Our deep-pocketed lackeys insist at every opportunity that a government would tax the wealth of the rich, and that our richest would have no choice but to pack up their things and move to a rich-friendly country where large fortunes are given due respect in tax returns.
This argument against taxing large fortunes may be losing its strength. The current Spanish government has in fact introduced a new tax on concentrated wealth. Spaniards with a net worth of over 3 million euros, the equivalent of about 2.9 million dollars, had to undergo a temporary wealth tax last year and will do so again this year.
This new tax ranges from a tax rate of 1.7 percent on private assets between $2.9 million and $4.8 million to a tax rate of 3.5 percent on assets over $9.6 million. The revenue from this new “solidarity tax”, according to Spanish Finance Minister María Jesús Montero, will help “ensure social justice and economic efficiency”.
“Those who have more,” as Spanish Prime Minister Pedro Sánchez likes to say, “should contribute more.”
And if all of our planet’s amazingly wealthy have-nots actually paid more, how much additional revenue would the world have available to improve the lives of the less wealthy?
The UK-based Tax Justice Network has attempted to answer this question. The network’s researchers have just published a report estimating how much Spanish-style wealth taxes could raise each year if they were introduced worldwide. The amount turns out to be quite substantial.
The Tax Justice Network estimates that the countries of the world will spend 2.1 trillion per year, “by following the example of Spain’s successful wealth tax” on its own richest 0.5 percent.
How could so little money be raised? The top 0.5 percent, according to a new analysis by the Tax Justice Network, own a disproportionately large share of the world’s wealth. On average, the bottom 50 percent of a country’s adult population owns just 3 percent of the nation’s wealth. How much of the nation’s wealth is owned by the top 0.5 percent? That’s an average of 25.7 percent.
In the United States, the richest 0.5 percent of the adult population have an average wealth of $29.3 million, according to the World Inequality Database. To be in the richest 0.5 percent, you must have a wealth of almost $8.6 million.
The United States is currently home to nine of the world’s ten richest men, with Elon Musk at the top of that list. His personal fortune is nearly a quarter of a trillion dollars.
Mark Bou Mansour of the Tax Justice Network may have the most vivid illustration of this astonishing statistic.
“The average U.S. worker,” he emphasizes, “would have to work 13 times longer than the number of people alive to accumulate as much wealth as the richest man in the world today.”
We will certainly not be able to close this outrageous gap with a wealth tax as modest as the one Spain has put on the table for world politics. But praise to Spain nonetheless. We have to start somewhere.
And a big shout out to the folks at the Tax Justice Network. They’ve combined their number crunching skills with a clever and colorful new step-by-step guide to taxing the super-rich. Check it out. We can do it!
