The richest 1% grabbed nearly two-thirds of all new wealth worth $42tn created since 2020, almost twice as much money as the bottom 99% of the world’s population, a new Oxfam report has revealed.
During the past decade, the richest 1% had captured around half of all new wealth.
“Survival of the Richest” was published on 16 January, the opening day of the World Economic Forum in Davos, Switzerland. Elites are gathering in the Swiss ski resort as extreme wealth and extreme poverty have increased simultaneously for the first time in 25 years.
“While ordinary people are making daily sacrifices on essentials like food, the super-rich have outdone even their wildest dreams. Just two years in, this decade is shaping up to be the best yet for billionaires – a roaring ’20s boom for the world’s richest,” Oxfam International executive director Gabriela Bucher said.
“Taxing the super-rich and big corporations is the door out of today’s overlapping crises. It’s time we demolish the convenient myth that tax cuts for the richest result in their wealth somehow ‘trickling down’ to everyone else. Forty years of tax cuts for the super-rich have shown that a rising tide doesn’t lift all ships – just the superyachts.”
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Billionaires have seen extraordinary increases in their wealth. During the pandemic and cost-of-living crisis years since 2020, $26tn (63%) of all new wealth was captured by the richest 1%, while $16tn (37%) went to the rest of the world put together.
A billionaire gained roughly $1.7m for every $1 of new global wealth earned by a person in the bottom 90%. Billionaire fortunes have increased by $2.7bn a day. This comes on top of a decade of historic gains – the number and wealth of billionaires having doubled over the last 10 years.
Billionaire wealth surged in 2022 with rapidly rising food and energy profits. The report shows that 95 food and energy corporations have more than doubled their profits in 2022. They made $306bn in windfall profits and paid out $257bn (84%) of that to rich shareholders.
The Walton dynasty, which owns half of Walmart, received $8.5bn over the last year. Indian billionaire Gautam Adani, owner of major energy corporations, has seen this wealth soar by $42bn (46%) in 2022 alone. Excess corporate profits have driven at least half of inflation in Australia, the US and the UK.
At the same time, at least 1.7 billion workers now live in countries where inflation is outpacing wages, and over 820 million people – roughly one in 10 people on Earth – are going hungry. Women and girls often eat least and last, and make up nearly 60% of the world’s hungry population.
The World Bank says we are likely seeing the biggest increase in global inequality and poverty since World War Two. Entire countries are facing bankruptcy, with the poorest countries now spending four times more repaying debts to rich creditors than on healthcare.
Three-quarters of the world’s governments are planning austerity-driven public sector spending cuts – including on healthcare and education – by $7.8tn over the next five years.
Oxfam is calling for a systemic and wide-ranging increase in taxation of the super-rich to claw back crisis gains driven by public money and profiteering. Decades of tax cuts for the richest and corporations have fuelled inequality, with the poorest people in many countries paying higher tax rates than billionaires.
Elon Musk, one of the world’s richest men, paid a “true tax rate” of about 3% between 2014 and 2018. Aber Christine, a flour vendor in Uganda, makes $80 a month and pays a tax rate of 40%.
Worldwide, only four cents in every tax dollar now comes from taxes on wealth. Half of the world’s billionaires live in countries with no inheritance tax for direct descendants. They will pass on a $5tn tax-free treasure chest to their heirs, more than the gross development product (GDP) of Africa, which will drive a future generation of aristocratic elites.
Rich people’s income is mostly unearned, derived from returns on their assets, yet it is taxed on average at 18%, just over half as much as the average top tax rate on wages and salaries.
The report shows that taxes on the wealthiest used to be much higher. Over the last forty years, governments across Africa, Asia, Europe, and the Americas have slashed the income tax rates on the richest.
At the same time, they have upped taxes on goods and services, which fall disproportionately on the poorest people and exacerbate gender inequality.
