Explained: Why Thomas Piketty Wants A Global Tax On Multimillionaire Wealth

The global wealth of billionaires in 2021 represents 3.5% of global household wealth, the share of the richest 0.01% rising from 7% of global wealth in 1995 to 11% in 2021, the results of the latest World Inequality Report 2022 showed.

Concentration of wealth

Since the mid-1990s, the richest 1% have captured 38% of the growth in wealth globally, according to the report.

According to the report, the richest 10 percent own about 60 to 80 percent of the wealth, and the poorest half consistently own less than 5 percent.

He said government intervention is essential to tackle inequalities with social and fiscal policies.

The poorest 50% of the world’s population own only 2% of the wealth and 8% of the income, while the richest 10% of the population own 76% of the total household wealth and captured 52% of the income. total in 2021, according to the report.

Thomas Piketty (Wikimedia Commons)

The solutions

The report, co-authored by economist Thomas Piketty, suggested developing new forms of taxing the wealth of multimillionaires, including a progressive rate of wealth tax with tax rates based on value. of the total amount of wealth held.

“One of the proposals we are making … is that the time has come to develop new forms of wealth taxation, to modernize our tax system, to take stock of what has happened in the economy in recent decades.

“What has happened is a higher concentration of wealth, more wealth inequality and our tax systems so far in most countries of the world have not adapted to this. It makes sense when governments are looking for money, figuring out how to pay off Covid debt.

“We are proposing a global wealth tax for multimillionaires, people who have more than a million dollars or euros and this tax in this proposal is progressive, which means that the rates will be according to the value of the amount. total wealth you own. “Lucas Chancel, co-director of the World Inequality Lab, said Wednesday in a pre-briefing meeting on the report to be released on December 7.

“In countries where wealth is highly concentrated, higher rates on the wealth stock of very wealthy individuals can generate high incomes,” he added.

The share of the world’s lowest 50 percent of incomes remains historically low despite growth in the emerging world in recent decades.

The share of world income going to the top 10 percent of the world’s highest incomes fluctuated around 50-60 percent between 1820 and 2020 (50 percent in 1820, 60 percent in 1910, 56 percent in 1980, 61 percent in 2000, 55 percent in 2020), while the share going to the bottom 50 percent of the lowest incomes has generally been around 10 percent or less (14 percent in 1820, 7 percent in 1910, 5 percent in 1980, 6 percent in 2000, 7 percent in 2020), according to the report.

The richest 0.1% of the world’s population collect more income than the poorest 50% as a whole. The average annual growth rates of wealth among the poorest half of the population were between 3 and 4% per year between 1995 and 2021.

The poorest half of the world’s population has captured only 2.3% of overall wealth growth since 1995. The richest 1% have enjoyed high growth rates (3 to 9% per year). This group captured 38% of the total growth in wealth between 1995 and 2021.

The share of wealth held by the world’s billionaires has risen from 1% of total household wealth in 1995 to nearly 3.5% today, the statement said.

Gender income inequality

In terms of gender, income inequality is marked, with female workers receiving only a third of total labor income.

“Today, women receive only a third of all income from work in the world, while gender parity would mean that they receive half of it. But currently, women only earn a third of all income from work and the situation has increased since the 1990s, but at a very slow pace. If we continue at this rate, we have to wait at least a century to achieve gender parity, ”Chancel said.

The second edition of the World Inequality Report will be released on December 7.

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