/month for every minor). I would add that this GBLI would need to be indexed for inflation. How to pay for it? Tax the hell out of the wealthy, who for too long have looted OUR Treasury for their enormous swollen wealth, at the expense of the 99%. To hell with this suggested mere 1.5% wealth tax. In addition, let us return to the progressive taxation of the prosperous 1950′s, with a marginal tax rate of 90% for income above $1,000,000 (including capital gains), elimination of all tax breaks and subsidies (including state and local), restoration of the corporate tax rate to 35%, and taxation of speculative and high-speed transactions, among other things. I would also argue for taking back the commons and making corporations pay for its use (including its extractions and other damage).
    A guaranteed basic living income would accomplish many things. Among them would be a restoration of bargaining power to those who want to work. As we would no longer have to work in order to live, we would see a massive increase in fulfilling volunteer activity, which we were previously unable to do because we had to work all the time just to survive. We would see a massive increase in small, local business start-ups and the pursuit of creative endeavors as people are better able to realize their dreams (fact: one of the biggest barriers to new start-ups, including artist studios and small farms, is the need to earn a living for the several years it takes for a new business to start earning a profit). While many might willingly withdraw from the job pool to pursue other activity, there will be those who seek to prosper beyond mere survival and want to work. But businesses will have to compete for them, pay fair wages, and offer quality, uplifting jobs that demand less sacrifice and more joy. We might even see the extinction of the abusive manager! One thing is for sure, though. With a Guaranteed Basic Living Income, we will at last see the extinction of poverty, once and for all.

    But first, for this to happen, we must slay the dragon of Calvinism that lays, and has alway lain, at the heart of slavery. My father always told me, “The world doesn’t owe you a living.” And I bought it, because I have always believed work to be noble. But the truth is, the world does owe us a living. Our nation does. Life, liberty, and the pursuit of happiness. The world owes us life! I should not have to be a slave in order to live.