In the years after World War Two, the top US federal income tax rate remained above 90% and averaged 81% between 1944 and 1981. Similar levels of tax in other rich countries existed during some of the most successful years of their economic development and played a key role in expanding access to public services like education and healthcare.
“Taxing the super-rich is the strategic precondition to reducing inequality and resuscitating democracy. We need to do this for innovation. For stronger public services. For happier and healthier societies. And to tackle the climate crisis, by investing in the solutions that counter the insane emissions of the very richest,” Bucher said.
According to new analysis by the Fight Inequality Alliance, Institute for Policy Studies, Oxfam and the Patriotic Millionaires, an annual wealth tax of up to 5% on the world’s multi-millionaires and billionaires could raise $1.7tn a year – enough to lift two billion people out of poverty, fully fund the shortfalls on existing humanitarian appeals, deliver a 10-year plan to end hunger, support poorer countries being ravaged by climate impacts, and deliver universal healthcare and social protection for everyone living in low and lower middle-income countries.
Oxfam is calling on governments to:
- Introduce one-off solidarity wealth taxes and windfall taxes to end crisis profiteering
- Permanently increase taxes on the richest 1%, for example, to at least 60% of their income from labour and capital, with higher rates for multi-millionaires and billionaires. Governments must especially raise taxes on capital gains, which are subject to lower tax rates than other forms of income
- Tax the wealth of the richest 1% at rates high enough to significantly reduce the numbers and wealth of the richest people, and redistribute these resources. This includes implementing inheritance, property and land taxes, as well as net wealth taxes – Oxfam
Notes:
Download “Survival of the Richest” and the methodology document outlining how Oxfam calculated the statistics in the report.
Oxfam’s calculations are based on the most up-to-date and comprehensive data sources available. Figures on the very richest in society come from the Forbes billionaire list.
All amounts are expressed in US dollars and, where relevant, have been adjusted for inflation using the US consumer price index.
According to the World Bank, extreme poverty increased in 2020 for the first time in 25 years. At the same time, extreme wealth has risen dramatically since the pandemic began.
The report shows that while the richest 1% captured 54% of new global wealth over the past decade, this has accelerated to 63% in the past two years. $42tn of new wealth was created between December 2019 and December 2021. $26tn (63%) was captured by the richest 1%, while $16tn (37%) went to the bottom 99%. According to Credit Suisse, individuals with more than $1m in wealth sit in the top 1% bracket.
The billionaire class is $2.6tn richer than before the pandemic, even if billionaire fortunes slightly fell in 2022 after their record-smashing peak in 2021. The world’s richest are now seeing their wealth climb again.
In the US, the UK and Australia, studies have found that 54%, 59% and 60% of inflation, respectively, was driven by increased corporate profits. In Spain, the CCOO (one of the country’s largest trade unions) found that corporate profits are responsible for 83.4% of price increases during the first quarter of 2022.
The World Bank announced that the world has almost certainly lost its goal of ending extreme poverty by 2030 and that “global progress in reducing extreme poverty has grind[ed] to a halt” amid what the bank says was likely to be the largest increase in global inequality and the largest setback in global poverty since World War Two. The World Bank defines extreme poverty as living on less than $2.15 per day.
Elon Musk paid a “true tax rate” of just 3.27% from 2014 to 2018, according to ProPublica.
The $6.85 poverty line was used to calculate how many people (two billion) an annual wealth tax of up to 5% on the world’s multi-millionaires and billionaires could lift out of poverty.
Polling consistently finds that most people across countries support raising taxes on the richest. For example, the majority of people in the US, 80% of Indians, 85% of Brazilians and 69% of people polled across 34 countries in Africa support increasing taxes on the rich.
Oxfam’s research shows that the ultra-rich are the biggest individual contributors to the climate crisis. The richest billionaires, through their polluting investments, are emitting a million times more carbon than the average person. The wealthiest 1% of humanity are responsible for twice as many emissions as the poorest 50% and by 2030, their carbon footprints are set to be 30 times greater than the level compatible with the 1.5C goal of the Paris Agreement.
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