Calls for a wealth tax are getting louder because of a growing gap between the ultra-rich and the not-so-rich. Oxfam International released a report ahead of the World Economic Forum that says the world’s 2,153 billionaires have more wealth combined than 60% of the global population. (1) That’s about 4.6 billion people. The global anti-poverty organization also says the wealth gap has a much greater impact on women than it does men.
It’s not big news that the world’s richest people are getting richer, but we may not realize by how much. The gap didn’t appear overnight. It has quietly grown over time as those on the top accumulate more wealth, and those on the bottom struggle to make ends meet.
Richest People in the World
You probably know at least a few of the richest people in the world. Amazon founder and CEO Jeff Bezos is number one. He has a net worth of $114 billion. That’s actually a discount from his net worth in 2018 when he took the crown from Microsoft co-founder Bill Gates. Bezos had $160 billion at the time, mostly due to a run-up in Amazon stock. But even with a drop in his net worth, he’s still worth more than Gates — but only by about $8 billion.*
Those are only two of the 2-thousand-plus people worth more than a billion dollars. Other names are also recognizable. Oracle of Omaha, Warren Buffett is third with $80 billion. Facebook founder Mark Zuckerberg has more than $70 billion. And the list goes on. As Forbes reports in its latest ranking of wealthiest Americans, their combined net worth is almost $3 trillion dollars. And that’s only in the United States.
Many Women Are Unpaid Caregivers
Going back to the Oxfam report, you’ll find other comparisons. Here are a few:
- The 22 richest men in the world have more wealth than all the women in Africa.
- Women and girls work 12.5 billion hours without pay taking care of other people.
- The value of that free work is estimated at $10.8 trillion a year which is three times more than the value of the global tech industry.
We’ve been hearing a lot about a wealth tax from Democratic presidential candidates. Oxfam is also proposing a wealth tax of 0.5% for the richest 1% of the world’s population. It says that amount of money would raise enough money to pay for the kind of jobs that many women are doing for free. Oxfam estimates the number of jobs at 117 million for childcare, eldercare, healthcare, and education.
The Oxfam India CEO says, “Women and girls… spend billions of hours cooking, cleaning and caring for children and the elderly. Unpaid care work is the ‘hidden engine’ that keeps the wheels of our economics, businesses and societies moving. It is driven by women who often have little time to get an education, earn a decent living or have a say in how our societies are run, and who are therefore trapped at the bottom of the economy.”
Oxfam says there will be a much greater need for caregiving as the global population grows and ages. It estimates that 2.3 billion people will need help with their daily care needs by 2030.
Wealth Tax Support by Billionaires
Many of the world’s wealthiest individuals have come out in support of a wealth tax. More than a hundred of them published a letter ahead of the World Economic Forum saying, “Every solution to this global (inequality) crisis requires higher taxes on millionaires and billionaires like us.” (2) It goes on to say, “A wealth tax could help address the climate crisis, improve the economy, improve health outcomes, fairly create opportunity, and strengthen our democratic freedoms. Instituting a wealth tax is in the interest of our republic.”
Bill Gates wasn’t part of that letter but he let his opinions be known in a New Year’s Eve blog. (3) He said, in part, “I think the rich should pay more than they currently do, and that includes Melinda and me.” He describes the system as unfair because most people pay taxes on their hourly work or salary at a higher rate than people pay on their investment gains from things like stocks and real estate. He says, “That’s the clearest evidence I’ve seen that the system isn’t fair. I don’t see any reason to favor wealth over work the way we do today.”
Billionaire George Soros has been one of the loudest voices in the pro-wealth tax movement. He was among those who signed a letter addressed to 2020 presidential candidates last year. (4) That letter proposed a tax of 2 cents on the dollar for assets over $50 million and an additional 1-cent tax on assets over $1 billion. That could raise some $3 trillion in tax revenue over a ten-year span.
Estate Tax Do-Over?
In addition to a wealth tax, there are proposals that would impact the capital gains tax and the estate tax systems. New York University law professor, Lily Batchelder, just published an estate tax proposal. She says in a paper published by the Brooking Institution that Americans are expected to inherit $764 billion this year and will pay only 2.1% tax on that money. She compares that to the average 15.8% income tax paid by workers, with some people paying as much as 37%.
Batchelder said in a Bloomberg article, “If anything, we should be taxing income from inheritances at higher rates than income from work.” (5) She says we should replace the estate tax with an inheritance tax, and says it’s much more than a matter of semantics. She writes that under the current estate tax system, the first $23.2 million of an estate is tax free. After that, it’s 40%, but there are also plenty of strategies that reduce or eliminate that tax. Her proposal would replace the estate tax with an income tax with a much smaller exemption. She says, “The proposal would take a large step toward leveling the playing field between income from inherited wealth and income from work.”
This issue will likely grow louder in the coming months as we get closer to the Presidential election, and we hear more from the well-publicized wealth tax proposals by some of the Democratic candidates. But no matter who wins, this is an issue that won’t go away.
Now it’s my personal opinion that when the government gets involved in running things, it tends to be less effective and more expensive than when the private sector does it. In a free economy, the best run business gets the business, rather than just being government funded, regardless of quality of service.
I’d rather see billionaires get tax credits for investing in the services that are needed by donating to the best organizations making the biggest difference. In the case of the opinion that more women are doing free labor when helping people, perhaps those donated funds could go to fund the services women have been doing for free so that they can get the education and job training that they want.
(1) Oxfam Report
(4) Forbes Article